|Re: 33S key press problem|
Message #4 Posted by Kevin Brown on 4 Feb 2007, 5:40 p.m.,
in response to message #3 by Gene
Couple of things here to consider.
1 ) The HP33s costs around $60, which, in 1977 terms would be about $20 or so. At the time, the only calculator near that in capabilty might have been the HP29C, which cost $195. So, the HP33s in real dollars costs about 1/8th what it would have in 1977. This leads to...
Well, 30 years of technological progress alone should reduce that $195 (in 1977 dollars) by quite a lot.
Total human labor is ultimately what determines how much something costs to produce in a highly competitive environment. This is true even of raw materials. You can see that this is true if you think about it -- just trace back all exchanges of money for goods back to a source, and you'll find that they all eventually end up being used to pay someone for their labor.
Technology in the form of automation is a human labor multiplier. It allows you to produce much more for the same amount of total human labor (which includes the labor required to make and maintain the automation itself) than you could without it.
[Incidentally, this is a very large part of why I'm opposed to offshoring of manufacturing -- it reduces the incentive to automate. Automation is the only long-term way to reduce the real cost of goods without also reducing the average standard of living, which in simple terms is what the average person can get for their labor.]
30 years of technological progress should significantly increase the amount of automation available to produce a calculator, which will significantly reduce the final unit price of that calculator in a competitive environment.
2 ) Sadly, we live in a disposable culture. If your VCR or DVD player breaks, you don't repair it, you get a replacement. If I get 4 years out of a device, that's probably pretty good seeing as how I might pay $50 for said DVD player.
That's true, but it's independent of the quality of the device. It would be true even if the device were built to last 20 years. The reason is that manufacturing is subject to productivity improvements (i.e., what you get for your money) through automation, while repair generally isn't.
The quality of a product is determined by a combination of its design, the selection of materials used to build it, and the quality and precision of the machinery used to manufacture it.
The cost of producing a good design is primarily related to the talent of the engineers who produced the design, which is strongly related to their salary. A truly talented engineer might cost twice what an average engineer would. But the cost of designing a mass-produced product is almost always tiny compared with the cost of materials and the manufacturing equipment over the production run. Let's be generous and call it a 10% increase in cost per unit.
The cost of the production machinery is generally so high that I expect it is capable of producing goods of pretty much any quality level desired. Such equipment has to be very future-proof because it's such a large investment. Certainly manufacturers in China have consistenly claimed that they can produce goods of whatever quality level is desired, and all that changes is how much it costs. The bottom line here is that I think it's safe to say that the quality of the production machinery is generally fixed at the high end of the scale. So we can treat it as a constant.
The cost of materials depends on the selection of materials and the quantity (and, sometimes to a great degree, on the design). Companies producing cheap goods attempt to minimize both. Companies producing quality goods will attempt to minimize both within the constraints of maintaining the requisite quality. The increase in per-unit cost for quality materials depends greatly on the difference in cost between the chosen materials, and to a lesser degree the difference in quantity (the amount of material required to build a calculator doesn't vary a great deal, perhaps by at most 30%, while the choice of material could increase the cost of a component by as much as 200% or more).
If you look at the materials used to build the HP calculators of the past and compare them with those used to build the calculators of today, I think you'll find there's not that much difference.
Finally, to counterbalance the increase of materials cost, technological improvements cause better materials to become available over time, often for much less money than previous materials. The plastic compounds available today are more advanced than they were 30 years ago.
So after all that, it's hard for me to see how you'd have to spend more than, say, an extra 50% for materials to build a calculator with quality equivalent to or better than those HP manufactured 30 years ago.
That brings the total extra cost to 80%. So a really high quality calculator should cost roughly 1.8 times what a cheap calculator with equivalent capability would.
To pay 80% more for a calculator that will last 400% longer is a bargain.
No, the reason for the loss of quality isn't in the cost of building quality. Even though people are price sensitive, that doesn't hold true for all goods, especially engineering calculators, which are targeted at people who by their nature tend to value quality more than the average person.
Remember that HP at one time did produce calculators that would last 20+ years. The quality we're talking about isn't a fantasy, it happened. And HP made a profit doing it, too.
The economics of that period of time aren't much different than the economics of today. No, the reason HP's calculators aren't built with the quality they once were has little to do with the willingness of the buyer.
3 ) While I too wish quality would come back, there just is not a large enough market for the quality calculator out there costing $250 or more to make and sell one. If HP made the 33s bullet proof and charged $250 for it, their sales would probably be 1/10th what they are at $60. As such, it would never get made in the first place. Concepts like ROI, NPV, etc., come into play here.
But if they made the 33s bulletproof and charged $110 for it, I expect their sales would be quite a bit better than 10%. They might not be as high as they are now, but I think they would be enough for the line to be profitable.
No, the primary reason HP doesn't build calculators with the quality they used to is that HP's management has a completely different set of core values than they used to. Hewlett and Packard built a profitable company, but their focus wasn't on maximizing profits. For them, what they valued were sufficient profits to keep the company prosperous, and within that constraint to build the best equipment they could. Quality came first and was constrained by the necessity of keeping the company afloat and of keeping the resulting products inexpensive enough that people could afford to purchase them (even if they were more expensive than competing products).
That strategy worked. HP had its ups and downs over the years under the tutelage of Hewlett and Packard, but it survived when other companies (such as Commodore) floundered and failed. Their strategy had long-term value.
Today, HP's management is concerned only with maximizing profit. How does this relate to the quality of products? Simple: a product built the way HP used to build them would last a very long time. During that period of time, the purchaser would not be buying another one. The total revenue for that product line would thus be less than it would be if the product didn't last as long. So the primary reason quality of goods today generally isn't as high as the quality of HP's products back in the day is to force people to buy more of them. This approach turns the cost of production versus longevity equation on its ear. Today, HP generally produces products with quality that is barely good enough, just like everyone else. Nobody is focused on producing quality first and profits second the way Hewlett and Packard did.
Don't confuse the values of corporate management with the viability of the market. They're not the same thing at all.
I too can wonder why on earth these decisions were ever made in the first place, and I have no idea on some of these, but expecting a gold-plated $250 instrument is not being a realist in this day and age.
Here I think you're wrong. Would you buy a 33s for $110 as opposed to $60 if you knew it would last 20 years? I bet you would.
People who lament the demise of quality in the modern world all seem to believe that there's no market for quality. There is. And the proof is in them, because they would buy better quality goods even if it cost more if such goods were available. And so would I. There are many of us out there. What prevents that market from being fulfilled is the drive on the part of corporate management to maximize profits above all else. A market in which the quality of the product is very high is almost by definition a market in which profit cannot be maximized.
So the unrealistic market isn't that of quality goods, it's that of corporate managers that are willing to make high-quality products at the expense of some profit.