> -----Original Message-----
> From: Hugh Gundersen
>
> On Tue, 4 Jul 2006 10:09:18 -0400, you wrote:
>
> Chuck
>
> On the 4th of July you are missing the real point of mass production.
>
> As a rule of thumb (not to be confused the Olde English version)
> anything that is manufactured for retail sale has the COST
> multiplied by
> at least 4 in small companies and 8 in larger ones.
>
> That is why the washer that you can buy for 2c at the hardware store
> cost $2 from Dell. (Ok so that's 100%) but get the drift.
>
> If you ran Dell your overheads will be that much more - do you have a
> service desk (yes the brown one in the back room) Does
> anybody sit there
> (Only you when the phone rings)
> Hugh
I think you are missing the whole economies of scale theory of mass
production. Using your analogy, the washer that the local hardware store
sells for 5 cents, Home Depot can sell for 2 cents because they get a lower
cost by buying from the manufacturer in bulk. In the same way, Dell should
be able to buy fans at a lower per item cost than an OEM small time builder.
Chuck may not be able to provide full time telephone support because he
would spend too much time waiting for the phone to ring, making his costs
very high per support call. On the other hand, Dell can have a centralized
tech support center that employs hundreds of people answering calls from all
over the world almost continually. This reduces their per call cost. And,
Dell can locate that call center in India and further reduce its costs.
Dell sells direct, eliminating the "middle men," further reducing the number
of steps where addition profit/costs can creep in. Dell can mechanize its
production line and use custom built components to further reduce production
costs. Dell is designed to mass produce identical units at the lowest
possible cost with ACCEPTABLE quality.
I think any small builder will agree that they cannot compete on price with
the likes of Dell, HP, Compaq, Gateway, eMachine or other mass produced
computers. When I look at the advertised prices in the Sunday ads, I know
that I cannot compete on a line item quote basis with the general specs to
build my own systems. But I realize that I can purchase higher quality
components that can be replaced or upgraded "off the shelf."
Sometimes I think some of the people on this list forget that Dell is a
business and as such, it major goal is to make money. As long as they can
fill a need, they will be successful and will have satisfied customers. Not
all people will be satisfied with Dell, but that does not mean Dell is the
devil. I don't agree with some of their policies, but then, I have never
purchased a Dell.
I am sure that Dell has done testing to determine the needs of the average
user as far as case ventilation, and implemented the lowest threshold
necessary. That means the majority of users will get satisfactory results,
but some will feel the need for additional fans. They provide the means to
add the additional fans. The end user can easily add a fan for a couple of
bucks. If Dell added the fan to every unit, it would increase the cost to
the users that did not need the additional fan. So Dell goes for the
price/performance point that will maximize their profits.
Just my thoughts for this 4th of July.
Jim Maki
[EMAIL PROTECTED]
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