Maker Pro
Maker Pro

how does the consumer electronics market actually work?

  • Thread starter Ozone Hole near South Pole
  • Start date
O

Ozone Hole near South Pole

Jan 1, 1970
0
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/outpost.com 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)?
 
M

Mantra

Jan 1, 1970
0
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/outpost.com 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)?

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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