How Many Sales = Success?

[jdh2550]

Over on another thread someone describes the Pandora as "the plain geeky girl in the crowd". Alas, he's probably right. There's also been lots of posts of folks describing how the big guys will never develop commercial games for the Pandora. It reminds me of the Mac vs. PC or the take off Wii vs. PS3 ads. Apple sells sizzle. Nintendo sells cute novelty.

Heck, there are a gazillion examples of the better technology loosing out to the better marketed technology. However, this device isn't going to register a blip with Sony or Nintendo - but it doesn't need to.

All this is well known by Craig, MWeston and ED.

So, what does success look like for this project? I seriously want them to succeed and to make boat loads of cash (a) it will encourage them to keep making the best technical device rather than the best selling device & ( b ) it will encourage others to try and emulate their approach.

This caters to all of us who PREFER the plain geeky girl in the crowd rather than the airhead.

So, this all got me to wondering how many sales Craig et al. expect to make and how many sales equals success for this venture? 10,000 units? 30,000? 100,000?

 

[Chip]

Common sense dictates that the Pandora is priced so that the investors will at least make their money back on design and manufacture costs by selling the initial batch of 3000. The devs may not get paid for all the time and effort that they have put into the project, but at least the bills will get paid. If I'm wrong and they don't expect to break even on the first batch, then they're either very brave or very crazy.

A Sony or Nintendo project could never be profitable on such a small scale because they would have spent tens of millions on alternate designs, market research and lawyers. Big companies have lots of shareholders to answer to and they can't afford to go out on a limb with a crazy new device without some proof that it should be successful. A couple of guys with a good idea and the balls to risk their own money can take those sorts of risks.

 

[craigix]

As many as possible

It's taken a year and a half but it has not cost us millions, it's very streamlined and neat.

We think we have made the most powerful and versatile machine we could have.

Matching the GP2X sales would be an awesome start!

 

[jdh2550]

As many as possible

It's taken a year and a half but it has not cost us millions, it's very streamlined and neat.

We think we have made the most powerful and versatile machine we could have.

Matching the GP2X sales would be an awesome start!

So, what's that? Around 30,000? And taking Chip's common sense thought that selling 3,000 covers your costs then you'll get 10 times your initial investment back? Sounds good... Duh! bad math - doesn't take into account manufacturing costs of the next 27,000...

I'm just curious nosy (and math challenged!) is all!

p.s. I don't expect you'll share the cost breakdown with us - but when you write your book perhaps you can put it in there? ;-)

 

[craigix]

You know we tried to manufacture the Pandora in the USA/UK and if we had done that it would have been about $600-$700.

UK/USA companies were just not interested in trying to give us a good price or to be competitive.

And people wonder where/why local manufacturing has gone.

 

[Sphinxter]

You measure it with the small biz ruler, survival == success.

Simply cannot do short run in this country anymore, throw in four round trip tickets to Taiwan and you'll still come out way ahead, on time and have gotten free help with your design. Sad, very sad.

 

[Svartalf]

You measure it with the small biz ruler, survival == success.

Simply cannot do short run in this country anymore, throw in four round trip tickets to Taiwan and you'll still come out way ahead, on time and have gotten free help with your design. Sad, very sad.

That's more to do with where you're trying to do short runs than anything else.

I'm surprised someone hasn't set up shop in some rural place where the cost of living is low and make a living off of removing most of that margin that they have. Done right, they don't actually have that much of a price advantage, really- it's just that we've had a bunch of MBA types trying to shave every penny off of the costs to look good for a bunch of sharesellers.

 

[juanvvc]

Maybe i'm absolutely wrong with my assumptions, but i think that GPH is as big as the Craigix et al's company: similar team, similar budget, similar machines (with updated specs, of course). In this sense, the Pandora will be as successful as the Gp2x if it sells a similar number of units

 

[Sphinxter]

You measure it with the small biz ruler, survival == success.

Simply cannot do short run in this country anymore, throw in four round trip tickets to Taiwan and you'll still come out way ahead, on time and have gotten free help with your design. Sad, very sad.

That's more to do with where you're trying to do short runs than anything else.

I'm surprised someone hasn't set up shop in some rural place where the cost of living is low and make a living off of removing most of that margin that they have. Done right, they don't actually have that much of a price advantage, really- it's just that we've had a bunch of MBA types trying to shave every penny off of the costs to look good for a bunch of sharesellers.


They have, it's called Taiwan.

 

[Orkie]

I'm surprised someone hasn't set up shop in some rural place where the cost of living is low

Rural areas in the UK seem to have a higher cost of living .

 

[christo930]

You know we tried to manufacture the Pandora in the USA/UK and if we had done that it would have been about $600-$700.

UK/USA companies were just not interested in trying to give us a good price or to be competitive.

And people wonder where/why local manufacturing has gone.

The Chinese are able to be "competitive" because the Chinese worker has no rights, the manufacturer has almost no laws to comply with for worker safety, environmental concerns and other such things. Many factories don't even pay their employees or pay sporadically. A lot of the Chinese factories have little if any quality standards, although they are generally much higher for foreign labels so that the same factory can put a high quality device like an iPod and then chipods on the other side of the factory with terrible quality. Realistically, how can an American manufacturer compete with a Chinese manufacturer paying slave wages (if at all), no environmental concerns, no worker safety concerns and lower quality. For a really good look at what I'm talking about you can check this out as a start.

http://www.pbs.org/wgbh/pages/frontline/shows/red/

It's a documentary showing how some Chinese are getting a higher standard of living, but hundreds and hundreds of millions are still in the direst poverty.

Chris

 

[magicman5421]

well assuming the 1st batch sells out (not much of an assumption), craig et al will make $~900,000 - 1,000,000. What kind of margin is being made on these devices? Craig has said that it is something that a pro development company wouldn't touch with a 10 ft pole, but that will determine how much they net. A success would be probably doubling the money sunk into the project by each person. On that note, Craig, do you have any investors? because I'd bet there'd be more than a few people who would be interested in investing in the pandora.

 

[plopperz]

You know we tried to manufacture the Pandora in the USA/UK and if we had done that it would have been about $600-$700.

UK/USA companies were just not interested in trying to give us a good price or to be competitive.

And people wonder where/why local manufacturing has gone.

The Chinese are able to be "competitive" because the Chinese worker has no rights, the manufacturer has almost no laws to comply with for worker safety, environmental concerns and other such things. Many factories don't even pay their employees or pay sporadically. A lot of the Chinese factories have little if any quality standards, although they are generally much higher for foreign labels so that the same factory can put a high quality device like an iPod and then chipods on the other side of the factory with terrible quality. Realistically, how can an American manufacturer compete with a Chinese manufacturer paying slave wages (if at all), no environmental concerns, no worker safety concerns and lower quality. For a really good look at what I'm talking about you can check this out as a start.

http://www.pbs.org/wgbh/pages/frontline/shows/red/

It's a documentary showing how some Chinese are getting a higher standard of living, but hundreds and hundreds of millions are still in the direst poverty.

Chris

Chinese employers pay their workers. It may not be half as much as someone who does the same thing in the UK, but they still get paid. Remember the cost of living in the UK is much, much higher than the cost of living in China. Think about it, the Chinese can (and have) make good-quality goods, it's just that if they did that all the time, the workers would get paid even less because of the costs of production. As for the environmental thing, this is why it makes me mad: Politicians are making silly laws about not idling vehicles and such, and don't do anything about the giant factories in Asia. If there was no unionized labour we wouldn't have these problems, and it would lower prices for other things as well, effectively balancing it out (lower wages vs. lower prices). I agree with you for the most part, but I think you're over exaggerating. I didn't watch the video (my computer sucks) but i imagine it would be good.

Getting back on topic (sort of): As long as the final product is of good quality I don't care where it's made.

 

[coldfish]

"the plain geeky girl in the crowd"

That was my quote, just to clarify, I'm low on subtlety.

No offense to anyone on the dev team, kudos for barging on in and having a go, it takes nubs (unless you have a massive inheritance from a rich aunt).

I work in product development, Im always trying to pick out logic flaws and in a product's raison d'être. 'Cant help myself, being critical.

 

[jaycee900]

well assuming the 1st batch sells out (not much of an assumption), craig et al will make $~900,000 - 1,000,000. What kind of margin is being made on these devices? Craig has said that it is something that a pro development company wouldn't touch with a 10 ft pole, but that will determine how much they net. A success would be probably doubling the money sunk into the project by each person. On that note, Craig, do you have any investors? because I'd bet there'd be more than a few people who would be interested in investing in the pandora.

I don't think its much of our business really, they have done all the hard work the last 1 1/2 to get this thing out from scratch the least we can do is not ask personal questions about money!
Though i hope the margin is pretty good and after 6-12 months maybe the parts cost will drop and you make a higher margin to keep the project active, we obviously don't want it too have such a slow start that you think its not worth anymore of your time to even think to carry on!

 

[Gilrad]

I believe Texas Instruments has a vested interest in seeing the Pandora hit the market, as a sort of flagship for their new hardware.

 

[Sphinxter]

well assuming the 1st batch sells out (not much of an assumption), craig et al will make $~900,000 - 1,000,000. What kind of margin is being made on these devices? Craig has said that it is something that a pro development company wouldn't touch with a 10 ft pole, but that will determine how much they net. A success would be probably doubling the money sunk into the project by each person. On that note, Craig, do you have any investors? because I'd bet there'd be more than a few people who would be interested in investing in the pandora.

I love the smell of venture cap in the morning.

 

[craigix]

well assuming the 1st batch sells out (not much of an assumption), craig et al will make $~900,000 - 1,000,000. What kind of margin is being made on these devices? Craig has said that it is something that a pro development company wouldn't touch with a 10 ft pole, but that will determine how much they net. A success would be probably doubling the money sunk into the project by each person. On that note, Craig, do you have any investors? because I'd bet there'd be more than a few people who would be interested in investing in the pandora.

I love the smell of venture cap in the morning.


Just like Infinium Labs and Gizmondo did?

 

[christo930]

You know we tried to manufacture the Pandora in the USA/UK and if we had done that it would have been about $600-$700.

UK/USA companies were just not interested in trying to give us a good price or to be competitive.

And people wonder where/why local manufacturing has gone.

The Chinese are able to be "competitive" because the Chinese worker has no rights, the manufacturer has almost no laws to comply with for worker safety, environmental concerns and other such things. Many factories don't even pay their employees or pay sporadically. A lot of the Chinese factories have little if any quality standards, although they are generally much higher for foreign labels so that the same factory can put a high quality device like an iPod and then chipods on the other side of the factory with terrible quality. Realistically, how can an American manufacturer compete with a Chinese manufacturer paying slave wages (if at all), no environmental concerns, no worker safety concerns and lower quality. For a really good look at what I'm talking about you can check this out as a start.

http://www.pbs.org/wgbh/pages/frontline/shows/red/

It's a documentary showing how some Chinese are getting a higher standard of living, but hundreds and hundreds of millions are still in the direst poverty.

Chris

Chinese employers pay their workers. It may not be half as much as someone who does the same thing in the UK, but they still get paid. Remember the cost of living in the UK is much, much higher than the cost of living in China. Think about it, the Chinese can (and have) make good-quality goods, it's just that if they did that all the time, the workers would get paid even less because of the costs of production. As for the environmental thing, this is why it makes me mad: Politicians are making silly laws about not idling vehicles and such, and don't do anything about the giant factories in Asia. If there was no unionized labour we wouldn't have these problems, and it would lower prices for other things as well, effectively balancing it out (lower wages vs. lower prices). I agree with you for the most part, but I think you're over exaggerating. I didn't watch the video (my computer sucks) but i imagine it would be good.

Getting back on topic (sort of): As long as the final product is of good quality I don't care where it's made.


The video I linked to and some other sources have stated that many times workers are hired for projects (like temp workers) and never paid. The full time employees make dirt and are forced to work incredibly long hours (they even have to eat and go to the bathroom at their work station). It's really bad and there is no way a legitimate western business can compete with the Chinese. The rising price of energy may very well make it too expensive to ship parts and completed products all over the world and may end up bringing jobs back to the west that have been lost to China and other developing nations. I'm not sure at what level the energy costs have to reach to make local manufacturing worth while though.

Chris

 

[jaycee900]

Just like Infinium Labs and Gizmondo did?


Though at least Gizmondo got their handheld out! Though its swedish badboys did their best to ruin any chance it had out there from the start, shame as it was a nice little unit though without its bugs of course!