Price question

Economics 101, monopoly/duopoly. It's market inefficiency - prices high, quantities restricted.

However re-invested profits have significant positive implications for innovation - something I'm sure we all welcome in the IT sector.
 
a quick look on google indidcated intels gross margin was about 50% and net margins nearer 30%. You experience higher margins than that when you buy a bottle of wine in a restaurant.

At the end of the day the first processor out of a billion dollar fab cost a billion dollars to manufacture. Even after making a million chips they;ve still cost the company $1000 each to make.
 
Dicehunter said:
im just saying that r+d is not that expensive like they make out to be
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R&D is running 24/7 in a fast moving business. Add on all the wage costs, and they have to be high to attract the best so that you keep your leading edge. All that before anything is even manufactured which means that in real terms the first newest, shiniest toy off the production line costs millions. It's only later when product numbers are higher and patents or manufacturing rights have been sold do the prices come down
 
Processors may cost a few quid to make when produced en masse, but fabrication plants cost hundreds of millions, as does funding the research that goes into them.
 
If enough ppl think they are being screwed over, and stop buying products because they feel that they are not getting VFM from them, then prices will be forced down. As long as consumers are willing to pay premiums for "The high end" then these companies will keep pushing the next best thing as what you must have.

Recent examples where this has fallen flat on their faces are Crysis (which EA now wants to port to consoles as they did not make as much as they wanted on the PC version), and the music industry in general.

Basically, if enough ppl say they won't stand for it, the companies will be forced to rethink their strategy. If however, ppl are happy to keep shelling out hundreds periodically to chase some sort of performance advantage, then it is only the scale of that willingness that decides how the market forces will play out.
 
Uh yeah... a company can sell it for whatever they want... you havent taken into account research and development either... they spend years developing new technology... and I doubt they are going to sell you the newest quad core for a fiver...
 
Just to echo previous comments: Research and development, production, marketing and all other aspects involved in turning a raw material into a profitable product.
 
I think you have to remember that relatively speaking, they are not performing research with our best interests in mind. They are doing it to increase their revenue.

Obvious point, but relates to consumerism etc. I think ppl can get confused about exactly what constitues a 'value proposition'.
 
Dicehunter said:
wow you really dont know sarcasm when you see it, apart from the packing thing which was slight humour a bit too slight for some the rest is true, i just think its wrong that we as consumers get ripped off this badly when the products in question cost so little to make, within a few weeks they more than make back there profits as i said i just think its wrong that the working people of the wrold have to spend so much on items that cost pennies to make, id really love it if the working man/woman didnt always stick up for the fat cats.
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Ever heard of a full stop?

It's just supply and demand. If enough people are prepared to pay the asking price, it's considered a good price to charge.

Besides, the rate that technology advances, current technology will be a quarter of its current price in 2 years' time simply because it will have been superceded by newer technology, thus lowering demand.
 
Ok since im being barked at left right and center how about this, after 6 months of the pc component being launched they bring the price down by 3/4, as they have made there costs back and a decent amount of profit so they dont need to sell at the ludicrous prices anymore and theyd still make a profit.
 
Why on earth would they do that by choice? For competition purposes maybe.

If someone offered you a tenner or £20, no strings attached, which would you pick?
 
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