I am absolutely speechless that I am being downvoted while you are being upvoted...
What exactly are these imaginary fixed costs that marketers don't have? You mean hiring advertisers is free? You mean buying commercials is free? You mean flying out to conventions is free?
I can tell you of quite a few startups led by MBA marketers who burnt all their cash trying to outsource their technical work. All the money went into hype which they don't even have a product for. Would you rather have imaginary hype or would you rather have a physical product?
I believe he is referring to an economies of scale type scenario. With a high-tech product (or most any for that matter) the manufacturer/developer has to pay huge sums of money before a single commercial unit is shipped. Fixed costs such as plant and manufacturing equipment are cash drains whether one or one million units are sold--hence the name fixed cost.
Yea, Fusion Garage has created a tangible product. To get it to the masses, however; they must convince the public they want it. Of course theres people who are already excited about it, but that certainly won't bring in enough revenues to keep the lights on at the end of the day.
I'm personally just getting tired of the same tired Business vs Tech banter. If we are to advance our industry and continue to create great innovative products, we must recognize eachother's strengths and weaknesses. Thats when the magic happens IMO.
With a high-tech product (or most any for that matter) the manufacturer/developer has to pay huge sums of money before a single commercial unit is shipped.
This really only holds true for a cutting edge product like a new CPU or the first iPod.
For everyone else like the JooJoo/Crunchpad, these electronics are assembled from commodity parts and manufactured in Asian factories on the cheap.
If preorders are taken, there is absolutely no reason for Fusion Garage to maintain a huge stockpile and the corresponding risk. This is why made to order companies like Dell are so successful.
Have any of you bothered to see how much it costs now to produce a prototype in China now? And do you really think that Fusion Garage is funding these factories themselves?
Wake up to the 21st century please.
Non-cutting edge electronics are cheaply produced in Asia. The "JooJoo" is made up of commodity electronics which means that these "low-tech" plants are easily able to solder and assemble the components together.
Fusion Garage is not building the factories, mining and smelting the ore, nor fabricating their own silicon...
Could you elaborate on how much it actually does cost to produce a prototype in China? Further, how about a finished and consumer-ready product? I understand that what you are alluding to is a cornerstone of the modern economy, but I find it difficult to believe that the affects of manufacturing costs are essentially null on a small firm from Singapore.
Like I mentioned above, it depends on how cutting edge your product is. I can't give you any specifics but you can try contacting a Chinese supplier through Alibaba.com they will be able to give you a rough idea. I know from the downvotes I've received that I won't be wasting more time trying to convince people about their misconceptions.
As a rule of thumb, the more exotic and cutting edge your product is, the more savings you will get from mass production obviously. The JooJoo/Crunchpad is not unusual. From what I've read, it's a commodity touchscreen attached to an Intel Atom motherboard.
If your product is unsellable due to a small difference in the quantity you are able to sell, you have bigger things to worry about: namely the quality of your product. There's a reason why the cost of new products such as consoles or cpus are sky high in the beginning. Why should your company be any different?
I don't have the exact data for an item like the crunchpad/joojoo, but for nearly everything I bothered checking, the price differences are quite often less than 25%.
Regardless of exactly how much this margin is, it is not wise for anyone to be straddling the fine line between the maximum consumers are willing to pay and the minimum a factory is willing to charge.
I leave it as an exercise to the doubters here to investigate by themselves. I am done wasting my time finding specifics just to further an argument on the internet.
I am absolutely speechless that I am being downvoted
Let me propose an analogy of what you're saying: some say a roof is important on a house, but without the basement, a house would collapse. Without the roof, on the other hand, the house would be fine for quite some time, especially in a warm summer climate, like LA.
In reality, a roof and a basement on a house are like marketing and engineering: both are necessary and neither is sufficient for a good product. Engineering without marketing is blind, and marketing without engineering is lame.
You made a nice analogy there, but other than you saying so, why is it exactly like selling a product? I can make up an analogy too.
Let me make this clear. I am not saying that marketing is completely useless. What I am saying is that when you go up to a marketing guy, chances are that he has no idea how to make the actual product. When you ask an engineering guy how to sell the product, he at least has an idea of how to sell it.
What I am saying is that when you go up to a marketing guy, chances are that he has no idea how to make the actual product. When you ask an engineering guy how to sell the product, he at least has an idea of how to sell it.
Marketing != Sales. Deciding what to make (market research) is the first part of marketing. If you make the wrong thing (if you are blind to the market), you're not going to sell a lot of it.
The analogy to the house holds because both a roof and a basement are necessary for a good house. Similarly, both good marketing and good engineering are necessary for a good product. Both are necessary, neither is sufficient on their own.
The analogy to the house holds because both a roof and a basement are necessary for a good house. Similarly, both good marketing and good engineering are necessary for a good product.
Again you offer no proof to the validity of your analogy other than because you said so.
What exactly are these imaginary fixed costs that marketers don't have? You mean hiring advertisers is free? You mean buying commercials is free? You mean flying out to conventions is free?
I can tell you of quite a few startups led by MBA marketers who burnt all their cash trying to outsource their technical work. All the money went into hype which they don't even have a product for. Would you rather have imaginary hype or would you rather have a physical product?