On Mon, 22 Dec 2008 03:19:30 +0100 "Marco Trevisan (Treviño)" <mail@3v1n0.net>
babbled:

quoted text
> Carsten Haitzler (The Rasterman) wrote:
> > seriously dropping camera isn't going to free up money for 3g. 3g is going
> > to cost many many many TIMES what the camera does. you're throwing out the
> > basketballs from the garage to make room for the hummer.
> 
> Mhmhmh... I'm not in that world at all. Please could you explain why a
> 3G chip would cost so much?

because the only chips available in low volume (like 5k, 10k, 20k) cost a LOT.
if you want high volume you cant buy a low-cost module, you need to develop it
yourself from the original schematics - and then pay a license fee. there is an
initial cost just to "get started" before you develop a single unit - this is
in the millions range. (depending who you go to). then you pay PER chip in the
range of $10-$50 LICENSE fees - you STILL have to manufacture the module
yourself too. so not including your own manufacturing setup costs.

now let's talk the volumes of freerunner. it's in the 10k's range (10, 20, 30
at most). lets assume 20k over 12 months (low but need to be conservative).
let's assume the LOW end of $1mil license. lets assume we have $20/unit
license. lets assume a further $500k module production setup fee. lets assume a
further $10/module production cost (production, testing, qa, all oveheads).

1m / 20k   = $50 / unit
500k / 20k = $25 / unit production setup costs
           + $20 / unit license fee
           + $10 / unit production costs
          --
             $105 / 3g modem

thats for 20,000 units. nokia and apple get to play the "mass production" game.
its not 20k - its 2million units or 5million or 10million or more. so the
equation is more like:
1m / 10m   = $0.1 / unit
500k / 10m = $0.05 /unit
           + $20
           + $10
          --
             $30.15 / unit.

less than 1/3 the cost. as best i know anyone selling pre-made "3g modules" so
you dont have to set up your own production is charging in the range of
$100-$300 per module (depending who you go to and the volume you buy). this is
where someone developed the module (did what nokia/apple etc. do) and now
re-sell their work. 1-offs i have seen for sale for $250 or so for a 3g module.
buy in bulk and you get a discount of course (thus the $100-$300 range). and the
fewer suppliers in between the better.

of course i am talking ballpark figures - these are not exact nor do not
indicate any particular chip or manufacturer. but they are about ballpark
"right". when you are apple and come and want to make 12m iphones - you get a
DAMN good price as you invest the money in doing your own 3g module run (based
on others original designs).

also there are license fees you pay per PRODUCT that uses 3g (a % of the total
cost of the product) - but i am not up on the details of these.

again - these are BALLPARK figures and intended to demonstrate how when you do
low-volume things like the freerunner you are in deep trouble trying to compete
- it's EXTREMELY HARD. i make no representation as to if this matches any chip
or is an amalgam of several and is even 100% accurate - or close. but it is
intended as an illustration of the kinds of costs you have to deal with. you
really need to give openmoko a break - or find a lot more open phone customers
willing to buy millions of open linux phones.

now remember - this is adding to the baseline COST. for every $ spent in cost,
om needs to try make a profit. to cover development costs, support, etc. etc. -
this is the only way you will also see it at a discount later. ie they lower
their profit when the device becomes "obsolete" and to do so u need a profit
margin to start with. so maybe you will take your component/base hw cost and
double it - that's retail. so... add a $100 part - see phone cost go up by $200.

of course if you are in the cut-throat retail channel business where you are
selling millions of devices each year and trying to compete with the $0 "free
phone with your plan" competitor - you shave profit margins a lot, but on
small-volume devices like the freerunner you need high margins to support a
company. as volumes go up - margins can come down - like pretty much everything
as the many of the same overhead costs apply to selling 20k freerunner as do
selling 10m freerunners, so not per unit.

-- 
------------- Codito, ergo sum - "I code, therefore I am" --------------
The Rasterman (Carsten Haitzler)    raster@rasterman.com


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