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DVD Player Maker's Margins just $1

Posted by ryuzaki0 on from the buyer's-market dept.

callipygian-showsyst writes "This news.com story tells how Chinese DVD player manufacturers are only making $1 margins per player! The story says that 'Commoditization is hitting China's DVD player manufacturers hard, according to researcher iSuppli, Between January and May, the average selling price of a DVD player exported out of the Guangdong province came to $40.80, leaving just about $1 in profit margins for the manufacturers.' You wonder if other business, like low-end PCs hardware, are in similar trouble."

7 of 397 comments (clear)

  1. Cell phone makers would be jealous... by datastalker · · Score: 5, Insightful

    ...since they sell their hardware at a loss. (Granted, they get money from the service subscription.) Microsoft loses billions of dollars on the XBox, to sell games. This is common, and will be getting moreso. It won't be long before hardware is essentially free, and the software/services you buy are where the money is generated.

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    1. Re:Cell phone makers would be jealous... by tsunamifirestorm · · Score: 5, Insightful

      The problem is that those companies (cell phone, video games) can sell additional games, service plans etc. while the DVD player company has no control over where DVDs are bought from (if the company even makes DVDs)

    2. Re:Cell phone makers would be jealous... by Swamii · · Score: 5, Insightful

      Microsoft: hardware will be essentially free, software will pay the bills.

      OSS: software will be free, services will pay the bills.

      Apple: software will be essentially free, hardware will pay the bills.

      Sun: hardware will be essentially free, services and software will pay the bills.

      Me: businesses will make money any way they can.

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  2. And that, my friends... by Meat+Blaster · · Score: 5, Insightful
    Is why outsourcing is such a fantastic idea.

    You play to the strengths of the manufacturing of each country, take out the middleman, and we no longer have to pay inflated costs for everything.

    Kind of wierd to think that it's cheaper to get something made and shipped halfway around the world than it is next door, but if it makes a dollar go farther in this economy I'm all for it.

    1. Re:And that, my friends... by dourk · · Score: 5, Insightful

      You, apparently, don't work in the manufacturing industry.

      I do. I produce my products in Southern California, even though I pay a huge penalty in wages and insurance and taxes to do so.

      One of my largest competitors is literally around the corner. His products are made in Taiwan/China.

      Even so, MY retail price is lower than his. And my '05 model products are already stocked on the shelf. If he's lucky, his are in a container on a ship waiting to get through customs.

      Your dollar isn't going any farther. It's just increasing somebody's profit rather than paying wages of my American neighbors.

      --
      Wake up.
  3. no by Trepidity · · Score: 5, Insightful

    Fair is defined as a level playing field. If we are playing a game of soccer, and your team cheats, the match was not fair. If no one cheats, it is a fair match. It is not required that our teams like each other: it's quite possible to play a fair match against someone you absolutely despise.

    Fair competition is the same. If a government is heavily subsidizing a company, that's not fair competition. If a group of companies is colluding to drive a competitor out of business, that's not fair competition. If lots of people are making the same thing, thereby driving down prices, that's fair competition.

    What you seem to be looking for is no competition, wherein either a government or cartel sets prices, rather than the market. That has nothing to do with fair competition, and is really about the exact opposite.

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  4. Re:Its all about volume by Waffle+Iron · · Score: 5, Insightful
    Since it takes fewer people to make the same # of items it did 10 years ago.

    That's not necessarily so. I read an interesting article a while back (I don't remember where, sorry), that covered Ohio Art's outsourcing of Etch-A-Sketches to China. It said that it now takes significantly *more* labor to put together each Etch-A-Sketch because the factory in China is less automated than the American one was. However, the labor is so much cheaper that the overall production cost is still lower.

    IMHO, the US is being lazy and shortsighted by trying to move so much manufacturing overseas instead of focusing on better automation. The manufacturing jobs will be lost either way, but at least with automation we wouldn't be allowing our national capabilies for making anything other than lawsuits or french fries atrophy. We wouldn't be building up such massive trade deficits either.