Home opinion-and-analysis ShawThing Faster, cheaper, better impacting all technology areas

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It must be hell to be running Tier One designer/manufacturers like Samsung, Apple, Microsoft, Sony, Toshiba, Panasonic and others as Moore’s law* bites into their market share and profits. Let us analyse a few ‘sweet spot’ products.

(*Moore’s law, paraphrased, reminds us that processing power, memory, or features double every 18 months for the same cost). For example:

  • A 7” mini-tablet starts from around $50. There is nothing wrong with it, perhaps it uses last week’s technology, and it will do the same job as a base $399 iPad mini or Galaxy Tab. Ditto for a generic 10” <$100 tablet, versus several hundred dollars for a name brand.
  • A 55”, 1080p, TV with the majority of purported smart features starts from under $700 and does the same ostensible job as a $3-4,000 flagship model. Read on about the new 4K TV's.
  • A 4.5” Android smartphone starts from well under $100 and provides the same Android user experience as, say, the impending Google Nexus 5 rumoured to be around $300 and a Samsung/LG/BlackBerry equivalent closer to $600.

In marketing parlance, information technology (IT) and consumer electronics (CE) are now firmly commoditised products.

For example, Android is Android regardless of which phone you use. The key differentiators are screen size, camera capabilities - which most never exploit to any critical extent - battery life and weight.

I venture that, apart from emotional attachments to brands, the majority of people would be just as happy with a cheaper, generic, semi-disposable product as a shiny new Apple or other.

That is what is happening with every commodity category. K-Mart, now the doyen of house brands is doing very well - a $9 toaster or jug does just as adequate a job as a $40 brand name one. Target, owned by the same company, is the home of brand names and is struggling.

There are some downsides to everything being faster, cheaper, better.

Technology advances do not happen by accident. It is expensive for a designer/manufacturer to develop a 4K Ultra HD TV and those costs must be factored into the price -  typically around $6,000 for a 55”.

Within month’s we will see Tier 2 (Hisense, TCL, etc.) 4K screens (using Tier 1 made panels) for about half the brand leader’s price (i.e. $3,000). Then we will see Tier 3 manufactures release generic panelled 4K screens for half that ($1,500) – step up Mr Kogan and friends, 4K, 55” TV for under $1000 by Christmas, if not sooner. [Update Seike via Sears in the US has released a 50”, true 4K, smart TV for US$1500 already and its getting rave reviews).

 

Opinion

Over the past few months, I have been to many product releases of IT/CE products from lesser known Asian manufacturers. In most respects, the more generic products are worth every cent of the suggested selling price.

Although Huawei, for example, may object to being categorised as lesser known, its new Ascend P6 3G, and the P2 4G LTE-A, smartphones are very well made and priced, and cetainly a match for any Tier 1 product. Many, many millions of these models will sell in Asian countries and if Aussies are smart they will realise that value should overshadow brand loyalty. That does not bode well for brand leaders.

Technology is a commodity now – research leads to reference designs. For example, Google Android has commoditised smartphones and Intel reference designs have commoditised Tablets and Ultrabooks, all in a good way.

I am not suggesting that if you have money to spare you should not buy a Tier one product, but I am just making the point that quality and technology-wise there is 'but a cigarette paper thickness' separating most IT and CE products these days.

Where price does count is in after-sales service and warranty (added value). Australians are well protected by consumer warranty laws. It is relatively easy to get action from the various State Departments of Consumer Affairs so the choice of bricks and mortar stores is no longer such an issue, although online can still be a warranty minefield.

Remember Moore’s law. That 4K TV will be an 8K, and your ARM based Android will be twice as powerful by this time next year. Australians are regarded as early technology adopters. Come in spinner as that is where the money is made!

My advice - buy what you need for today's needs and look beyond marketing hype and brand recognition.

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Ray Shaw

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Ray Shaw ray@im.com.au  has a passion for IT ever since building his first computer in 1980. He is a qualified journalist, hosted a consumer IT based radio program on ABC radio for 10 years, has developed world leading software for the events industry and is smart enough to no longer own a retail computer store!

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