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'[OT] Re: Cheaper PICs !'
1999\04\19@225257 by Wagner Lipnharski

picon face
I don't know if my 2 cents worth 2 or 1 cent, but worth something:

You can yell, you can scream, you can paint in 20 ft letters size, that
your grass is the greener one in the neighborhood, until you look over
the fence and see that shinning beautiful green grass as you never saw
before, without a single yellow spot, then you would try to find out how
your neighbor does that.

Weeks ago somebody said that I should millionaire to test several
microcontrollers, new at the market, from Atmel, Motorola, Texas, SST,
Siemens and others, but to tell you the truth, I don't see just one TV
channel all my life, nor read just one magazine, nor got attached to
just one electronic supplier, and barely I waste not more than $15 and a
couple of days to put a new mcu working.  If $15 or a couple of days
makes me millionaire... I am sorry but something is wrong with this
picture.

Most microcontrollers have assembler and C compilers just for free at
the internet, and you don't need to have the best one just to make few
programs.  Almost "all" microcontrollers can use external program
memory, as eprom, and a cheap and nasty eprom burner can produce
external code for all of them, not talking about flash memory to be used
there too.

Yes, I am encouraging you to test other chips, I am not against
Microchip, I am not against the PIC, I am in favor to your future, as a
technician, as a future engineer, that can think "which one would be the
best for this new project?" and decide it without emotion, but with
knowledge, to not get surprised with your tomorrow's neighbor greener
grass.

And probably in lots of them PIC chips would still being chosen, but as
your decision, not from somebody else.

In 1975 I was using Zilog Z80, and I still have some emotional
connection with this chip, the last thing I build with Z80 was in 1992,
since new chips just got better than that, and I am sorry Zilog people,
you guys need to run fast, at 30 MHz, 5/3.3V @ 2ma, 32k flash code, 8k
internal Ram, 4k eeprom and 32 I/O ports, uart, spi, i2c, wtd, power
control and a little other tricks, for only $4.00 for single quantity,
if not, the buggy man will catch not only you, but all others that don't
follow the market expectancies.

... remember IBM that did not believed in the PC market in the 80's,
"just a toy" several top management said, "who in the hell would want to
do data processing at home?", = I was there, I saw it =, they just
forgot about a little detail, "evolution and mass production", why do
you think Microsoft doesn't use the letters I, B and M at their logo?
perspective? vision? they play chess better? Bill is a genius?

Just take a look around and probably you will find a better way to make
your front yard grass greener than your neighbor...

Wagner.
http://www.ustr.net

1999\04\20@001338 by Ravi Pailoor

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Wagner,


Wagner Lipnharski wrote:

{Quote hidden}

Just like you, I was using Z80 from 1980 till 1994 for all my projects and
still have some attachment to it. Somehow I could not switch to Z8. In 1994
I switched to PIC and am still with it now. Any day if I have to choose a
processor for my projects, I would stick to Z80 if nothing equivalent comes
from Microchip.

Pailoor

=================================================
For Embedded Controls Solutions and Custom Designs

CHIP TECHNOLOGIES - Member, Microchip Consultant Program
Bangalore - INDIA

Email   : spam_OUTchiptechTakeThisOuTspamvsnl.com
Webpage : http://business.vsnl.com/chiptech ( updated 16th April 1999 )

1999\04\20@092222 by Andres Tarzia

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>From: Wagner Lipnharski [.....wagnerlKILLspamspam@spam@EARTHLINK.NET]
>Sent: Monday, April 19, 1999 23:52
>To: PICLISTspamKILLspamMITVMA.MIT.EDU
>Subject: [OT] Re: Cheaper PICs !
>
>Yes, I am encouraging you to test other chips, I am not against
>Microchip, I am not against the PIC, I am in favor to your future, as a
>technician, as a future engineer, that can think "which one would be the
>best for this new project?" and decide it without emotion, but with
>knowledge, to not get surprised with your tomorrow's neighbor greener
>grass.

You are absolutely right.
"If your only tool is a hammer, then to you all of your problems will look
like a nail".

More and more processors out there -from ANY manufacturer- will only benefit
all of us.

Kind regards,
Andres Tarzia
Technology Consultant, SMART S.A.
e-mail: .....atarziaKILLspamspam.....smart.com.ar

1999\04\20@133801 by Andres Tarzia

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Answering two messages in one...

Andres Tarzia wrote:
> ... There are an awesome lot of variables to take
> into account when fixing prices, and customer opinions are not even near
the
> top of the list.

Tjaart van der Walt wrote:
>If competitiveness is not close to the top, they should re-think
>their pricing structures. (Hey, *we* can help them ;) )

Mark A. Walsh wrote:
{Quote hidden}

First of all, I have to say that I am on a different business. Electronics
is just a hobby for me.

Now, suppose I design a home-made digital answering machine using some uC,
some memory, some interface chips/discrete parts and a home-made PCB. The
case is ugly. The display is rude. I spend $30 just for buying the parts.
Now, if I were to market this product, which price should I set for it?
Surely, CUSTOMER OPINIONS will be that they'd find a much nicer-looking
digital answering machine for $15 at any electronics shop. And it is
smaller. And it allows more time for messages. Now what? Should I sell it
for $10? I spent $30 just for the parts! And I expect some money for my
work...

What I mean is that there is a bottom price at which you can sell a given
product. Surely you can't sell it at a lower price than its cost, or you'll
lose money. Then you have a structure to maintain (all those nice .PDFs we
all love takes money to write, for example) and a bunch of investors who
demands some money back. And there are government taxes. So you have to sell
the product for some amount money OVER your cost. These considerations, and
others that I am not writing here, come way BEFORE any customer opinion.

Then there are marketing considerations. If you sell your product (a good
product) at $0.03 per part, in a market where the competition is charging
$10 per part, you will sell a lot of them, but you will not recover your
money and will go out of business faster than you can say "PIC". On the
other hand, if you charge $100 per part, you could surely count units sold
using just one hand, and you'll go out of business anyway.

There is an "optimal" price for any product. That is the price where your
income is maximum. A lower price and you'll get less money (although you may
sell more units) because of a slimmer margin. A greater price and you'll get
less money because of less units sold.

Sadly, sometimes a market is driven by huge companies and the "optimal"
price is too high for starters, hobbyists or small companies. For example:
does the Xeon have to have such a high price tag? Some other times the price
is good, but the selling terms kills any small quantity customer. Try buying
GPS chipsets. They sell for $30 or so per chipset. But they only sell you
thousands at a time (in one case, no less than 100,000!). Forget about
buying just a couple for your home project.

I don't know what is driving the PIC prices, but as I said before, I don't
think that we, as customers, will have a big enough impact as for forcing
Microchip to lower prices JUST FOR OUR OPINIONS. Now, if Atmel, Motorola,
and/or others start producing alternatives at a lower cost, that is a
different story...

Excuse me for the message lengh...

Regards,
Andres Tarzia
Technology Consultant, SMART S.A.
e-mail: EraseMEatarziaspam_OUTspamTakeThisOuTsmart.com.ar

1999\04\20@142716 by Roland Andrag

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Someone else who understands capitalism!

<snip>

>There is an "optimal" price for any product. That is the price where your
>income is maximum.
Yes!

> Now, if Atmel, Motorola,
>and/or others start producing alternatives at a lower cost...
Microchip will just have to follow..

1999\04\20@150921 by Wagner Lipnharski

picon face
Andres Tarzia wrote:
[snip]
> Now, suppose I design a home-made digital answering machine using some uC,
> some memory, some interface chips/discrete parts and a home-made PCB. The
> case is ugly. The display is rude. I spend $30 just for buying the parts.
> Now, if I were to market this product, which price should I set for it?
> Surely, CUSTOMER OPINIONS will be that they'd find a much nicer-looking
> digital answering machine for $15 at any electronics shop. And it is
> smaller. And it allows more time for messages. Now what? Should I sell it
> for $10? I spent $30 just for the parts! And I expect some money for my
> work...
>
> What I mean is that there is a bottom price at which you can sell a given
> product. Surely you can't sell it at a lower price than its cost, or you'll
> lose money. Then you have a structure to maintain (all those nice .PDFs we
> all love takes money to write, for example) and a bunch of investors who
> demands some money back. And there are government taxes. So you have to sell
> the product for some amount money OVER your cost. These considerations, and
> others that I am not writing here, come way BEFORE any customer opinion.

You would be surprised how many companies define their product prices to
the market based upon their internal costs, instead define their
internal structures and costs based on what the market would pay for
their products.

It looks like it explains why so many companies just open and close. It
looks like that they need to go back to the first grade school and start
all over again.

Your example is perfect and you touched right into the wound.  You
simply don't see any home made VCR or home made PC motherboards, right?
and this happens because apparently everybody all over the world just
did learn that it doesn't worth anymore...  just let the east produce it
by millions.  Can you just imagine how much is the real factory door
cost of a hi-fi svhs VCR? the ones you can buy at any electronic shop by
$400? probably it cost no more than $28. Can you imagine how much is the
factory door cost for a PC serial mouse that you can buy with the db9
connector, cable, mouse with keys and electronics inside, installation
diskette encapsulated in a plastic blister, that you can buy for only
$4.00? probably less than 60 cents. What about a PC 101 keys keyboard
for $8.00 at several stores of even by mail?  You would never try even
to think to produce it at home to make some money.  You would be calling
yourself dumb idiot, right? Just think about how much it would cost to
home made a PC keyboard...

But remember, that mouse producer would use the same kind of electronics
that you would use, cable and so on, the big difference is "research".
If the research is not well done, even a million units a day could cost
them $10 per unit, and they will get flatten broke fast.

For sure your electronic answering machine would have components cost
reduced to $12 in 5 thousand units production, and probably the final
cost can be around $5 or $6 if produced in 100k units with a good
research just about everything, then, you can think to sell it by $20 at
Target or Wall Mart, and make from $2 or $2.50 of profit per unit.

The free market price turns it nice, the customer is not so dumb, and
can analyze something, learning day by day. Why I should purchase your
answering machine, a not known brand, by $20, without any guarantees
that your company would stay alive to fulfill the 12 months warranty, if
I can buy same thing from AT&T or Bell South for only $15?  In this
case, the company name worths much more than the product itself.

This is why you pay more for IBM, HP or Compaq machines, they have a lot
of other things behind their product front panel, but you can choose not
to buy from them.

Going back to the point, if the .pdf files and nice webpages are really
necessary to you be able to produce your equipment, then stick to the
ones who include the cost of that support into their products.  All chip
producers print all the necessary technical data-sheets to allow
everyone to be able to understand their chipsets.  The problem is that
some people just don't know it, or don't know even how to get it, or
even with the books handy they are just lazy or ignorant enough to not
understand even the book index. You know how to recognize those people.
There are very few chip producers that don't have a webpage or don't
offer all the info via Internet. They all know that information is the
point of sale.

So, it looks like that if for example Microchip has expensive products
because their internal cost to support their customers with "more
information" is higher than the others, it is your choice to pay for
that, but only if you need it.

But it still a decision to be made from "your own company" to adapt your
final cost based on your product cost =OR= do the other way around (the
right one). If stated that you can not produce a reliable competitive
answering machine for less than $6.00, just forget it and find out a
different device with less competition. It can be the most important
decision your company would do, to be alive or dead soon.

Wagner
http://www.ustr.net

1999\04\20@152351 by Bob Drzyzgula

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Perhaps you have noticed my signature line:

> ============================================================
> Bob Drzyzgula                             It's not a problem
> bobspamspam_OUTdrzyzgula.org                until something bad happens
> ============================================================

I put that there, because there really are a great number
of things that are explained by the cute little saying:
"It's not a problem until something bad happens".

In many cases, including the topic at hand, this is a
symmetrical observation:

* On the one hand, Microchip is not going to view their
  pricing as a "problem" until and unless "something bad
  happens". In Microchip's view, the primary "bad thing"
  that could happen is that their overall profits, or
  rate of profit growth, depending on how they think
  about things, would decline. There are of course two
  primary componants to profit: Sales volume and profit
  margin. The two are linked in a complex manner which is
  a function of things like labor costs & productivity,
  factory utilization, economies of scale, etc. But
  generally, to make more money, they have to find a
  balance point at which the equation 'profit equals
  units sold times profit per unit' (which is actually a
  sum across all parts) is at a maximum. For a company
  that has a great number of parts to sell and costs
  associated with selling those parts, this is a very
  complex formula indeed. In some cases, selling fewer
  parts at a higher margin will actually be optimal,
  much to the chagrin of long-time customers.

* On the other hand, this "bad thing" is not going
  to happen if customers do not stop buying Microchip
  products. If all one ever does is whine about the price
  while buying them at the same (or greater) rate as ever,
  no manufacturer is going to heed the whining. The cold,
  hard fact of the matter is that customers have to *stop
  buying PICs* before Microchip will ever believe that
  their prices are too high. This is the only reliable
  barometer that they have. Thus, the other side of my
  aphorism suggests that: "If you want someone to believe
  that there is a problem, then you have to allow or
  arrange for something bad to happen." And in this case,
  you have to understand that Microchip doesn't believe
  that whining is a bad thing in and of itself -- whining
  is merely human nature.

You can try this at home. The next time a customer,
a vendor, a pointy-haired boss, or some other associate
persists in a behavior or point of view that you think is
dead wrong, try applying this rule. What is it that you
think is wrong with the other person's point of view,
and what is it that would convince them that they were
wrong? Chances are that you think that there could be a
problem with it, and chances are that the other person
doesn't think so because nothing bad has happened yet.
Understanding this, you will usually have two choices:
Deliberately let something bad happen (to be used with
great restraint and moderation and more appropriate in
the case of semiconductor sales than for life-and-death
kinds of things) or walk away knowing that you probably
will not be able to change the other person's mind. In
the latter case, if you are right, it is likely that
something bad will eventually happen. If you are wrong,
the only bad thing that is likely to happen is the chip
on your shoulder, but at least that will be
self-inflicted.

It is of course trite and simplistic, but it explains a
lot of things.

--Bob

--
============================================================
Bob Drzyzgula                             It's not a problem
@spam@bobKILLspamspamdrzyzgula.org                until something bad happens
============================================================

1999\04\20@180452 by Andres Tarzia

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>Andres Tarzia wrote:
>[snip]
>> Now, suppose I design a home-made digital answering machine using some
uC,
{Quote hidden}

you'll
>> lose money. Then you have a structure to maintain (all those nice .PDFs
we
>> all love takes money to write, for example) and a bunch of investors who
>> demands some money back. And there are government taxes. So you have to
sell
>> the product for some amount money OVER your cost. These considerations,
and
{Quote hidden}

Even if you started a business in some area because you saw a niche which
you could fulfill and you started defining your company internal structures
and costs based on market studies, you could end up in the same situation.
When everything was running nicely, something changes out there that makes
your market studies obsolete. Damn!

Now you SHOULD change your company to adapt it to the market. Hey, you!
Change it! Today! Hello? It looks that changing a company is actually a very
difficult task... Upper management usually likes the way that things are
NOW. Especially if you are making good money NOW.

-

Besides that, speaking about it will not make it happen. For Microchip to
reduce prices they have to sell less units and only then, they will rethink
the situation. And that will only happen if customers stop buying from
Microchip.

You know, there is not such a thing as a "right" or a "wrong" price. The
price of a product is no more than an agreement between the selling part and
the purchaser part. Even if a price is irrationaly high, some jerk -er...
excentric rich- will still buy it. As I said before you have the right of
not agreeing with Microchip prices and buy from somebody else. But do it!
Crying and shouting about high prices and still buy from them is not a very
clever plan... No manufacturer will lower their prices just because their
customers are unhappy about them... but continue buying at those very same
high prices.

These are my 4 cents (you know, internal costs, inflation, taxes, so not
longer 2 cents :)

Regards,
Andres Tarzia
Technology Consultant, SMART S.A.
e-mail: KILLspamatarziaKILLspamspamsmart.com.ar

1999\04\20@184906 by wagnerl

picon face
Andres Tarzia wrote:
> Even if you started a business in some area because you saw a niche which
> you could fulfill and you started defining your company internal structures
> and costs based on market studies, you could end up in the same situation.
> When everything was running nicely, something changes out there that makes
> your market studies obsolete. Damn!

This is the difference between big and small companies that are faster
in change things, with less managing to pester and create obstacles.
This is also why a person dedicated just to marketing planning and
strategies is very important in any company size. From centuries it is
being done in any war strategy - "preview situations and find out enemy
secrets", any chess player do it all the time, but most small companies
just think this is money spent without any sense. Planning is the key
for success, since you just go for the battle when you have all the
answers and no surprises are allowed.

> Now you SHOULD change your company to adapt it to the market. Hey, you!
> Change it! Today! Hello? It looks that changing a company is actually a very
> difficult task... Upper management usually likes the way that things are
> NOW. Especially if you are making good money NOW.

Again, if you play chess thinking 5 or 6 plays ahead, you change before
it is necessary.

> Crying and shouting about high prices and still buy from them is not a very
> clever plan... No manufacturer will lower their prices just because their
> customers are unhappy about them... but continue buying at those very same
> high prices.

If they play the game in the "action vs reaction" fashion, (and by this
way they are doomed), they will not pay any attention to people
shouting, but if they have plans and strategies, with marketing analysis
and customer satisfation goals, they will listen.  Customers complaining
about prices and still purchasing means that they don't have any other
choice... "today"... they need to be careful, because it means that the
customers are looking around in search for better offers.

You just don't ask for divorce at the first fight, but it is a strong
alert that something is not right, and it can ends up in divorce,
right?  and normaly when it happens, there is "another supplier"
involved... :)

Wagner.

1999\04\21@170514 by Nigel Goodwin

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picon face
In message <51691EF37C93D21195B9006008C5148C2DCE9E@SMARTNTS02>, Andres
Tarzia <RemoveMEATarziaTakeThisOuTspamSMART.COM.AR> writes
>I don't know what is driving the PIC prices, but as I said before, I don't
>think that we, as customers, will have a big enough impact as for forcing
>Microchip to lower prices JUST FOR OUR OPINIONS. Now, if Atmel, Motorola,
>and/or others start producing alternatives at a lower cost, that is a
>different story...

Product pricing is pretty simple, it's based on what the market will
stand!. If this means a large profit, all well and good - but if it only
means a small profit, not so good :-). Obviously if you can't make any
profit on an item, it would be better to drop it all together.

This doesn't always happen, 14 inch portable TV's are almost always sold
at a loss to the manufacturer - but the manufacturers sell at a loss
just to keep in the market.
--

Nigel.

       /--------------------------------------------------------------\
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       | Lower Pilsley   | Web Page : http://www.lpilsley.demon.co.uk |
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       \--------------------------------------------------------------/

1999\04\22@045034 by richard

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Hi there

One of my buisness theory books defines profit as

Profit : The amount a customer is willing to pay for and item without moaning
of feeling cheated.


That one makes sence to me :-)

Nigel Goodwin wrote:

{Quote hidden}

--
Regards,
Richard Parsons


Corporate Mail  - richard at wasp dot co dot za
Cellular Mail   - rp at sms dot wasp dot co dot za
Personal Email  - caveman at surgeons dot co dot za

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