[Asterisk-Users] Cost of IP Phones, or Isn't It Just Software?

[Lars Boegild Thomsen]

Hi,

Getting off-topic on the list - so let's do this in email instead.

> And that's plain ridiculous.  Plus, the phone alone isn't worth $500 in
> hardware -- so we're obviously dealing with GREED here.

Well, that's what most public listed companies are driven by.

> much better solution at a lower cost.  Our company employs some 20
> programmers, 40 support and 20 training staff, and we're greatly
> profitable.

In other words - you charge what the market is prepared to pay, but still
enough to make a lot of money.  Don't get me wrong - I fully understand that
but I fail to see the difference between that and Cisco's model :)

> Cisco would be smart to drop the prices of their phones to realistic
> levels

I never worked for Cisco but I worked with one of their international
partners and I actually borroed a desk at one of the cisco office for more
than 2 years so I've got pretty intimite knowledge of their business model.
First of all - trust me - Cisco know exactly what they are doing.  They
never try to compete at the low-end stuff.  If they want to move into that
field they buy another company and keep their brand for the purpose
(example: linksys).  They deliberately profile their own stuff as market
technology leader and nothing less.  Also Cisco don't really care or bother
about end-users.  They prefer large accounts and deliberately put their
prices so high they won't be bothered by end-users and got PLENTY of margin
to provide for resellers, distributors and give heavy discounts to their
large accounts.  I never worked with a company that will go to more extreme
measures to get a deal than Cisco.  To quote one of my friends - who is an
account manager in Cisco - once when I asked him for a rediculous low price
for a Cisco device: "Cisco NEVER say NO to a deal".  In other words - if
Cisco want a business they'll shoot out the phones at whatever price it
takes to get that deal.

> -- if their phones cost $200 instead of $400, they would probably
> only make $100/phone, but they'd sell disproportionally more phones to
> balance this out.  On the other hand, they'd really P.O. their current
> customers who paid their inflated prices.  Sucks to be them.

Cisco are doing ok profit wise - so they must be doing something right -
whether you like it or not is another matter :)

> So, reading all the great feedback on this, what if we took an
> open-source SIP phone (Siphon, KPhone), figure out the least amount of
> hardware to run it, configure a PC104 or other SBC prototype and then
> show it to investors.  Heck, I think I may just try this out sometime...

Well - I live in south-east asia and I'll be happy to help you find cheap
manufacturing of these devices if you find a way to finance it.  It is
entirely possible but you'll be facing the same problems as everybody else
that tries this.  I met the founder of Snom a couple of years back and their
problem is a good illustration of this.

They knew they had a great product which was manufactured in Germany.  They
also knew that in order to make money on this they needed to do mass
production in some cheap Asian country.  But they were not able to finance
the more than 90 days it took between where they had to pay up for doing
this production run to when they were able to get their money back.  So -
they are still doing shitsmall production runs and probably still do at
least the assembly in Germany - which is why they have to charge USD 200++
for something that would have cost them less than USD 40 to manufacture out
here - that is if they were able to make 100.000 devices at the time.

> deal.  Part cost for prototype: Less than $1K.  Software is GPL'd.  Then
> I'd have an actual prototype to show the banks

Been there - done that - the bank won't even bother to look at your
prototype.  They don't give a f*ck.  What they want to see is how you plan
to get the investment back - that's the only thing they care about - and
your challenge is to find a way to convince them, and that ain't easy
without a track record (meaning existing customers - which you don't have if
you only have a prototype).  Say Catch-22 :)

> BTW, where can you get the Grandstream for $50?  That's a decent
> alternative to having Sipuras and analog phones everywhere in this
> house.

Well - end-user price out here is around USD 60 if you buy ONE right now.
If you buy a hundred or so you'll get them down to that price.

Regards,

    Lars...

--
Lars Boegild Thomsen
Technical Director
JustIT Sdn. Bhd.
Cell Phone (MY): +60 (16) 323 1999
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