Originally Posted by David_B
There's much more that goes into the cost of making a tv besides manufacturing cost.
Umm, not really. The "cost of making a TV" is pretty much defined as the manufacturing cost. Perhaps you are referring to amortization of R&D and physical plant, packaging and logistics expenses, sales and marketing expenses as "costs of building a TV" in addition to the actual COGS (physical materials, pre-purchased parts and the costs of transforming them through the aforementioned plant into finished goods)?
If so, that's fine; it changes nothing. You can remove 100% of the Smart TV features from a modern TV as well as the tuner and you wouldn't cut the build cost much at all. I gave you $150-200. You think it's more? If you start including "all the other costs" it doesn't change. Arguably it gets worse. Any model-specific R&D would be amortized solely
over your high-end set, not spread across your product line as would any line re-tooling. Any custom packaging and branding would be the same.
It's probably true that every dollar you saved in reduced COGS would be spent elsewhere on this "cheaper to build" TV making it no longer cheaper to build from an accounting perspective. Clearly, my business experience and MBA doesn't qualify me to discuss this matter.
Rogo, you obviosly have never worked in the financial department of a corp that designs and builds and sells consumer goods. You realy should stop guessing.
I never have worked for a comparable company and yet I've identified the cost drivers and discussed how the accounting works. I can also explain somewhat approximately why adding $10 worth of content to a product adds a significant multiple of that to the retail price of it. Is there anything else you need me to explain?
There's a difference between random guessing and educated guessing. The point isn't whether the final price of this TV that has no market would be $10,000; the point is the economics don't work. I've explained why that's the case.