[vorbis] Re: OGG portable (iRiver iHP-120)

[Paul E]

Kyle Rose wrote:

>Ralph Giles <giles at xiph.org> writes:
>
>  
>
>>>How musch of that huge price tag is MP3 royalties? With an ogg encoder
>>>instead of Mp3, I imagine the gaget could be alot cheaper ( and higher
>>>quality!)
>>>      
>>>
>>According to http://www.mp3licensing.com/royalty/ it's US$2.50-$5.00 per 
>>unit. Or 6 to 12 thousandths of the $400 retail price.
>>    
>>
>
>Or, about 1%.
>
>Doesn't seem like much now, but I suspect these devices will get much
>cheaper over time, so that 1% will eventually become 5% or 10%.  That
>cuts a great deal into one's profit margin.
>
>Cheers,
>Kyle
>
Think about this.  If they are selling the product to stores for $250 
cost becomes greater.  It goes from ~1.25% to 2% of the cost.  There is 
something else though.  How much does it cost to produce?  If it costs 
them $180 for each unit (development, advertising, production, etc)  
Then $5 is 7.14.  And that is with conservative numbers.  It could cost 
much more to sell due to limited quantities.  Many companies only make 
5% profits after all expenses are paid so that 2% really turns into 40% 
change in net profits.

Anyway, can you tell I'm taking 10 units of accounting right now?

Paul

<p>--- >8 ----
List archives:  http://www.xiph.org/archives/
Ogg project homepage: http://www.xiph.org/ogg/
To unsubscribe from this list, send a message to 'vorbis-request at xiph.org'
containing only the word 'unsubscribe' in the body.  No subject is needed.
Unsubscribe messages sent to the list will be ignored/filtered.