From: mccall@mksol.dseg.ti.com (fred j mccall 575-3539)
Subject: Re: Rude behavior on this group.
Organization: Texas Instruments Inc
Distribution: na
Date: Thu, 17 Dec 1992 18:53:40 GMT

In <1992Dec17.170011.23616@cbnewsh.cb.att.com> rkl@cbnewsh.cb.att.com (kevin.laux) writes:

>In article <1992Dec16.215923.4494@mksol.dseg.ti.com>, mccall@mksol.dseg.ti.com (fred j mccall 575-3539) writes:
>> In <1992Dec15.192137.6763@jupiter.sun.csd.unb.ca> hwhalen@jupiter.sun.csd.unb.ca (Hugh Whalen) writes:
>> 
>> >In article <1992Dec15.183951.23430@mksol.dseg.ti.com> mccall@mksol.dseg.ti.com (fred j mccall 575-3539) writes:
>> >>In <1992Dec15.054239.12858@microsoft.com> richs@microsoft.com (Rick Schaut) writes:
>> 
>> >[enormous amount of stuff on passing through costs deleted]
>> >>
>> >>And you can bet that those costs are 'passed through', or you're
>> >>looking at a vendor who won't be in business very long.
>> >>
>> 
>> >Not necessarily. For example.

>	[ profit scenario deleted ]

>> Based on ZERO evidence that this happens, and the complaints of a lot
>> of people who don't WANT the frigging software.  Once again, a
>> somewhat less than realistic example.
>> 
>> In a highly competitive market, you don't have the kind of profit
>> margin to eat those kinds of costs.  Take that 20% profit down to
>> around 2%-5% and see what your numbers do.
>> 
>> >Cost is only one factor that a business considers when setting a 
>> >selling price. Other factors such as price/demand, competition, etc. 
>> >are often as important or more important.
>> 
>> You're assuming a non-competitive market that allows large initial
>> profit margins.  Do you really think that that's the kind of market
>> that PC cloners are looking at?

>	ZERO evidence?  What you have here is an opinion.  (And opinions
>are what you have when you don't have the facts.  (If you had the facts, you
>wouldn't need an opinion.))

All you have to do is look at the number of cloners to know that it is
a highly competetive market with very small profit margins.  

>	Complaints of a lot of people?  Who said so?  And how does HE know?

Geez, all you have to do is LISTEN.  Why do you think this keeps
coming up as a thread; serendipity?

>	My gripe is that the example was illustrative of the Law of Diminishing
>Marginal Returns, a very basic economic principle.  You seem to be saying that
>this is no longer applicable to the marketplace.

No, I seem to be saying (I hope -- since it IS what I am saying) that
in a highly competetive market (like CP clones) profit margins are
going to be pushed to the bone.  If you add a feature that has a cost,
WHATEVER THE COST, you are going to have to pass that cost through or
start losing money (because you started from a situation where profit
margin was quite small -- any costs pushes you over to a loss per
unit). 

>	Btw, which profit margin are we talking about?  Gross or net?  From
>the example, it's gross.  The 2-5% range would be a good figure for net.  And
>net would include those other factors mentioned.

I'm talking about net.  I'm not sure what everyone else is using.
After all, the net profit per machine is really the only one that
matters.  If I have a gross profit per machine of 100% but an overhead
that more than consumes it, I'm losing money.  The idea of selling
stuff is to make money.

-- 
"Insisting on perfect safety is for people who don't have the balls to live
 in the real world."   -- Mary Shafer, NASA Ames Dryden
------------------------------------------------------------------------------
Fred.McCall@dseg.ti.com - I don't speak for others and they don't speak for me.
Newsgroups: comp.os.ms-windows.advocacy