Profit Profit Profit

I knew Mike Arrington was a dummy, but I didn’t think he was this big a dummy:

If HP were to knock the screen quality down just a bit and figure out a cheaper storage solution, the BOM (bill of materials) on their device could be significantly lower than $200. Normally theyโ€™d retail that at $400 or more. But if instead they sold it for cost, and sold millions of them, a very robust developer network would pop up around WebOS. See Apple and Google for great ideas on monetizing apps on devices by grabbing up to 30% of revenues and also trying to control app advertising.

It’s easy to sell a bunch of $500 tablets for $100. That doesn’t mean you’d sell a lot of $200 tablets for $200. And even if they did sell, it’d be for little-to-no profit. Apple’s 30 percent cut of app sales is a nice side business, but it’s a drop in the bucket compared to their hardware sales. App advertising is an even lower margin business.

โ˜… Tuesday, 23 August 2011

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