Dell Axim X5 Profitable at $199?

[Ed Hansberry]

http://discussion.brighthand.com/showthread.php?s=37414e163b42e94ec5e3e418d516a98f& postid=451469#post451469

According to a Brighthand thread, Todd Kort, a Gartner analyst often seen quoted in PDA market share reports, says Dell may be making a pretty penny off of the $199 and $299 Axim X5 models after the rebate, and a few pretty pennies off of those models sans the rebate.

"According to a teardown report from Portelligent the total hardware and assembly costs on the 400MHz Axim are estimated at less than $150. Obviously, there are some additional software costs, probably about $20. Given Dell's low OPEX, (operating expenses) it is clear that they are making decent profits on the 400 MHz Axim, especially when people pay the full $349."

For just $2,450, you too can read the report, available at Portelligent. Operators are standing by.

[Ed Hansberry]

http://discussion.brighthand.com/showthread.php?s=37414e163b42e94ec5e3e418d516a98f& postid=451469#post451469

According to a Brighthand thread, Todd Kort, a Gartner analyst often seen quoted in PDA market share reports, says Dell may be making a pretty penny off of the $199 and $299 Axim X5 models after the rebate, and a few pretty pennies off of those models sans the rebate.

"According to a teardown report from Portelligent the total hardware and assembly costs on the 400MHz Axim are estimated at less than $150. Obviously, there are some additional software costs, probably about $20. Given Dell's low OPEX, (operating expenses) it is clear that they are making decent profits on the 400 MHz Axim, especially when people pay the full $349."

For just $2,450, you too can read the report, available at Portelligent. Operators are standing by.

[Rob Borek]

I should get into writing trumped-up market analysis reports and charge $2500 for them... :lol:

[daninnj]

You kidding? I can buy 11 or 12 Axims for that!

DanInNJ

[Ed Hansberry]

Originally Posted by Chris Hendriks

That cost is unlikely and not a fair representation of the total product cost and therefore is very misleading unless the information is viewed in the correct perspective.

The cost estimate does not include items such as:

Pocket PC licensing fees

Kort estimated that at $20. Reasonable.

ODM profit

Per device? If it is 10-15% I'd be shocked. So, make it $22.

warranty cost

Dell is essentially self insured on this one. A buck or two, max.

packaging cost

Maybe a buck.

manual cost

'nuther buck.

CD cost

2 cents.

software licensing fees for software on the CD

What software? I thought it was all "trial" versions. Whatevert isn't is *HEAVILY* discounted. The developers want on the CD for upgrade fees.

cost of accessories in box (cradle etc)

That is in the cost of that $150 I think. If not, the cradle would be $5-10. Call it $25 for everything.

shipping costs to the US

Maybe $10. Maybe.

currency exchange

Dell hedges that.

cost of "float"

Dell has no float. They have negative days in payables. They get their money from you before they pay their suppliers. Best in the business at it.

So, $150 plus my stuff above is $210. Lets say I was waaaaaaaaaaaay wrong and it comes out to $250. They sell it for $299 with the rebate and that is $50. $349 sans the rebate and it is $100.

[MPSmith]

So the margin on Axims might be high (although that's not likely to be true). Even if so, would someone tell me why that's a problem? For one thing their margin can not be much higher than the rest of the computer industry. I'm quite certain that Dell hasn't found some cheap alien technology to make these PDA's out of. Listen, if you want to talk about high margins, let's look at items like clothing or cars.

The overall point of some of the comments in this thread are eluding me. Here we have a product that has shattered industry price barriers yet we still have those concerned about their profits? That's kinda nutty IMO.

Nice story, but we've missed the point. We ought to be saying "Gee, now I hope more companies start making PDA's. See, you can make a good profit if you make a decent product!"

Am I missing something?

[Paul P]

Originally Posted by Ed Hansberry

So, $150 plus my stuff above is $210. Lets say I was waaaaaaaaaaaay wrong and it comes out to $250. They sell it for $299 with the rebate and that is $50. $349 sans the rebate and it is $100.

Minus the 35% incidental cost. :wink:

[Ed Hansberry]

Originally Posted by MPSmith

The overall point of some of the comments in this thread are eluding me. Here we have a product that has shattered industry price barriers yet we still have those concerned about their profits? That's kinda nutty IMO.

That is the whole point - that with these really low prices, Dell isn't doing it at a loss, they are making money at it. Possibly good money. That is good for Dell and the Pocket PC market.

[MPSmith]

That's not the way the thread reads. NEVER in this thread has ANYONE said ANYTHING about this being a good thing. (Until I pointed out how negative the thread is heading). I think this is wonderful. Why isn't everyone saying that?

[KiLLiN-TiMe]

So, what are you trying to tell me??? Dell is selling Pocket PC's to make money? LOL!

At least they are not raping us as bad as everyone else in the market is!
Just my two cents…

[MPSmith]

Originally Posted by KiLLiN-TiMe

So, what are you trying to tell me??? Dell is selling Pocket PC's to make money? LOL!

At least they are not raping us as bad as everyone else in the market is!
Just my two cents…

Glad I'm not the only one who thinks this way!!!