Sillyness: Free Runner price vs iphone 3G price
heikkis at matnat.uio.no
Wed Jun 11 10:03:41 CEST 2008
This discussion is silly. Seriously, it's silly. It's silly on so many
levels I probably can't sum up all the point's that make it silly.
Now that I got your attention;
I apologize, I don't think you guys or anyone else are silly. ok?
But bear with me as I try to explain why I think this is a silly
1. OM is a niche marked manufacturer.
First off all, does anyone here even remotely imagine that OM/FIC has
the marketing capacity or brand leverage as Apple? You know, Apple
Corporation whose whole existence is dependent on good industrial design
and long-term brandname marketing? You know, the Apple corporation that
has survived 30 years of IBM and MS hostility by leveraging their
I can't (at the moment) even imagine OM trying to target the
majority of Apple's consumerbase. It's corporate suicide.
2. OM is a startup company. (on the long term scale.)
The GTA01/02/03+ designs are still evolving and more importantly the
cellular/computing market hasn't even started to seriously grow. No
sane economist can today even guess when market saturation will occur.
Besides, today's PDA's / mobile are fairly primitive in capabilities
compared with the wealth of software and choice in the PC market.
(Including all Apple, OM, HTC, Nokia and SE PDA/mobiles.)
This means there is a lot of opportunities for startups to both
create new market's and to fail miserably. OM has been around for a
couple of years and has to stay in the game at least until it's
possible to forcast how the mobile computing market will evolve.
This could take a decade, and personally I hope FIC & whoever
owns the majority of OM shares is willing to provide 10+ years of
capital before any significant return of investment occurs.
But I doubt OM's shareholdes has (yet) the willingness to
invest the amount necessary to create a global distribution and
production capability to rival Nokia, SE or Apple on basically a
untried HW design, untried SW and a untried nieche market.
At least, it won't happend until after GTA03 or maybe even GTA04 has
become a success and /created/ a niche opensource crowd/fanboy
3. Production cost's on HW dictate a Economics of Scale.
When comparing prices and claiming OM/Iphone is cheaper/more expensive
don't forget that regardless of now cool/cheap/nifty/open/closed the SW
is the overhead to start production of hardware is insanely high _and_
in addition there is a base cost for the physical components that won't
go away. As production in units ramp towards /millions/ of units the
overhead margin shrinks towards zero. But I doubt there will ever be
sold more than a couple of ten tousands of GTA02. I'm not even sure that
the GTA02's price and production will cover the costs pr unit for
I'm not claiming they are dumping prices, rather that the cost
of running OM,( engineering, marketing, accounting etc.) probably won't
be recuperated by selling GTA02 units. (Nor 03 or 04.. maybe during
4. How cellular phones are priced is dictated by how a regional market
The US _isn't_ the only market in the world, nor are the the market
conditions in the US even remotely comparable with other regional
markets. So maybe the Iphone is sold in the US locked to a AT&T
plan, in a market where there you actually have to pay /exit-fees/,
and where monthly costs doesn't change regardless of where you bought
your phone. How many units sold in different markets isn't
dictated only by the sales price but rather on how the market has
evolved in different regions.
Don't overextrapolate when trying to guestimate the "cost" of a
Iphone vs. GTA. Some regions has a lower barrier to entry, and personally I
won't be surprised if GTA02 end up being sold by the ten thousands in
Europe/Asia while the sales in the US will only reach
a few hundred units. (IMHO)
5. The GTA01/02/03+ designs are still evolving and the SW is barely
Discussing Iphone vs gta interface and SW capabilities isn't
remotely interesting as it has next to no impact on sales.
Any current GTA SW is << iphone SW in terms of maturity and
capabilities if it was targeted at the same consumer base as the iphone.
Look at linux on desktops, Ubuntu and derivates has barely
started to nible at the edges of MS's entrenced market domination.
Expect another decade of steady improvement of linux desktop SW while
MS's does the I'm-a-dinosaur-and-meteorites-doesn't-exist dance before
market partity has been reached. This also applies to OM in a market
were Nokia and SE are the actually main opponents.
6. OM want to leverage the development cycle of opensource/free
Of course OM is gambling on the fact that opensource/free
software has a insane rate of evolution when it hits the right "sweet
spot" among opensource developers/fans boys. But to hit this "sweet
spot" they will _have_ to do everything they can to appeal to such a
crowd rather than the regular consumer base. (Slightly OT; This make the
GTA03 VGA&QVGA discussion just as silly because my impression is
that most of the people who appears to be developers want a VGA.)
7. Apple currently defines the PDA/mobile marketplace.
People tend to forget that the "big boys" always get to define what's
"modern" or "chique" in the marketplace and therefore has a tremendous
influence on the brainshare at CEO/corporate/administrative level,
including the brainshare at their opponents.
But this doesn't mean it's economically sane for a smaller
player to /aim/ for the same goals because they will always end up
playing by _rules written by their main opponent_.
Thousands of startups and even large firms has gone
belly-up by trying to copy/emulate the ideas of their main opponent.
Does anyone here use WordPerfect?
To survive in such a enviroment you either have to become
a /professional/ copycat (me-too-er) _or_ to redefine the rules of the
game so you'l play on a field where you dictate the rules rather than
your opponent. Eg. create your own niche market and then leverage it to
open new markets afterwards.
Microsoft isn't scared of FOSS because the software is
superior or better in any way. (In most cases it isn't, but I'l leave
that for another discussion). They are scared by the FOSS because the
GPL licensing (especially v3) virtually exclude them from a market
where they have practically no influence on the rules /inside that
market/. The only choice they then are left with is to try
squashing the _whole_ niche market. Eg. Novell-MS deals, price dumping,
OXML/ODF standard wars etc.
Sincerly, Heikki Soerum.. Who hasn't even studied economics.. ^_^
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