The story reminds me of Tata Nano the 2000USD car. Tata designs and manufactures the car to target at the middle class in India. It turns out that this car also captures another market segment - the rich people!
Thank you for touching on the labor cost. Jennifers article described the typical model that China has used over the years to gain grounds. How do you explain the shift in price from $350K to $15K other than cost, design that makes sense to the end users, and of course China's ingenuity to make small profits from single sources but make a greater profit from the sale of large numbers of the same item.
The example given here by Jennifer makes one wonder how much less we could be paying for some of the high-tech equipment we currently use if manufacturers did more to reduce cost. However, there's a cost to society of driving down prices lower and lower. Companies are in business to make profit and if sales volume don't make up for lower prices, you can guess labor costs will be impacted too. Will the West accept China's labor compensation?
Its proven and many big healthcare equipment manufacturers have to understand the requirements which are different in the emerging nations. They should bring in local people to understand what exactly market need in specific country. But there is always a competetion from the local players mainly in terms of product cost. If global companies can bring out low cost products with a superior quality they can beat out the local players.
I have been following this for a number of years and suspect that it is not as 'clear cut' as it is made out to be.
There are too many players in the OLPC, who look at this is the wrong way, manufacturing a similar product for under $100 is not that difficult, that is: IF you are less familiar with Academia and more familiar with asian mass production.
There were all sorts of 'issues' related to in-house squabbling about the software, how and what it should run and how open the hardware should be, none of which was down to the likes of intel or other major suppliers(this was occurring long before Microsoft got involved), but rather the personalities of the people involved in the OLPC camp.
I have the feeling that the project is still looked at from the wrong direction. Rather than trying to educate the children, there should have been a far broader outlook, specifically related to teaching the adults/older children repair and SMT techniques (this really is possible, having seen some fantastic results with 3 people and a toaster oven in China)
There are far more threatening projects to Intel than the OLPC, but I think we will see many of the arguments becoming moot as the pad computers start to take off, particularly as we can now pick one up in China running at 1.2GHZ with a couple of GB of memory 8 inch screen, wifi/usb & expansion connector (running linux & android)....... all for about $30us
The point being is that innovations like these may initially not come from the giants, such as GE, Intel, etc., but in the end will be driven by them, possibly by brute force.This is more about survivability.There are many start-up companies or smaller competitors that are working on providing lower cost solutions that could disrupt certain industries.If they were to gain a strong foothold in developing nations, then they may most likely become the next titan by sheer volume.The tech giants see this as a potential threat and in some cases provide a “stripped down” version of their more expensive solutions at a loss to buy their way into the market and drive away any potential upstarts that could threaten their dominance.
In the article mentioned above, the giant is Intel who saw a threat of an upstart aggressively looking to penetrate the developing nations with very low cost computers.Intel, who traditionally doesn’t even build computers, but chips, built a low cost computer to ensure that they will remain relevant in these markets.Microsoft provided the OS for these low cost machines for the same reason.
There are more “have nots” than “haves” in the world and those that can market and build their brands to the “have nots” may be the winners in this game.
I would venture to guess that GE is buying the market from competitive threats for other innovative smaller companies as well as from other giants, like Siemens.In the end the consumer wins, I guess.
Presently world is moving towards globalisation, especially GE is plunging into health care equipments their strategies initially was not that great, but now they are developing different levels and the prices are getting fixed accordingly . yeah i agree in few days prices of houses may become so low by using nano materials.
It is an interesting point about GE market aim. Maybe it was just misjudged market research. Tektronix for example has very low-end scopes made in China and for Chinese market, which are selling here as well. It is all to market research and sometimes expensive equipment is not for the price of it. To achieve all specs with sensitivity, accuracy and with low positive-false diagnosis the equipment will be expensive, but maybe not for large market.
EBN Dialogue enables and encourages you to participate in live chats with notable leaders and luminaries. Not only editors and journalists, but the entire EBN community is able to comment and ask questions. Listed below are upcoming and archived chats.
Thailand Stages a Comeback Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Microsoft Surface: Potential Winners & Losers What are the implications for the electronics industry supply chain of Microsoft Corp.'s decision to launch its own tablet PC? Join industry veteran and EE Times' systems and OEM expert Rick Merritt on Tuesday, July 3, at 12:00 pm EDT for a Live Chat on this subject.
Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Peter Drucker famously said "Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window." Yet in the razor's-edge world of electronics—with a lean supply chain and just-in-time demands—the need to know the future is vital.
While no one really can accurately predict the future, we can take guidance from another Drucker saying which is the best way to predict the future is to create it.
You've heard the saying "the No. 1 supply chain risk is your people." That hasn't always been the case. But today's complex global supply chain requires a new type of multitalented employee. It's one who understands, finance, marketing, economics, is savvy with technology, graceful with relationships and can think analytically.
Where are these people? Are universities properly preparing the next generation supply chain professionals? How do train your existing workforce for these new, demanding positions?
Brian Fuller, editor-in-chief of EBN, will lead a 60-minute Avnet Velocity panel discussion that will ask and answer these and other questions swirling around today's supply-chain talent challenges.