Why do computers cost so much?

[ScubaScott]

This question popped in my head after my LDS is pushing the Cobras at ridiculous prices....

I plan my dives by tables and use a computer for backup, but computers are handy on multi-level dives, no doubt about it. I will always dive with one, so I'm not dissing them, but....

Why do they cost so much? Essentially, they are only a waterproof calculator. I'm an engineer, with a pretty nerdy calculator, but it certainly didn't cost anywhere near what a Cobra or Wisdom does, and yes, it does much, much more....

You can put a desktop computer in your home that does far more than a dive computer, for less dollars than many dive computers on the market. Doesn't make sense.....

they must be like the price of gas, with all kinds of mysterious influences affecting the price.....

Rant over,
SS

 

[KrustyTheClownFish]

You are paying for the manufacturers liability insurance premiums.

This question popped in my head after my LDS is pushing the Cobras at ridiculous prices....

I plan my dives by tables and use a computer for backup, but computers are handy on multi-level dives, no doubt about it. I will always dive with one, so I'm not dissing them, but....

Why do they cost so much? Essentially, they are only a waterproof calculator. I'm an engineer, with a pretty nerdy calculator, but it certainly didn't cost anywhere near what a Cobra or Wisdom does, and yes, it does much, much more....

You can put a desktop computer in your home that does far more than a dive computer, for less dollars than many dive computers on the market. Doesn't make sense.....

they must be like the price of gas, with all kinds of mysterious influences affecting the price.....

Rant over,
SS

 

[Mako Mark]

This question popped in my head after my LDS is pushing the Cobras at ridiculous prices....

I plan my dives by tables and use a computer for backup, but computers are handy on multi-level dives, no doubt about it. I will always dive with one, so I'm not dissing them, but....

Why do they cost so much? Essentially, they are only a waterproof calculator. I'm an engineer, with a pretty nerdy calculator, but it certainly didn't cost anywhere near what a Cobra or Wisdom does, and yes, it does much, much more....

You can put a desktop computer in your home that does far more than a dive computer, for less dollars than many dive computers on the market. Doesn't make sense.....

they must be like the price of gas, with all kinds of mysterious influences affecting the price.....

Rant over,
SS

I used to work in a BCD factory and the prices went kinda like this:

Cost to manufacture BCD $68
sell to wholesaler $142
wholesaler sells to retailer $299
retailer sells to public $629

Which, is nearly a 1000% mark up

I think that this would be very similar to dive computers. I cant imagine that the hardware costs more than a few dollars.

Krusty has a point too though.

 

[ScubaScott]

Insurance - good point. Although I can't remember what my manual says, I'm pretty sure the computer companies have every legal aspect covered, making it nothing short of a miracle to actually win a case in court.......

In my mind, i was thinking exactly what Cancun Mark said.....

What a rip off....

This all being said, I don't why this pisses me off - I'm not even in the market for a new computer.....

SS

 

[Damselfish]

Dive computers don't sell anywhere near the volume as desktop computers or calculators. Aside from markups and insurance, the product development costs would need to be amortized across a smaller number of units.

 

[ShoalDiverSA]

Don't believe anything you are told. You are paying the pension for the widows of all the goats lost to DCS while testing the computers.

Seriously though, it probably has something to do with the long (costly?) development cycles. Relatively small market - though this is changing, with the resultant drop in computer prices.

I think it might also have something to do with the computers being a niche product initially and really only accessible to the more well-heeled (?) divers. The price has come down slowly over time, but because the initial prices were so high, they have a long way to drop.

Difficult to answer - I suppose only a dive computer manufacturer can field this one.

Cheers,

Andrew

 

[HammerNoMore]

they must be like the price of gas, with all kinds of mysterious influences affecting the price.....

Not so mysterious. There are two main factors that I see:

1) High development costs / manufacturing costs vs. small vertical market. Sure desktop manufactures spend more on development but they high sales rate both reduces the manufacturing costs and allows you to recoup devopment costs at a much lower per consumer rate.

2) Price fixing. The scuba industry is full of it. If there were any acual price competition the prices would be lower.

James

 

[KrustyTheClownFish]

Small market for sure, but I doubt the development costs are that high. A dive computer is only a couple of transducers (pressure & temperature) and a small digital signal processor (DSP). The sampling rates are in the kHz range. Wouldn't they be able to use off-the-shelf electronics? Then all you need to do is make a strategic hire of the scientist who knows the RGPM algorithms or whatever...

 

[lairdb]

Small market for sure, but I doubt the development costs are that high. A dive computer is only a couple of transducers (pressure & temperature) and a small digital signal processor (DSP). The sampling rates are in the kHz range. Wouldn't they be able to use off-the-shelf electronics? Then all you need to do is make a strategic hire of the scientist who knows the RGPM algorithms or whatever...

You underestimate the fixed costs associated with manufacturing startup. What are you figuring for electronics, $50? OK, but add:

Molded parts: a dive computer has 7 molded parts, out of three different materials. If I combine similar material parts into a single mold, I still need 3 molds. Figure $100K to $250K per. At $100K, I've got $300K to amortize across the total sales base. If my product lifetime is 10,000 units, that's $30 each.

Assembly: At those quantities, I barely can justify automated assembly, so I'll do it, but I've got to make 2000 units at a time and then warehouse them. So, $5 each assy cost, blus a one-time $10K line setup charge, plus a one-time $10K investment in automated test, plus $2 of labor to take them off the end of the line, visual check, hand steps, and pack. Add a dollar to cover warehousing costs and cost-of-money to carry the inventory and that's another $10/unit.

Engineering: The pure engineering takes me, all told (design, FEA, testing, algorithm implementation, coding, testing, etc.) 5 man-years because I'm pretty experienced at this; all my people have done this before and I'm pretty efficient. Regulatory processes contribute a little, as does algorithm licencing, but let's throw those in and call it $50/unit.

SG&A: My management overhead, sales activity (not only salespeople but advertising, tradeshow participation, etc.) is also pretty efficient at 18% of top-line, so all that costs me another $26/unit.

Tax provision: 32% corporate tax rate on EBIT costs me $37/unit.

Presto -- $50 of parts cost me $203 to _break even_ to put into the shop's hands as a product; I need to satisfy my owners or investors with some margin on top of that, and the retailer gets to make some money.

(Numbers are a total SWAG for illustrative purposes; I'm not in the dive computer business, YMMV, etc. etc.)

 

[miketsp]

Insurance - good point. Although I can't remember what my manual says, I'm pretty sure the computer companies have every legal aspect covered, making it nothing short of a miracle to actually win a case in court.......


SS

Given that tables and computers only work with statistical predictions and nobody actually guarantees you won't get a hit even diving within limits, it would be pretty hard to win a case in court unless of course you could demonstrate a performance failure leading to problems. For example a slow running clock, you think your bottom time is 10 minutes and you have actually been down 20... or some such failure.
So I don't believe the insurance premiums should be too high.

Has anybody actually heard of a computer manufacturer being sued successfully?