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> Is it really high capital intensive? I make websites and i m not rich. If you work in the industry and aren't familiar with concept yet, it's something that

> Is it really high capital intensive? I make websites and i m not rich. If you work in the industry and aren't familiar with concept yet, it's something that you would greatly benefit by reading up on. Capital intensity is about the RATIO of capital costs to operating costs. Compare the cost of developing a website with the cost of operating it. In general, the former are much higher than the latter--though there are some exceptions. Actually, the total (absolute, not the ratio) cost is related to a third factor I didn't even list--constant or increasing returns to scale. This means that products can be VERY expensive to develop before an extra dollar of investment won't result in more than one additional dollar of profit. No surprise that there's a synergistic relationship here with capital intensity (very low per-unit costs). This isn't going to be super-applicable if you're building websites for small companies, but if you consider how much it would cost to develop a commercial operating system that was on par with what's currently out there (Android/iOS/Linux/MacOS/Windows/etc...) it would many millions on the low end to billions if you couldn't rely on open source.

buboard 7y ago
i m not in the industry but i couldn;t find a definition such as the one you re mentioning > Capital-intensive industries use a large portion of capital to buy expensive machines, compared to their labor costs. The term came about in the mid- to late-nineteenth century as factories such as steel or iron sprung up around the newly industrialized world. i dont know, computers are dirt cheap, and IT is famous for being particularly easy to enter into as a sector. I don't think i m the exception
- liara_k 7y ago
  There's more to "capital" than a physical machine. Compare the cost of creating software (often many millions) to the per unit cost of copies of that software (zero). Compare the cost of developing a new processor architecture and setting up the manufacturing plant (billions and billions) compared with the per-unit cost. Compare the cost of building out a physical network infrastructure to cover a city (many millions) compared with the cost of connecting a single user to the box down the street. Compare the cost to create all of Facebook's hardware and software infrastructure to the marginal cost of adding one more user to the platform.

buboard 7y ago

i m not in the industry but i couldn;t find a definition such as the one you re mentioning > Capital-intensive industries use a large portion of capital to buy expensive machines, compared to their labor costs. The term came about in the mid- to late-nineteenth century as factories such as steel or iron sprung up around the newly industrialized world. i dont know, computers are dirt cheap, and IT is famous for being particularly easy to enter into as a sector. I don't think i m the exception

liara_k 7y ago
There's more to "capital" than a physical machine. Compare the cost of creating software (often many millions) to the per unit cost of copies of that software (zero). Compare the cost of developing a new processor architecture and setting up the manufacturing plant (billions and billions) compared with the per-unit cost. Compare the cost of building out a physical network infrastructure to cover a city (many millions) compared with the cost of connecting a single user to the box down the street. Compare the cost to create all of Facebook's hardware and software infrastructure to the marginal cost of adding one more user to the platform.