Re: Fast400 Value to iSeries community is less than zero

["Mike Naughton" <mnaughton@xxxxxxxxxxxx>]

Well said, Chris! This is what I was trying to get at with my example, but
maybe it didn't come across. You've expressed it very well. Seems simple
enough to me. . . . :)

midrange-l@midrange.com writes:
>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


Mike Naughton
Senior Programmer/Analyst
Judd Wire, Inc.
124 Turnpike Road
Turners Falls, MA  01376
413-863-4357 x444
mnaughton@juddwire.com