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how does the consumer electronics market actually work?

Discussion in 'General Electronics' started by Ozone Hole near South Pole, Apr 18, 2004.

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  1. Hi,

    I have noticed that many tech devices of the day are manufactured by
    relatively unknown OEMs. They actually use fairly similar chipset,
    have fairly similar spec .... Qutie likely, they follow the same
    reference design as well...

    Take a DSL router as an example, we can probably buy that for $50 in
    amazon/ etc. Anyone knows how the profit is distributed
    along the food chain (e.g. what's the typical mark up by the
    retailer/ wholesale, typical cost of the electronic/mechanical
    components, money involved to pay for reference design/ patent or
    other IPs)?
  2. Mantra

    Mantra Guest

    Most commodity products use reference-designs that come from IC
    manufacturers: things like USB hubs are almost invariably straight
    from the core-chipset IC manufacturer's application note - zero
    technical creativity, zero technical uniqueness, pure commodity solely
    defined by cost of goods.

    For commodity ICs the IP is generally part of the price of the part,
    e.g. a LAN controller or USB controller IC. For SOCs there is usually
    a separate IP cost since you can mix-and-match components. Different
    vendors have different schedules depending on order size, vendor, IP
    owner (not always owned by the foundry but 3rd party boutiques), etc.

    It's easy enough to throw together a pro forma to estimate the cost
    models. You just need to do some research on a likely chain and its
    costs (there is no universal).

    Because of globalization, ERP systems and telecommunication, chains
    tend to be very short - there's little to stop a major retailer
    (Walmart, Best Buy, Fry's) from going direct to the factory to make a
    bulk purchase. Wholesale doesn't really exist: a lead company like
    LinkSys might take the order from Fry's but have the product shipped
    direct air freight from one of their subcontracting factories to
    each-and-every retail outlet. If you are Dell, you cut out even the
    retail and ship from 3rd party suppliers' factories straight to the
    end-customer (e.g. monitors come straight from Sony or Hitachi with
    Dell labels applied).
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