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highlander_ns
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Re: Broken Model
highlander_ns   4/6/2014 3:16:52 PM
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@alex_m1 I agree that more innovation could lead to better things. Having only a few big players definitely leads to stagnation and incremental improvements.

highlander_ns
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Re: Technology always advances - get ready for the next wave
highlander_ns   4/6/2014 3:15:10 PM
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There's nothing actually wrong with the business model. The model is to make chips and sell them for more than it costs to make them. It's better to say it's a brutal business than it is to say the model is broken.

alex_m1
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Re: Broken Model
alex_m1   4/6/2014 3:09:41 PM
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@highlander - yes lowering barriers does decrease growth in prices. But it still increases innovation. Meaningfull innovation can open new application areas and markets , making more people/businesses buy more electronic stuff, meaning growth, even with jellybeans.

Another growth option is a shift to online-only commerce - which seriously decrease the share retailers take from products , leaving more to be shared between manufacturers and consumers and/or seriously decreasing prices of electronics(sometimes even around 30-40%) and general products. All those can easily lead to growth.

 

 

highlander_ns
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Re: Sanghi, what a negative and ridiculous attitude
highlander_ns   4/6/2014 11:18:36 AM
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It's grim if he keeps putting out jellybean parts.

highlander_ns
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Re: Broken Model
highlander_ns   4/6/2014 11:17:08 AM
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@alex_m1 Any cost reduction will quickly be reflected in the price. Competitors will also figure out how to reduce cost.


It would be better to increase the cost of innovation because then there are greater barriers to competition and the few who can field products will be able to ask for higher prices.

If students could whip up meaningful chips with no budget the industry would be an even bigger race to the bottom than it already is!

highlander_ns
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Re: Broken Model
highlander_ns   4/6/2014 11:12:34 AM
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The big problem is that it's hard to increase the perceived value of a semiconductor. Any part that meets the spec is OK. It's not like a handbag where the intangibles can set the price anywhere between $5 and $50k.

You are right that only unique capabilities that are valued by customers will be able to command a respectable price. The problem is that most capabilities can quickly be copied by competent engineers. Patents don't amount to much when there are many ways to skin a cat. Only the execution of an idea is patentable, so that only matters when there's one possible execution.


Most electronic gadgets could be considered miraculous when judged on their own merits but in a brutally competitive market economy they become commodity junk, soon to be obsolete very quickly.

resistion
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Re: Broken Model
resistion   4/6/2014 9:40:09 AM
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Even with low cost of invention, somewhere between invention and product, the value of the development should be high. Here "value" should be how well it enables the product to be priced higher, e.g., unique or unsurpassed functions or capabilities.

alex_m1
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Re: Broken Model
alex_m1   4/6/2014 12:35:30 AM
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@highlander: low cost of invention, combined with decent patent protection could work, even if the innovator's profit per unit is quite small,because it accumulates over time.

Also by lowering the cost of innovation you're enabling non-standard people to innovate meaningfully.For example students could innovate meaningfull, usefull blocks while doing their thesis.

_hm
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Re: Sanghi, what a negative and ridiculous attitude
_hm   4/5/2014 7:35:34 PM
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There are so many things to do and there is so much of scope for innovation and new IC designs. Situation is not as grim as Sanghi may predict.

alex_m1
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Re: Broken Model
alex_m1   4/5/2014 6:01:19 PM
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@highlander,

Yes, you're right. Easier development help competition too.

The thing that helped the pebble smart watch to create a competitive advantage was the ability to build communities of developers and of marketing. 

That doesn't exist for chip sales.

Maybe a good model for unique chip startups is to require some shares of companies they're selling to?

This way they could enjoy some of the competitive barriers system companies can create.

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