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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 th

by 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.
- TomVDB 7y ago
  Let’s take this way of thinking to the field of software, where every additional license sold has essentially zero cost. Are software companies allowed to charge a price for their free-to-produce products at all? If they are, how would you justify that? And why would that justification not apply to CPU vendors, if they’d label their hardware as freebies where you’re just paying for a perpetual license?
  - asveikau 7y ago
    Software is not a physical good in the same way a CPU or a car is. Also, as you seem to acknowledge, when you purchase software, you are technically acquiring a license. Remove for a moment that this is controversial for some (see FSF). I think it would be a tougher sell to say when you buy a car or a piece of silicon that you don't own it. (There is firmware and microcode, sure.)
    - TomVDB 7y ago
      What about software that comes with a license key dongle? Now you're buying hardware as well. :-) > Also, as you seem to acknowledge, when you purchase software, you are technically acquiring a license. That's really just semantics. When you buy a mainframe with some CPUs disabled, you're not only buying the hardware, you're also buying a license for the OS, which includes the ability to use a certain number of CPUs of the machine. You're commenting earlier that you'd price the higher SKU the same as the lower SKU, but I think it's just as likely that you'd simply not make a higher SKU because there'd be no extra profit in doing so. It may seem perverse that hardware is being sold with capabilities deliberately crippled, but doing so if often one of the only ways to justify developing these higher SKU capabilities to begin with. This kind of product differentiation makes it possible for customers to buy a higher SKUs that otherwise simply wouldn't exist.

by abofh 7y ago

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.

TomVDB 7y ago
Let’s take this way of thinking to the field of software, where every additional license sold has essentially zero cost. Are software companies allowed to charge a price for their free-to-produce products at all? If they are, how would you justify that? And why would that justification not apply to CPU vendors, if they’d label their hardware as freebies where you’re just paying for a perpetual license?
- asveikau 7y ago
  Software is not a physical good in the same way a CPU or a car is. Also, as you seem to acknowledge, when you purchase software, you are technically acquiring a license. Remove for a moment that this is controversial for some (see FSF). I think it would be a tougher sell to say when you buy a car or a piece of silicon that you don't own it. (There is firmware and microcode, sure.)
  - TomVDB 7y ago
    What about software that comes with a license key dongle? Now you're buying hardware as well. :-) > Also, as you seem to acknowledge, when you purchase software, you are technically acquiring a license. That's really just semantics. When you buy a mainframe with some CPUs disabled, you're not only buying the hardware, you're also buying a license for the OS, which includes the ability to use a certain number of CPUs of the machine. You're commenting earlier that you'd price the higher SKU the same as the lower SKU, but I think it's just as likely that you'd simply not make a higher SKU because there'd be no extra profit in doing so. It may seem perverse that hardware is being sold with capabilities deliberately crippled, but doing so if often one of the only ways to justify developing these higher SKU capabilities to begin with. This kind of product differentiation makes it possible for customers to buy a higher SKUs that otherwise simply wouldn't exist.