Originally Posted by thebland
All true. The Oppo is quite versatile. But do you have a Onkyo Caliber SSP in your theater or something of the Meridian pedigree? I mean, parts is parts...
That is because there is no $2000 giant killer SSP on the market yet - no one suggsted there is. All I'm saying is the technology may be at a point where someone could build it.
You are too hung up on the cost of parts. Do the math:
A Mach IV retails for $7,800. Lets say ADA gets $4,500 and the dealer gets $3,300.
Lets assume that the $4,500 is broken down as follows:
$ 1,500 parts (this is very generous)
$ 500 assembly
$ 600 overhead (SG&A) absorbtion
$ 1,000 R&D recovery
$ 900 EBIT margin (20%)
Now lets say someone changes the business model, and tries to sell 10x as many units of the same quality as the ADA, but at $2,000 instead of ADA $7,800. The model would look something like this:
First, you sell factory direct - no dealer margin.
$ 1,000 parts (operating at 10x the scale you can get the same quality part for less, lets assume 1/3)
$ 250 Assembly (operating at 10x the scale you can drive down assembly cost per unit lets assume 1/2)
$ 150 overhead (SG&A) absorbtion (operating at 10x the scale overhead cost per unit drops dramatically)
$ 100 R&D recovery (if you sell 10x more units R&D cost per unit drop by 10x, assuming the same R&D budget to develop the unit)
$ 200 software licensing (a state of the art room correction)
$ 300 EBIT margin (15%) (since you are selling 10x more unit, you are still making far more money at $300 per unit that the high end boutique manufacturer making $900 per unit).
This shows that it is economically possible to build and market a high end SSP for $2000, using the same quality parts, and spending the same on R&D as a high end manufacturer, while licensing state of the art room correction.
This is more or less what Oppo did to the universal players market, and it could be done with a SSP as well.