
Hardware is dead - swombat
http://venturebeat.com/2012/09/15/hardware-is-dead/
======
thaumaturgy
Hardware is dead; long live hardware.

The free-fall in PC prices in the 90s "killed" the PC, except that every major
PC manufacturer still sells high-end models, and retailers still make money on
them.

The free-fall in automotive prices in the 20s "killed" the automobile, except
that people kept buying faster, sleeker, newer models anyway.

Like so many other electronics and everyday devices, the commoditization of
tablets won't "kill" the tablet. It will result in a glut of disposable,
troublesome, irksome devices, but there will still be a very nice market of
people willing to pay more for a better device. Go make money there, you'll be
happier anyway.

~~~
bigdubs
So not to be that dude, but ...

"The King is dead, long live the King." refers to the accession of a new
monarch. It implies in the language an immediate, uninterrupted rule of the
line.

It should not be used when something has died, and it's just dead and there is
no implied line of succession.

A terrible but relevant example would be "the iPhone is dead, long live the
iPhone.", implying that the 4s is dead and 5 now reigns.

~~~
thaumaturgy
Whoops; thank you. I didn't know that.

~~~
ghshephard
Don't give in so quickly - your use was fine, and in keeping with the concept
of "X is Dead, Long Live X"

~~~
molmalo
But what the phrase really means is: "X is Dead, Long Live Y" with x being the
diseased king, and y the rightful heir and new king.

As wikipedia states [1]:

The phrase _is a traditional proclamation made following the accession of a
new monarch_

And...

 _"Given the memorable nature of the phrase (owing to epanalepsis), as well as
its historic significance, the phrase crops up regularly as a headline for
articles, editorials, or advertisements on themes of succession or
replacement."_

That's why bigdubs was right.

But finally... most probably the successor and new monarch could be something
like what Ballmer said to The Seattle Times [2]:

 _I think when you look forward, our core capability will be software, (but)
you'll probably think of us more as a devices-and-services company._

Devices+Services is the new king. Google, Amazon, Microsoft, Apple, are all
going this route.

[1]
[http://en.wikipedia.org/wiki/The_King_is_dead._Long_live_the...](http://en.wikipedia.org/wiki/The_King_is_dead._Long_live_the_King)

[2]
[http://seattletimes.com/html/businesstechnology/2019168601_m...](http://seattletimes.com/html/businesstechnology/2019168601_microsoftballmer16.html)

~~~
ghshephard
Yes - that's precisely what the original poster was referring to. "Hardware
(The old, legacy, big manufacturer, high margin, centrally built) is dead,
Long live Hardware (The new, on-demand built, small manufacturers, lower
margin, distributed build).

I'm sure there will be many more generations of hardware as well - indeed, the
next big generation will probably be some form of print-at-home, then perhaps
biological - who knows.

There will be many iterations - but they all will consist on something
physical replacing the last generation.

With that said - I appreciate your meta-point, that the concept of "Selling
Hardware Alone" without the devices/services associated it, is going out of
vogue with the highly-valued companies here in North America. Point made.

------
noonespecial
I've already started sticking them to the walls of my house to control lights,
the thermostat, the garage door etc. This didn't make sense at $400/device but
as soon as they hit $100 or so the game was afoot. Now they're so cheap, its
literally cheaper to grab one from "the pile" and whip up a nice html5
interface for the task than to buy a dedicated Insteon controller or Nest
thermostat. Hell, it was cheaper to automate my garage door and give it a REST
interface on the web than to buy a single new clicker at Sears.

I'm guessing that in the near future there won't be many surfaces left in our
lives that aren't festooned with touch-screenage.

~~~
yardie
What hardware are you using? I've wanted to try home automation for a while
but all I can find is either the lowend stuff (X10) or the really highend
stuff that requires a dealer to install it for you.

~~~
davidcuddeback
He mentioned Insteon, so I'm assuming <http://www.insteon.net/>.

I've been wanting to get into home automation too. My biggest fear is vendor
lock-in. I'd like to hear more about how he gave his garage door a REST API,
because that's something I could build my own interface for.

~~~
noonespecial
I had an old X10 relay module laying around. I just straight wired it in
parallel with the wall button.

[http://www.thex10shop.com/product/x10-pro-home-automation-
pu...](http://www.thex10shop.com/product/x10-pro-home-automation-
pum01-universal-relay-switch-module-um506)

Looks like its been discontinued but I'm sure something like it still exists.
I probably payed the $20 retail for it. Thus my judgement that it cost less
than a new clicker from Sears.

The garage door has a sensor that's part of the security system, which was
replaced by a beaglebone. Between the two systems, I can use the main server
to program a small app to GET the state of the door and PUT the door into the
open and closed state.

------
jgrahamc
"At these levels there is almost no profit margin left in the hardware
business. A $45 tablet is cheap enough to be an impulse purchase at the check-
out line in Best Buy. A $45 price puts tablets within reach of a whole host of
other activities not traditionally associated with computers. Tablets could be
used by waiters in restaurants."

I've been to plenty of restaurants where waiters having been using handheld,
wireless devices to take orders, so that's nothing new. And claiming that a
rapid price drop means there's "almost no profit margin" and then equating
that to the death of hardware seems completely upside down.

If hardware manufacturing has dropped to the point where complex devices are
cheap to buy then we are entering a golden age of hardware since it means that
manufacturing and design process has got cheap enough that many things that
were previously too expensive to design/manufacture will be made.

It can also herald an era of 'mom and pop' hardware companies.

~~~
freshhawk
"... then we are entering a golden age of hardware ...

It can also herald an era of 'mom and pop' hardware companies."

Exactly!

I never understand bloggers and pundits who analyze these things from the
perspective of the stockholders or owners of the large players instead of the
consumers/small players.

Why the hell would you cheer about the high margins charged on the products
you are paying for? Is marketing getting so good that consumers are now
complaining about too much competition among those they buy from?

~~~
michaelt

      Why the hell would you cheer about the high margins 
      charged on the products you are paying for?
    

I don't cheer high margins, but in some industries cheap medium-low quality
products crowd more expensive higher quality products out of the market.

Consider inkjet printers; there are many cheap products on the market, but the
consensus opinion among techies seems to be that there's no suppler with a
good product.

It would be a shame if more of the technology industry went in that direction.

~~~
freshhawk
I'm not sure inkjet printers are a good example, although you can say that
since the cheap printers flooded the market there are fewer "good" printers
and they lost the economies of scale so they are more expensive.

This example is so polluted by the whole ink cartridge "sell the razor blades"
business model and the legal challenges around 3rd party cartridges that I
would be very hesitant to generalize from the printer example.

With that said, the kindle business model _is_ that same model so maybe there
is something to it.

------
koji
Being a mechanical engineer and a hardware guy myself, I may be biased, but I
think hardware is alive and well. With rapid prototyping and open-sourcing of
3D printers, fabrications shops and the like, the opportunity to create new
hardware devices is easier now than ever before.

The issue the article focuses on is commoditizing of hardware. Tablets all
essentially have the same components and the economies of scale are
exaggerated. When you have multiple manufacturers of very similar devices they
all start reducing their margins to gain market share. This is a race to the
bottom, and I believe the point the article is trying to make.

However, the innovators of hardware are the winners. New devices that create
new markets, new functions, new possibilities for consumers have the potential
to sell large volumes at high margins. This has the advantage of the added
barrier of manufacturing. Competitors take longer to tool-up and compete,
giving first-movers a larger advantage than software producers. The iPod, for
example, still remains the leader to this day.

Hardware isn't dead, it just becomes a commodity over time. To avoid reaching
the bottom, you have to be a company that's always innovating, just like
software. Creating new products, vastly improving design, etc. Leave the
copycats in China to turn it into a commodity, you should be onto your next
big thing by the time that becomes an issue.

------
buss
The generic cheapness that may portend the death of hardware is the same force
that is causing a renaissance of hardware hacking.

Most major cities have hackerspaces or techshops (<http://www.techshop.ws/>)
where you can 3D print and use CNC mills. It's not uncommon to take apart
cheap hardware and hack something into it (failure is much easier to stomach
on a sub-$100 device).

Arduino has been the main driver in this area for years, but mark my words: Go
on Raspberry Pi is the hardware platform of the future. Go is close to the
metal and has great concurrency, which make it ideal for interfacing with
sensors. No more dealing with Arduino's lack of real threads and the weird
sketch format.

My Pis arrive tomorrow; long live hardware!

~~~
seltzered_
good point. I'm pretty happy that hardware hacking is potentially becoming
mainstream again, hopefully it makes complex hardware design seem less and
less like an ivory tower affair like it has for the past 20-30 years.

I've worked in the industry at a chip startup, and it's one where people hold
on to stacks of internal design books across companies because the information
is very niche and protected.

As far as the commoditization of consumer hardware, everyone in the industry
knows about it, and they're responding by investing more by offshoring, or
focusing on higher-end industrial markets. Hardware/chip startups are
increasingly rare (or are very underfunded) unless they offer a significant
game-changer due to the capital costs involved.

------
dholowiski
A $45 knock off tablet, bought in China miles from the manufacturer doesn't
equate to a $45 price tag in the USA. Put a brand name on it (and some quality
control), put in the 8 or 16gb the market requires (this tablet was 4gb) and
shipping and import fees, and you're easily up to the $200 we're paying today.

This is a non-story.

~~~
prostoalex
Maybe not $200 [http://dx.com/p/7-0-resistive-touch-screen-
android-2-2-table...](http://dx.com/p/7-0-resistive-touch-screen-
android-2-2-tablet-pc-with-camera-wi-fi-tf-black-
arm-v5-349-79mhz-107155?item=29) but agree on non-story.

~~~
dholowiski
Yes, but people aren't going to but those, look at the specs. What kind of
experience does a 350mhz cpu give you?

------
debacle
I think this is touching on a different vein.

For 30 years, companies have extolled the virtues of globalization, while jobs
were moved overseas and shareholders reaped the benefits.

Now, finally, we're starting to see the consumer aspect of globalization. If I
can buy a tablet for less than it costs to take my wife to dinner, technology
is truly within everyone's grasp.

------
habitue
2 thoughts: He isn't saying anything except "margins are razor thin". Hardware
companies have made money on razor thin margins in the past, and will continue
to do so. Razor thin margins don't mean "0 margin".

He seems to be ignoring the costs of distribution. The reason the tablet is
$49 is because you can walk to the factory from where it's being sold. Try to
take advantage of that price and import it to the US and you'll find the cost
is higher. I don't see why it's amazing that you can buy a cheap tablet at
wholesale prices, that's obvious

~~~
gregsq
Distribution is usually via Hong Kong at something of middle man markups, but
still cheap. The last time we ordered this way, the item arrived declared for
customs as 'Contents: Gift'. I'm not sure what the preferred weight limit is
for them.

There's a sea of knockoffs over there, some terrible, others very good.

~~~
habitue
Yeah the "Contents:Gift" trick is cute, but illegal if you're actually
importing.

------
narrator
One thing that's interesting about China is there are literally 10s of
thousands of independent manufacturers. In the U.S publicly traded companies
raise and borrow money for incredibly cheap and buy out and consolidate
everyone but in China this doesn't seem to happen.

------
ck2
I never understood why good articles have tiny non-descriptive titles, like
the author got tired.

Certainly it's not for lack of space, it is the web after all and not a print
newspaper.

If you have a 20+ paragraph story, at least give us some motivation to read
it.

At least put a subtitle or appositive clause on the title.

~~~
MatthewPhillips
On sites like this the author doesn't come up with the title.

~~~
dsrguru
Why is that?

~~~
Tsagadai
Traditionally, editors and subs write the titles. Many online news sites ape
the model that preceded them in the print world (except for the part about
employing editors with a talent for actual editing).

------
adamlindsay
A low price point on commodity hardware certainly doesn't correlate to the
hardware industry being dead. If anything it is quite the opposite. With such
a low price point, the potential market opens up quite significantly. There
become many more people that can now afford a tablet, and there also becomes
many that can justify having a few around the house for various tasks. A
tablet in the kitchen for just recipes becomes a viable product. Of course I
would want that particular tablet to have some particular features. Maybe
water proof, and easy to clean.

On the opposite end of the spectrum, you do have the Apple's and Amazon's of
the world that the author mentioned. Quality/expensive hardware will continue
to exist long into the future. It will help drive the advancements in
technology, and a portion of consumers will always demand quality regardless
of price.

If anything the low price point opens up the market for new products. Take
Ouya as an example here. While they managed to get $8.5M on Kickstarter, their
initial outset had them need less than $1M. I would argue, and I think I have
here that we are on the brink of a cambrian explosion of new hardware devices,
and given the low entry point, there will be many new companies that bring us
exciting new products.

------
patdennis
Here's a link for anyone who feels like exploring the wonderful world of cheap
generic Chinese tablets:

<http://www.dealextreme.com/c/tablets-1409>

Or cheap generic Chinese anything, for that matter.

~~~
meritt
Your implied negative standpoint, with the products are "cheap" and "generic"
and "Chinese", is rather naive and amusing. The entire point of this article
is the fact that these products are indistinguishable from the same ones with
a HTC, Samsung, HP or Apple logo emblazoned on the device.

Hardware will truly be dead when people realize just how much they're paying
for the brand name and nothing more.

~~~
ctdonath
As noted by another post above, take one of these products, bump the specs to
something tolerable (say, 16GB instead of 4GB etc.), do some real quality
assurance tests/screening, ship it halfway around the world, put a reputable
name on it (so customers can trust they're getting something worth getting),
add a sensible markup, set up a tech support hotline, and that $45 slate is
now $200 - right about where decent tablets are now.

"brand name and nothing more" isn't nothing. It's why people pay Apple $649
for an iPhone 5 consisting of $167.50 in parts - there's more to a product
than just parts, there's assuring you'll end up with more than just $167.50 in
parts.

------
DanielBMarkham
Looks like great opportunities for folks to start hardware startups.

Anybody know how to pick up 2 or 3 of these for prototyping?

I'm also assuming you can somehow easily boot Linux on it.

~~~
olalonde
I live nearby Hua Qiang Bei in Shenzhen, if you are serious I could ship some
for you. I'm actually seriously considering setting up a Hua Qiang Bei
e-commerce: this place is really a gold mine for electronics.

------
spiralpolitik
Hardware isn't "dead", but companies that sell commodity hardware certainly
don't have a bright future. Margins will be razor thin so unless you have
insane volume or can manage your supply chain like a boss, then exiting now
might be the best long term plan.

Similarly if you only produce Operating System software you are also "dead".
Once the long extended death rattle of the PC compatible system is finally
over there won't be a large common platform for third party companies to
target. Even Microsoft sees the writing on the wall with this one hence
Surface.

So to ensure survival a company needs to be in control of the entire widget,
both hardware and software to produce the best possible system. This will
yield a diaspora of almost but not quite compatible devices running a variety
of different software platforms. Some will be open source, some will not. Some
companies will survive the transition, most will not and new companies will
rise and take their place.

------
programminggeek
So what he's saying is there's room in the market for a software company to
take these $35 tablets(in volume), add custom software enhancements, and sell
them for $200? Sounds like a business opportunity, if maybe a bit short lived.

Also, why has nobody pointed out the opportunity in taking these and making
custom software for various industries like Medical, Automotive, Automation
(home or industrial), Sales (of various things).

Custom software on disposable hardware could really turn into some big money
businesses. Maybe there's no money in the hardware, but you can add some
serious margin by bundling it with custom software and maybe add the tag
"enterprise" if you want to sell to large companies.

------
cfinger
I think he has it backwards. Hardware is getting cheaper, making it easier to
sell products that used to be too expensive. The cheap labor in China is
fairly accessible to everyone.

This is an opportunity, not a death blow.

$0.99 Apps didn't 'Kill' software for the same reason.

------
the_economist
If I had a processor that ran 1000x faster than current processors, would I be
limited to selling it for $50?

Currently commoditized hardware is dead, perhaps.

There will come a hardware invention that offers something new, and there will
huge profits there.

------
mstevens
So I've decided to try the experiment. Ordered a 7" android tablet -
[http://www.aliexpress.com/item/Best-discount-price-Free-
ship...](http://www.aliexpress.com/item/Best-discount-price-Free-shipping-
Android-4-0-3-7inch-Tablet-PC-with-Capacitive-AllWinner-A13/597529226.html)
described as running ice cream sandwich from aliexpress for $57.68, with free
shipping.

It's not quite $45, although it looks like I could've got that price if I
didn't need shipping.

Should be interesting to see what I get and how cheaply made (or not) it is.

------
robomartin
Let's make an important clarification here: When the word "hardware" is used
in this article (and this thread) it is really to mean "commodity consumer
hardware". There's far more to the hardware business than what you can buy at
BestBuy or Walmart. That said, even industrial and specialty hardware is under
pricing pressure in markets where reasonable volumes can be had.

That's the secret, really. Any market where product can be manufactured in
volume is a market that can be targeted by the benefits provided by the
Chinese manufacturing machine. Limited volume products are not a good fit for
this system.

That said, I don't really understand the surprise or revelation perhaps
implied by the author. What is so special about a tablet? In terms of the
hardware involved and the manufacturing process, well, nothing. Absolutely
nothing. A tablet is no different than any other electronic device.

And, yes, while a stereo amplifier or a CATV tuner use different components, a
tablet is subject to exactly the same manufacturing process and obeys the same
economic rules. Any product that can be manufactured in the tens of thousands,
hundreds of thousands or millions of units per month will, eventually, race
for the bottom in terms of pricing. This does not necessarily equate to lower
quality.

The question that we should really be asking is: Why are we paying so much for
tablets in the US?

~~~
ippisl
>> Why are we paying so much for tablets in the US?

Because of few factors:

1\. It's relatively hard to find a Chinese tablet that can you be sure it has
good quality. That's what branding is for, but chinese tablets don't have good
branding.

2\. Marketing does help to sell products. Promotion is needed.

------
teeja
>Try to take advantage of that price and import it to the US and you'll find
the cost is higher.

A college I did graduate work at has a huge auditorium named after a man who
made tens of millions of dollars throughout the early 20th century importing
stuff from Asia. Which taught me that huge profits can be had by importing
exotic junk and <s>ripping off</s> selling it to your fellow citizens for many
times what you paid.

------
vidarh
The manufacturer he failed to identify is most likely Shenzhen Lyric Pioneer
(<http://www.lyxfsz.com/>), which is behind dozens of the All Winner based
Android tablets, under a wide variety of brand names.

(One of their more amusing product pages:
<http://www.lyxfsz.com/en/products_view.htm?id=27> ... )

~~~
est
There are thousands of LyricPioneer-likes in ShenZhen. Which LyricPioneer do
you mean?

~~~
vidarh
I'm not sure what you're trying to say. Is the name common? (Google doesn't
seem to find anyone else using that name in English, but that doesn't need to
say much). In any case, the website URL I provided makes the reference unique,
down to the address.

If you mean there are lots of similar products from other sources, then maybe.
But pretty much all of the cheap Android tablet models that make it to Europe
at least use the exact same board design (identical PCBs, apart from minor
changes depending on features, but even most differences between models is
accounted for by what components are mounted on the PCB, not differences in
board design), the same handful of cases, and the same Android distribution
and the same model numbers - everything points to a single source for the ones
sold in the UK at least, but maybe none of the other manufacturers bothers
with the export market.

I've seen nobody dig up any alternative manufacturers of these specific models
over the last couple of years. There may be a few others, but the AllWinner
based tablets soldin Europe seems to be pretty much from a single source. If
you see a large number of different brands, that doesn't really say anything -
that's the case for the ones shipped to Europe too.

------
seddona
The low end of every successful product category ever created eventually
becomes a commodity. The author has equated the commoditization of low end
tablets with the death of one of the worlds largest industries.

This would be like saying; margins are slim on spreadsheet software, the
software industry is dead.

This article exudes a failure to grasp basic economics.

~~~
koji
This is a more succinct and elegant way of explaining what I was trying to
say.

------
acgourley
It's worth noting everyone in the hardware business knows this. For example:
why do you think everyone is fighting over the living room? Players like
Samsung want to sell you a cheap tablet so you might buy the smart TV it pairs
well with. And then maybe you'll buy content there too.

------
azundo
What is really exciting about this is the impact on emerging markets. I live
in Ghana and tablets and phones are how people access the internet, and will
for the foreseeable future. If tools get good enough there might never be PCs
as a tablet seems to be a much more accessible interface to get started with.

It is an interesting market to think about trying to monetize but the
potential is huge as tablets drop to a price point where average urban
dwellers (who are currently barely computer literate) can afford them. I
already see iPads in the hands of the richer crowd and expect to see cheaper
Androids flooding the market very soon. The need for custom software to make
it easy for a population that can only hunt-and-peck is going to be huge.

------
iandanforth
Another win is when these products become components themselves. Think
robotics and other DIY projects that can have a huge amount of functionality
out of the box thanks to an established platform tied to an excellent
selection of sensors and communication options.

------
sown
As a alleged kernel engineer I wonder what this means for me.

For now, I see it means that one person out of a dozen gets to write the
device driver -- if that --and the rest of us get to do patch slavery. heh. :)

as far as linux, it is kind of sucked the air out of the room for embedded
development, but I think in kind of a good way. I'm sort of out of an
interesting systems job, and people who think they can write an app in user
space for their device and be done with it are in for a shock when it doesn't
go quite right, but with embedded linux people can just write an app in user
space for their device and be done with it. Yes, you read that right.

------
ck2
It's going to be amazing when you can buy a usable tablet for $20 at at the
dollar store - or maybe even a vending machine.

I remember when desktop calculators were more than that.

Don't we have Google to thank for this in large part?

------
cs702
The first question that popped in my mind as I read this was: how will this
affect Apple over time?

If tablets with decent specs are available in China at relatively low volumes
for $35 each, it's a matter of time before we start seeing free and nearly-
free tablets in developed countries like the US. (Not just Amazon; companies
like Verizon and Comcast could throw in a free 7" Android tablet just for
signing up with them.)

Will consumers continue to shell out for iPads, iPhones, or iPods to the same
degree when they can get decent Android devices for near zero?

~~~
spiralpolitik
If the market follows the iPod model then consumers on a whole will prefer the
Apple models over the "cheap" alternatives. This will continue until the
market is superseded by another market.

If the market follows the PC model then Apple's share will collapse to a
modest percentage, but will still control the profit share.

In either case Apple wins.

~~~
archangel_one
I'd argue that following the iPod model rather relies on the competition's
devices remaining fairly horrible by comparison - none of them ever had such
nice hardware, and I never tried one with adequate software to handle several
thousand songs on the device. This seems unlikely to repeat itself to me; IMO*
the Nexus 7 is an extremely nice little tablet which proves this kind of thing
can work, and other manufacturers can take advantage of Android to provide
good software, which often let down the iPod competitors.

There is a third option of course; that the market follows neither model that
have gone before, and Apple does not win this time. We won't know for sure
until after, though.

* Disclosure: I work at Google, so my opinion is not without potential bias.

------
neverm0re
"Amazon is also clearly way ahead on this model. At the Kindle launch event
last week, Jeff Bezos highlighted that Amazon does not make money on the
Kindle, it makes money on the content it sells on top of the Kindle."

And Nintendo has been aware of this since the 80s. Consoles have been closed
platforms with razor thin to loss leader margins on hardware for over thirty
years now. It's only that the development model itself has shifted with
tablets and smartphones, they're a bit more open than they used to be.

------
chaostheory
The 1st thing I was thinking about the $45 China quoted market price (which is
probably lower since it doesn't include either volume or haggling) was the
cost of shipping from China to the other markets. At the end of the article we
see the price after shipping translate to $79, which adds approx 100% to the
cost in-stores. I guess the next wave will involve ways of either making
shipping and the process of importing cheaper, or just circumvent it all
together with say 3d printing.

------
diminish
Hardware will die, when web sites or apps will give them for free (as a true
commodity). Imagine, you get a nexus tablet when you sign up for Gmail or
Google Apps.

~~~
bobbles
I can imagine something like every shopping trolley having a tablet built into
the handle that shows the store layout,specials near you, etc.

Would be pretty neat

~~~
petitmiam
[http://www.news.com.au/technology/well-aisle-be-its-a-
smart-...](http://www.news.com.au/technology/well-aisle-be-its-a-smart-
trolley/story-e6frfrnr-1226241466882)

I'm sure there is better out there though!

------
brador
2 cents: After the hardware break even point how does a hardware manufacturer
gain an advantage in such a market? Add malware to the build.

The manufacturers are faceless, nameless and blameless. There's no way for a
bad sale to really hurt them. Hence, no market incentive to keep it clean.

Expect these to go lower still, but personally I would stick to branded
tablets for anything requiring a secure login.

------
bradfa
It's called differentiation. If you don't have it, you're in a commodity
market (Android anythings). If you do have it, you're not in a commodity
market and generally hardware gross margins hover around 50% (or more!).

If you won't innovate and differentiate, then yes, hardware is dead. You won't
make any money these days making something someone else makes cheaply.
_MAKE_SOMETHING_ELSE!

------
jiggy2011
I guess the key will become content. Tablet makers will want to be "the only
tablet that can do X" where X won't necessarily be a technical hardware
feature but rather a deal made with a content producer to be the only platform
for their content to be distributed on.

That way you can sell devices at a huge markup despite the hardware being
identical to lower end models.

~~~
polyfractal
This is what Amazon seems to believe, although they are _marking down_ prices,
not marking up.

They appear to be fine with producing cheap, commodity tablets as a means to
enable more content distribution from their services. Classic razor blade
model. It's worked well for Kindle (ereader version) so far, and I imagine it
will work pretty well for their tablets.

When you have good content, you want to practically give away the vehicle that
delivers that content.

~~~
jiggy2011
It would be possible to come at it from the other direction though.

Let's say Apple decided to buy up some big content producer or network. Let's
say HBO because that's the one everybody seems to talk about.

They could now make that content exclusive to their devices, or perhaps even
models of their devices. Say you want to watch "game of thrones" you have to
buy the 16GB instead of the 8GB one of whatever. Despite the fact that there
is no technical reason for this to be required, you can then charge much more
money for the 16GB one, an order of magnitude more than the extra flash
storage is worth.

------
ansible
Do keep in mind that $35 USD in China is not directly comparable to prices in
the USA. And not just because of the cost of living in the USA.

There are no returns, for example. When you walk out of the store, that's it.
If there is any kind of problem, your main option is to just throw it away.
There is no tech support either.

------
nikcub
He seems to equate low price to mean there is no profit margin, which isn't
right.

There is obviously enough margin to get the device to the USA and sell it in a
retail store for $75 (a retail store that demands its own margins)

I'm surprised that seeing it at Fry's didn't change his mind to 'these things
are going to sell like crazy'

------
Nick_C
[OT] Apropos the recent discussion on third-party requests and Adblock Plus,
Ghostery and NoScript:

Wow, just wow. This website pulls in requests from _28_ third-party sites and
wants to run javascript from _21_ third-party sites.

This abuse is why users have NoScript et al.

------
trotsky
Confusing that he shops in Shenzen every "four to five months" but had only
"heard" that tablets had gotten cheap, what he's reporting on has been going
on for at least 18 months.

------
ariannahsimpson
Amusing then, that there is so much interest in hardware. A hardware company
seems to win a big prize in practically every hackathon I've seen in the past
year at least.

------
Datonomics
$56
[http://www.frys.com/product/6905837?site=sr:SEARCH:MAIN_RSLT...](http://www.frys.com/product/6905837?site=sr:SEARCH:MAIN_RSLT_PG)

------
Eduardo3rd
I'm pretty sure that this is the table from the end of the story.
[http://www.frys.com/product/6982177?site=sr:SEARCH:MAIN_RSLT...](http://www.frys.com/product/6982177?site=sr:SEARCH:MAIN_RSLT_PG)

I wonder how this compares to the Nexus 7 in terms of
usability/response/lag/etc.

~~~
betterth
Android 2.3, never going to get updated, crappy resolution, slow single core
processor...

Honestly, it's going to suck compared to a Nexus 7. Remember, Android 2.3 IS
NOT a tablet operating system, the first of which was 3.0, so it's basically a
7" non-cellular Android phone.

~~~
7952
And windows 95 was a terrible desktop operating system. But it still sold. The
people who are going to buy this won't care.

~~~
betterth
It wasn't crappy at the time. For those of us used to Windows 3.x it was
amazing.

This is more akin to selling Windows 95 on machines after Windows 98SE was
already out. At that point, yes, 95 was considered terrible.

------
Kilimanjaro
So, a $35 device can be sold at frys for $75 at 100% profit?

And you say hardware is dead?

------
praveenhm
Hardware is dead long back, long live hardware

------
bitwize
... except if you're Apple.

------
goggles99
Well why do you think that Apple has so much cash in the bank? (it is only
partly from the App Store skim).

