prodata
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Re: Why did the industry fail?

Tue Mar 06, 2012 2:54 pm

… to create the RPi for itself? It must have been evident for a while that a PC like the RPi was feasible at low production and selling prices. The boards themselves have obviously been around for some time as examples like the Bifferboard and Slug illustrate but originally designed as sub-assemblies for some larger device. And the innards for low-cost mobile phones are not dissimilar devices. It"s surely not that there was any likely shortage of applications or demand.

But obviously no Far-East manufacturer was creative enough to launch any such product off their own bat. Is it simply that they"re not imaginative or entrepreneurial enough – they'd always prefer to work simply by extending the specification of an established product category or by simply making it cheaper than hitherto?

I"m genuinely curious as to the reason. Many of us will have had applications for such a product and known that it was feasible in principle. So why hasn"t it happened until now? Any ideas?

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Re: Why did the industry fail?

Tue Mar 06, 2012 3:01 pm

Price

bredman
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Re: Why did the industry fail?

Tue Mar 06, 2012 3:14 pm

The problem was lack of a target application. Nobody would create the hardware in the hope that hackers would fall in love with it.

In the case of the RPi, the target application is education. It was not created for hackers.

Unfortunately, nobody will ever develop really mass-scale hardware just for hackers. The biggest scale so far is probably Arduino, but even this is very small-scale compared to consumer products.

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Re: Why did the industry fail?

Tue Mar 06, 2012 3:19 pm

Yep, price.

You can't deliver for $25 or $35 if you want to make money. Because if you want to make money, your suppliers want to make money out of you, too. And as a company you probably want to control everything, do professional marketing, etc.

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Re: Why did the industry fail?

Tue Mar 06, 2012 3:21 pm

nmcc said:


Price


Hmm – I'm not convinced. An RPi-like device would, I'd suggest, have been successful even if the price had been $50-60. (OK might have been nice to have simple $1 case thrown in and maybe an SD card). So there would have been plenty of margin for any distributor. Chinese producers make many PC-related products in the $1-10 range, so I don't think that hitting a relatively low price for the RPi would have scared them off. It's something else.

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Re: Why did the industry fail?

Tue Mar 06, 2012 3:26 pm



prodata said:


But obviously no Far-East manufacturer was creative enough to launch any such product off their own bat. Is it simply that they"re not imaginative or entrepreneurial enough – they'd always prefer to work simply by extending the specification of an established product category or by simply making it cheaper than hitherto?

I"m genuinely curious as to the reason. Many of us will have had applications for such a product and known that it was feasible in principle. So why hasn"t it happened until now? Any ideas?



I think there is a certain arrogance about the West being more creative/intelligent that the East that is really going to backfire in the decades to come. "they" do it because that's how you convince someone to purchase stock off you in large quantities from the other side of the world not because that's all they are capable of. I cant believe it sometimes, there have even been documentaries on TV suggesting this idea.
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Re: Why did the industry fail?

Tue Mar 06, 2012 3:27 pm

Profit margin and development cost.

Years of man effort has gone into this by James H and team and untold amounts of resources and experience. Plus technology has only recently reached a place where systems on a chip using mobile phone parts actually make sense for producing a real live computer - particularly with usable graphics performance.

The other significant factor is they have managed to get spectacular price breaks on the broadcom chips only because they are a charity. The industry would either have had to commit to buying far far more initial chips before broadcom would have even talked to them - and therefore there would have been a very high risk on the return.

The industry has made attempts, firstly there are things such as the beagle board, but the price point they have to sell at means they are a very niche product with low demand (classic chicken and egg scenario).

The other similar attempt were Netbook PCs. These were meant to be low cost devices running linux, however the consumer market didn't want linux and the prices have actually gone upwards rather than going down/staying stable. If linux on netbooks had worked then I think you would have ended up with much better performance, with better graphics chips at very competitive prices when you include the fact that they have screens+batteries.

Also remember while sales have been amazing they have been brought mainly by hobbyists or those wanting a cheap media centre. It's yet to be proved whether the RPi will get serious traction in classrooms or the real world as a day to day computer - I hope they do but there is lots of work yet to wean people off Windows

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Re: Why did the industry fail?

Tue Mar 06, 2012 3:27 pm

I mean. How many revenue may be in 10.000 pieces? Calculate the time they spend to design it, to test it, to redesign it, the money for lawyers, time to bargain, time for support, costs for hosting, beer.. (don't understimate the beer factor).

You think there would be enough money in it to make a sustainable business?

And also, they may have thought it would take some time to sell the first batch.

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Re: Why did the industry fail?

Tue Mar 06, 2012 3:40 pm

The foundation got a reduced rate for the SoC due to them being a charity. If they weren't a charity the cost of the chip would have been much higher.

So your talking $75+ a unit once you add a profit margin and take into account the addition costs.

For $100 there are currently a few different devices similar to the R-Pi so it would be hard for a newcomer to start and maintain the business against them.

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Re: Why did the industry fail?

Tue Mar 06, 2012 4:03 pm

mole125 said:


Profit margin and development cost.

Years of man effort has gone into this by James H and team and untold amounts of resources and experience. Plus technology has only recently reached a place where systems on a chip using mobile phone parts actually make sense for producing a real live computer - particularly with usable graphics performance.

The other significant factor is they have managed to get spectacular price breaks on the broadcom chips only because they are a charity. The industry would either have had to commit to buying far far more initial chips before broadcom would have even talked to them - and therefore there would have been a very high risk on the return.

The industry has made attempts, firstly there are things such as the beagle board, but the price point they have to sell at means they are a very niche product with low demand (classic chicken and egg scenario).

The other similar attempt were Netbook PCs. These were meant to be low cost devices running linux, however the consumer market didn't want linux and the prices have actually gone upwards rather than going down/staying stable. If linux on netbooks had worked then I think you would have ended up with much better performance, with better graphics chips at very competitive prices when you include the fact that they have screens+batteries.

Also remember while sales have been amazing they have been brought mainly by hobbyists or those wanting a cheap media centre. It's yet to be proved whether the RPi will get serious traction in classrooms or the real world as a day to day computer - I hope they do but there is lots of work yet to wean people off Windows


I'm not the person behind this - that's Eben. He's put in some years getting this project to fruition. I'm just a hanger on/groupie in comparison.
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mole125
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Re: Why did the industry fail?

Tue Mar 06, 2012 4:27 pm

I stand corrected, sorry Eben!

Though if you are just a hanger on/groupie in comparison I hate to think what that makes us on the forums...

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Re: Why did the industry fail?

Tue Mar 06, 2012 4:27 pm

The RaspPi has three innovations: size and price and operating system.

It's size makes it possible to include it in projects that would not be possible if it were just twice the size. Its price makes it disposable. Its operating system makes it flexible.

If I want a micro-controller, then I buy an Arduino, because it is cheap. I can package it up into a project, and then buy another for the next project. I can even design it into a project where it might be lost. It is disposable. If it was $50 or $100 I would have to think twice.

A bigger board is more difficult to package. I can't build a wearable PC with a Eurocard-sized computer. I can't fit it into a R/C model or a meteorological balloon.

But a microcontroller has limitations. I have to write most of the software myself. That gets expensive and tedious. The software I write is single-purpose, whether it is controlling a quadcopter or a mobile phone. But if the computer runs Linux (or Windows, or QNX or any of a wide range of others,) then I get vast swaths of software as standard. I can add a web-server or diagnostics without a thought. My VOIP telephone is programmed in a week instead of three months and has more features.

There have been small cheap computers before (eg Arduino), there have been small Linux computers before (eg Cotton Candy). And any old PC can run Linux cheaply. But the Raspberry Pi is all three and that has never been done before. I don't believe it was even a design goal for the RPF; they wanted a $25 computer that could be programmed by children, and Linux and the size were ways of achieving that goal, not ends in themselves.

I can believe that there was no demand for something like the RaspPi. No one has ever made money selling only to hackers. Commercial companies think nothing of paying £100 for an SBC or writing their own software stacks.The hobbyists and the small developers did not have the ear of the manufacturers, nor the volume that made it worthwhile. The larger companies believed themselves well-served by the more expensive and more powerful products on offer, or wanted to package into a single-purpose device such as a mobile phone.

Even those hobbyists who did manage to get a project off the ground failed to understand the difference a few dollars makes. If a Beagle Bone costs $90 I might buy one and use it for a few projects, tearing the last one down to make the next. It might be a prototype platform, but it is not a production platform. But if a RaspPi costs $25 I'll buy one for each project.

Small, flexible and disposable. That's the key.

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Re: Why did the industry fail?

Tue Mar 06, 2012 5:12 pm

mole125 said:


I stand corrected, sorry Eben!

Though if you are just a hanger on/groupie in comparison I hate to think what that makes us on the forums...


Groupies once removed? Hangers squared?
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Re: Why did the industry fail?

Tue Mar 06, 2012 5:46 pm

mole125 said:


Profit margin and development cost.

Years of man effort has gone into this by James H and team and untold amounts of resources and experience. Plus technology has only recently reached a place where systems on a chip using mobile phone parts actually make sense for producing a real live computer - particularly with usable graphics performance.

The other significant factor is they have managed to get spectacular price breaks on the broadcom chips only because they are a charity. The industry would either have had to commit to buying far far more initial chips before broadcom would have even talked to them - and therefore there would have been a very high risk on the return.

The industry has made attempts, firstly there are things such as the beagle board, but the price point they have to sell at means they are a very niche product with low demand (classic chicken and egg scenario).

The other similar attempt were Netbook PCs. These were meant to be low cost devices running linux, however the consumer market didn't want linux and the prices have actually gone upwards rather than going down/staying stable. If linux on netbooks had worked then I think you would have ended up with much better performance, with better graphics chips at very competitive prices when you include the fact that they have screens+batteries.

Also remember while sales have been amazing they have been brought mainly by hobbyists or those wanting a cheap media centre. It's yet to be proved whether the RPi will get serious traction in classrooms or the real world as a day to day computer - I hope they do but there is lots of work yet to wean people off Windows


What got netbooks was "feature bloat". Basically everyone wanted "their" feature added. As said features were added it drove the cost up. Soon the netbooks were kinda small laptops, both in function and price. This no longer interested the public as much as the original incarnation. Watched it happen from start to end I was one one people who got the first eeepc on preorder.The issue was the people who created it had no idea why it was so popular when it first came out. And they never "got it" and managed to ruin the product line.

This is one of the reasons I'm very happy that the rasberrypi foundation has stuck to their guns on the price point. And also avoided the temptation to bloat the device.

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Re: Why did the industry fail?

Tue Mar 06, 2012 6:50 pm

Do lookup the Ubislate/Aakash Tablet

Kind of flopped, but targeted the same price point with similar performance

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Re: Why did the industry fail?

Tue Mar 06, 2012 6:55 pm

In fact Mole125 has the right answer, PROFIT MARGIN and development cost. Likely development cost is the least of the two. The actual cost of building an iPhone 4 is like $187. Yet they sold them to AT&T for $599 (more than 200% profit). Then AT&T sells them for $199 plus a two year contract that makes them thousands of dollars. This unfortunately has become the sales model for ARM based computing in cell phones. Blackberries were even worse when they came out, I opened up a couple of them and there really is not much in there compared to an iPhone. Why would you develop a $35 computer that undercuts the price on (enter your favorite ARM development board here) when you can make 300 to 900% more? Most companies only count on you buying one or two boards so they want more money out of you.

My opinion is that any number of RasPi type devices will be built in the near future. They will be incorporated into everything including high end toasters. The analysts will start writing articles about how we are all dying earlier due too all of the wireless traffic caused by these devices. We are already seeing a large drop in the sales of PC style computers as people rely more upon their cell phones and tablets too do their daily computing. Mostly this because the majority of people, have no more use for a computer, than to get onto Facebook or twitter. Wearable computing really is sidelined by cell phones at this time.

I still see wearables in the future where you grab your favorite vest or shirt and you wonder how anybody wore these without the internet. Unfortunately RasPi will not currently fulfill a wearable as it"s power use is to high in the production model. An Alpha board would have worked really well. Another factor is the available connectivity on the production boards, which is less than what was on the alpha board(GPIO, DSI etc.). The RPF should show the Alpha to their new partners and see if they would be willing to produce it for the hobbyist.
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Re: Why did the industry fail?

Tue Mar 06, 2012 7:03 pm

the fact that the device going on sale/re-order crashed the websites of two major suppliers of electronics equipment in a massive way shows that the device has a big demand and it does make me wonder why this wasn't done before.

Bringing the RPi to market at the price point of $35 has mostly been made possible by the fact that the Raspberry foundation is a non profit organisation. If you added a layer of bean counters to the mix along with a layer of investors then the final price would not have been $25/$35.When it came to the meeting to decide the price, the question would have been, "How much do you think the nerds will pay for this?". And that is why similar products have not had the interest like the RPI has. They priced themselves out of a market.

The RPi has had an amazing amount of publicity right in the places that the people that will be interested in the RPi frequent on the internet. In the normal day to day o sorting out and managing my home computer kit, I can easy find a place for a few low power computers to sit. I hate the firewall on my router and could easy replace it with a dedicated computer. But then there is the size, power and cost (add to that the missus complaining lol). Enter the Raspberry to the Melé.

for any new computer system to be successfully it needs a "killer app", in the case of the RPi, its killer app is its price point along with versatility to be integrated into low cost projects. The first projects I have in mind are a HD media player, a hardware firewall, a print server and NAS. Then I am going to work on  a new CCTV system for our hotel.

I just hope that the education sector take up the RPi and include it in secondary schools as an educational programming tool, because if it does not then the market for the RPi will end up as a cheap computer to embed into a products and it wont bee fair for the foundation to not turn a profit on a device that will essentially be a commercial product. Prices will rise.

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Re: Why did the industry fail?

Tue Mar 06, 2012 7:28 pm

One factor I want to add to all of the above is the 'user interface'. Linux hackers still like to have their keyboard and (big) monitor. All the tablets are just to.... lets say "awkward" to work with. You don't put a tablet in a corner as server. But a Pi: yes. You can either remote login but you can also connect a 1080p monitor and a keyboard and you can work with it in luxurious comfort which none of these 7" tablet screens can offer you.

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Re: Why did the industry fail?

Tue Mar 06, 2012 7:45 pm

JoeDaStudd said:


The foundation got a reduced rate for the SoC due to them being a charity. If they weren't a charity the cost of the chip would have been much higher.



We need to stop this rumour that the foundation got a big discount on the processor part - they didn't get any discounts, but if Broadcom's other customers believe they did, it'll create a lot of hassle for everyone.

The only concession it was reported that they got for the project was a lower minimum order requirement.

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Re: Why did the industry fail?

Tue Mar 06, 2012 8:10 pm

Smartybones said:


Bringing the RPi to market at the price point of $35 has mostly been made possible by the fact that the Raspberry foundation is a non profit organisation. If you added a layer of bean counters to the mix along with a layer of investors then the final price would not have been $25/$35.When it came to the meeting to decide the price, the question would have been, "How much do you think the nerds will pay for this?". And that is why similar products have not had the interest like the RPI has. They priced themselves out of a market.


This is most of the reason, there were many voulunteer'ed hours that went in that a commercial company would have paid for.  The foundation was also cut a great price on the SOC so good that they are not allowed to talk about it.  Plus for a corp. to make this they would also have a building, and a bunch of useless people like CEOs soaking up money.  If you want to know what a full blown retail product looks like with the same exact SOC look at the Roku2 series.

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Re: Why did the industry fail?

Tue Mar 06, 2012 8:51 pm

Why did the industry fail? Failed to do what? Failed to pursue a less profitable business model?

The consumer IT industry presently thrives off the cultivation of the technically illiterate user who suffers from a lack of attention span and an excess of disposable cash. Its all about short-term returns; diminishing the future stock of potential developers is not a major concern. The ideal is simply to have everyone lusting after constant upgrades to a whole suite of devices that preform more-or-less the same function… Internet TVs, tablet PCs, mobile phones, gaming consoles…

The consumer IT industry may be failing society, buts it not failing to serve itself. The Raspberry Pi is a threat, not just something they've overlooked themselves.

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Re: Why did the industry fail?

Tue Mar 06, 2012 10:01 pm


The foundation was also cut a great price on the SOC so good that they are not allowed to talk about it.


Not really, as mentioned the main concession from Broadcom was to allow purchase in low volume.

An nobody talks about the price deals they make with suppliers. I challenge anybody to get an answer from Roku what price they negotiated with Broadcom for the BCM2835.

(Thinking abut it: Eben might have had an small advantage that he knew what deals others managed to cut with Broadcom.)

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Re: Why did the industry fail?

Tue Mar 06, 2012 10:02 pm

una.szplodrmann said:


Why did the industry fail? Failed to do what? Failed to pursue a less profitable business model?


Sorry, but I don't really buy the business model or margin argument. Sure, every business aspires to a product with a self-renewing demand or a high margin. But, equally, in the IT area there are plenty of examples of low margin products where – presumably – volume compensates for a small margin. It always amazes me for instance just how cheaply a PC case+power supply – a large and heavy item to ship around the world – can be sold to consumers for.

I think that Smartybones has the right sort of speculation in implying that no business with sufficient clout to make it happen had the entrepreneurial vision to foresee the total potential demand when a smaller demand from individual groups is aggregated across many subgroups, each of whom has different operational requirements (educational, media streaming, device control, sensor interfaces etc etc) but which can be met by a single hardware product.

'Course it remains to be seen whether this model is successful but my hunch is that RPi-type devices will be a milestone in the history of micro-computing.

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Re: Why did the industry fail?

Tue Mar 06, 2012 10:55 pm

It seems farily simple to me:

There was a problem. Not many people spotted this problem (though several years later Google's CEO would comment on it) but some people did. They did not like what they saw and decided to try and fix this problem.

These people had more energy and drive and vision in their earwax than most of us have in our whole bodies. They spent their own cash; and time; and blood-sweat-tears to make something that they believed would make a difference.

And out popped the Raspberry Pi like a purpley, vernix-clad baby. But with more USB ports and less hair.

So not yer average business model then

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Re: Why did the industry fail?

Tue Mar 06, 2012 11:21 pm

I wouldn't call it a failure. Delivering such a product at this price point would be hugely risky. And frankly, without the charity and education angles to push from a PR perspective, would have failed.

The biggest reason for the success of Pi (if you want to call it that...how it does at its actual purpose is yet to be seen) is the amount of press attention the foundation has brought to it. Without the hype, staying around in the hacker community it would have sold, but I doubt to the quantity it did. Probably not enough to be a profitable enterprise, and now that the PR on such a product is all spent, it will be hard for something else to succeed in the same place, much like the Arduino alternatives haven't really taken off despite mostly being far superiour.

That said, I expect TI to come out with something competitive in the fairly near future. They're the ones that recognized this market existed, and they should be able to compete on price and get their existing community onboard.

Also don't kid yourselves, Broadcom is making plenty of profit off this. They wouldn't be in it otherwise.

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