A few days ago I made some comments about the incredible slashing of prices on consumer electronics. How low can you go before you’re losing money on each $30 DVD player?
Turns out you can go pretty low. From Mark Schubin’s Monday Memo:
A story by John Schwartz in the Week in Review section of yesterday’s New York Times is headlined “How Low Can DVD Players Go?” The story (which doesn’t seem to be on the Internet) quotes Consumer Electronics Association (CEA) spokesperson Jim Barry as saying of under $60 machines, “They’re not making any money on that. It’s got to just be a way to get people in the store.” The story goes on:
“But Mark Knox, director of digital media services for Sharp Electronics Marketing Company of America, said the low-low price might allow some profit.” “By keeping features to a minimum, a company could slap together a $30 non-name machine that a big retailer like Wal-Mart could sell without losing money, Mr. Knox said.”
An illustration then shows costs of various parts of a DVD player. The case is said to cost about $1, the remote control $1.50 to $2, the optical pickup $2 to $3, the disc mechanism and circuits $4 to $5, and, most expensive, licensing and patent fees of $6 to $12 per unit. At the low end, that’s $14.50.
So now, the story is no longer the potential bursting of the electronics bubble, it’s how overpriced the stuff actually is! Amazing!
