Re: Fast400 Value to iSeries community is less than zero

On Friday 09 November 2001 10:48 am, James Rich wrote:

> Yes.  The small customer says, "Slower, smaller capacity hardware is
> cheaper to produce.  Those lower prices should mean I pay less for the
> machine.  I am getting screwed if I have to pay for high-powered hardware
> that is then artificially slowed."

Your response is a definite, "No it isn't and no you are not." To produce a
seperate line of hardware to address the lower end of the market would
require a different manufacturing line in a plant. The costs associated
with this can be very large. If IBM were to need to manufacture a different
processor configuration for each price point in the market the overall cost
would he higher to them than the cost of manufacturing all the processors
on one production line and just licensing them to different customer
requirements.

The proof of this is that IBM is the one paying the costs. If they could be
saving money on the manufacture, they would be. Whether or not they'd pass
that on is debatable maybe, but I don't think they chose the CFINT method
of handling this so they could pay higher marketing costs.

> The big customer says, "I paid a premium for high-performance.  My
> expensive machine has the same hardware capacity as the inexpensive
> machine.  Why don't I get a lower price if the same hardware can be sold
> more cheaply?  I am getting screwed!"

"No, you are not." Because IBM offsets some of its manufacturing costs by
licensing some machines to smaller users, the overall cost of delivery to
the big customer is reduced so they pay less, not more. IBM is not crowding
out big deliveries by packing small orders into the production line. They
are letting the production line run at optimum capacity and they are using
the smaller licenses to offset some costs.

That would be my answer, but that was just off the top of my head. ;-)

> James Rich
> james@eaerich.com

--
Chris Rehm
javadisciple@earthlink.net

And thou shalt love the Lord thy God with all thy heart...
...Thou shalt love thy neighbor as thyself. There is none other
commandment greater than these. Mark 12:30-31