3 ms·

I may get flack for this, but that sounds ethically questionable. The sale has been made, why not just give the customer a better car for free?

CaliforniaKarl 7y ago
For chips, it’s possible for a chip to go through the production process, but have a defect in part of it. When that happens, the manufacturer disabled access to that part, and sells it as a lower-capability product. On the other hand, if everything came out good, then the manufacturer sells the part as the high-end product.
- asveikau 7y ago
  Yeah, I thought of when I first followed overclocking in the late 90s, and Intel had a reputation for selling artificially slow chips in those circles. But in that case rating the appropriate clock is a subjective exercise, and they don't want the part to start failing if pushed to its limits. GP here made it sound like it was rather more harmless in this case, not sure if that is a mistaken impression of mine or what.
- Osiris 7y ago
  Unless demand for the less expensive part exceeds the defect rate. AMD CPUs, especially the 3-core parts, were often unlockable by re-enabling the disabled cores in BIOS. Lucky buyers could get 4 cores for the price of 3.
deleted 7y ago
[deleted]
icegreentea2 7y ago
It certainly feels ethically questionable from a certain perspective. But we can look at it in a specific way. We want pricing to be fair. A typical customer's perspective of a fair price is that is should approximate the unit cost of production plus the up front development cost of a product amortized over units. In this view fairness, if a family of widgets all have the same hardware, and use the same based software to enable or disable different features, they should all have the same price. However, there's another view of fairness (or maybe just a desirable feature of the markey). It should be possible for a customer to purchase only the features required to meet their requirements, and that they should be able to spend less money on less features. Those two views of fairness can be in contradiction with each other. The ability of a company to be able to provide a family of products at a variety of feature and price points cheaply is aided by their ability to do software based control of features. Use of a single physical platform reduces cost (which aids the final customer). If a company had to price everything at a single feature/price point, the average customer will see an increase in price to pay for features they do not want. Anyhow, that's the argument. Still feels icky though.
ac29 7y ago
Because then no one would buy the more expensive, higher margin car, purchases of which are indirectly subsidizing the cheaper one. This would push its price up. The alternative is to design a car with a smaller battery pack. This would mean additional design work, and less efficiencies of scale. This would make the cost of both tiers of car go up.
- asveikau 7y ago
  I understand this, but it's shifty because they already sold a physical good at a certain cost at an agreed upon price. If they can't stand to offer the thing they already sold at a price they already got paid then maybe they should charge more. The way this is phrased it's just differing margins for the same physical good and no additional cost for the manufacturer to justify a higher price. (Not sure if this is an accurate assessment, but that is what I get from the comment.)
  - abofh 7y ago
    Let's imagine you need a cpu. Suppose that once r&d is considered, two chips (single/dual core) cost roughly the same to manufacture. I could sell everyone the 2 core processor and say sorry to customers needing less, you have to pay full price. Or I could maximize the market I can sell to, and offer the same product with a burned out pin that locks out the second core. Or even better, sell everyone a soft upgradable 1 core, so you buy the entry level product, and when/if you need it, you can buy into the upmarket model. But the important part here is: ignoring r&d. Yes, the hardware I'm selling you could do more, but you're subsidizing fewer engineers, so you only get access to their efforts, not every effort my company has ever produced.
    - asveikau 7y ago
      I don't need another over-explanation of such justifications. I referenced the phenomenon in CPUs elsewhere in this thread. This part: > Or even better, sell everyone a soft upgradable 1 core, so you buy the entry level product, and when/if you need it, you can buy into the upmarket model ... is still one that I would have trouble with, were I the manufacturer. I would be inclined to throw away profits on high end sales and price them all low for these scenarios, based on my desire to be fair to the customer and not run the thing like a casino with physically dubious upsells for what they already purchased. Yes you read that right. This is one reason why I am not in a position to be running Intel.

CaliforniaKarl 7y ago

For chips, it’s possible for a chip to go through the production process, but have a defect in part of it. When that happens, the manufacturer disabled access to that part, and sells it as a lower-capability product. On the other hand, if everything came out good, then the manufacturer sells the part as the high-end product.

asveikau 7y ago
Yeah, I thought of when I first followed overclocking in the late 90s, and Intel had a reputation for selling artificially slow chips in those circles. But in that case rating the appropriate clock is a subjective exercise, and they don't want the part to start failing if pushed to its limits. GP here made it sound like it was rather more harmless in this case, not sure if that is a mistaken impression of mine or what.
Osiris 7y ago
Unless demand for the less expensive part exceeds the defect rate. AMD CPUs, especially the 3-core parts, were often unlockable by re-enabling the disabled cores in BIOS. Lucky buyers could get 4 cores for the price of 3.

deleted 7y ago

[deleted]

icegreentea2 7y ago

It certainly feels ethically questionable from a certain perspective. But we can look at it in a specific way. We want pricing to be fair. A typical customer's perspective of a fair price is that is should approximate the unit cost of production plus the up front development cost of a product amortized over units. In this view fairness, if a family of widgets all have the same hardware, and use the same based software to enable or disable different features, they should all have the same price. However, there's another view of fairness (or maybe just a desirable feature of the markey). It should be possible for a customer to purchase only the features required to meet their requirements, and that they should be able to spend less money on less features. Those two views of fairness can be in contradiction with each other. The ability of a company to be able to provide a family of products at a variety of feature and price points cheaply is aided by their ability to do software based control of features. Use of a single physical platform reduces cost (which aids the final customer). If a company had to price everything at a single feature/price point, the average customer will see an increase in price to pay for features they do not want. Anyhow, that's the argument. Still feels icky though.

ac29 7y ago

Because then no one would buy the more expensive, higher margin car, purchases of which are indirectly subsidizing the cheaper one. This would push its price up. The alternative is to design a car with a smaller battery pack. This would mean additional design work, and less efficiencies of scale. This would make the cost of both tiers of car go up.

asveikau 7y ago
I understand this, but it's shifty because they already sold a physical good at a certain cost at an agreed upon price. If they can't stand to offer the thing they already sold at a price they already got paid then maybe they should charge more. The way this is phrased it's just differing margins for the same physical good and no additional cost for the manufacturer to justify a higher price. (Not sure if this is an accurate assessment, but that is what I get from the comment.)
- abofh 7y ago
  Let's imagine you need a cpu. Suppose that once r&d is considered, two chips (single/dual core) cost roughly the same to manufacture. I could sell everyone the 2 core processor and say sorry to customers needing less, you have to pay full price. Or I could maximize the market I can sell to, and offer the same product with a burned out pin that locks out the second core. Or even better, sell everyone a soft upgradable 1 core, so you buy the entry level product, and when/if you need it, you can buy into the upmarket model. But the important part here is: ignoring r&d. Yes, the hardware I'm selling you could do more, but you're subsidizing fewer engineers, so you only get access to their efforts, not every effort my company has ever produced.
  - asveikau 7y ago
    I don't need another over-explanation of such justifications. I referenced the phenomenon in CPUs elsewhere in this thread. This part: > Or even better, sell everyone a soft upgradable 1 core, so you buy the entry level product, and when/if you need it, you can buy into the upmarket model ... is still one that I would have trouble with, were I the manufacturer. I would be inclined to throw away profits on high end sales and price them all low for these scenarios, based on my desire to be fair to the customer and not run the thing like a casino with physically dubious upsells for what they already purchased. Yes you read that right. This is one reason why I am not in a position to be running Intel.