> Alex Balashov wrote:
>
>> The price can float more freely,
> > far less anchored to the underlying production costs.
>
> To expand on this a little bit:
>
> Say you want to be a wheat farmer. Wheat doesn't have a lot of
> differentiation points that have a grandiose impact on price. Sure,
> there are different types of wheat, grown under different conditions,
> and so on, but as much as they're different, they are also, in very
> significant ways, the same -- it's still wheat. Wheat is wheat.
>
> The agricultural processes involved in producing wheat are well-known
> and easily discoverable. There are abundant quantities of wheat
> ubiquitously consumed across a broad swath of economic sectors and
> market segments, at all levels of income and so on. So, the real
> question in going into wheat production is simply whether you want to do
> it -- that is, whether you want to and are able to make the investments
> in capital machinery, land, seed, and so on, and whether you can make it
> scale in a way that is competitive and make it efficient enough to
> compete with modern, high-volume agro-industrial conglomerates.
>
> Aside from that, though, it's not really hard to figure out what the
> machinery costs, what the land costs, what the seed costs, and what kind
> of pricing your competitors are getting from this source, that source,
> to make this type of wheat, that type of wheat, and the techniques they
> use to get this yield and that yield and sell it here or sell it there,
> and so on.
>
> That is the main reason why it is structurally a commodity, aside from
> its ubiquity. This dynamic results in a very visible cost structure
> that creates aggressive competition almost exclusively focused on price.
> As said before, wheat is wheat. The way that you innovate your way into
> success as a wheat-grower is by tweaking various parts of the process on
> an economic level; increasing efficiency, finding ways to squeeze down
> the prices of your inputs, and so on. In marketing wheat, you can't
> really tack a lot of "value-added" characteristics onto it stemming from
> some sort of inherent opacity. It's wheat.
>
> That's kind of how it is with PC hardware, although obviously, not
> immensely so.
>
> Proprietary communications systems are not like that at all, and have
> not ever been historically. The engineering is relatively opaque and
> secretive, as is the underlying cost structure. Furthermore, PBX
> systems have always been a business-focused product whose value lies
> almost exclusively in its being a capital good. PC hardware is a
> mass-market product for all sorts of consumers, and attempts to mark it
> up in business target markets are predicated on additional value-added
> characteristics (support, service, perception of higher quality, etc.).
> Otherwise, they're still anchored to that underlying transparency of
> cost structure.
>
> -- Alex
>
>
> --
> Alex Balashov
> Evariste Systems
> Web : http://www.evaristesys.com/
> Tel : (+1) (678) 954-0670
> Direct : (+1) (678) 954-0671
> Mobile : (+1) (706) 338-8599
>
So to sum up Alex's very long winded explanation. It is the "status
quo" that Jay called BS. I guess some people are not ready for the
paradigm shift or they were and now want to shift if back.
Thanks,
Steve Totaro
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