I'm not totally sure I understand. I expected these to be selling for twice the price, not half price.
I thought the whole idea of so much of the tech is to be able to lock you in and make profit that way, through servicing and features and subscriptions and whatever else.
If they're giving up that entire profit stream, they have to make money somewhere else. So how are they selling these for so much less and still making a profit? What am I missing?
They're using an absolutely ancient engine from Cummins that has probably paid off its r&d and assembly line costs at least 10x over. It has virtually no pollution controls on it like DEF or DPF. That alone is saving a fair amount of money.
/woosh
But I could be wrong. I can't know but I'm pretty sure the GP was writing tongue in cheek. As in mocking the business strategies that have been eroding the engines of our economy.
Actually, no. I don't like the modern business strategies but they are what they are.
The only reason many consumer televisions are as cheap as they are is because they're being subsidized with advertisements.
It's the same thing with the razor and blades model, where the razor is sold at a loss and the profit comes from the replacement blades. Or the game console model, where the console is much cheaper than an equivalently powered PC because the profit is made on the games.
Low upfront purchase prices are subsidized by future income streams which can be enforced with technological locking. If you don't have that, the upfront purchase price generally has to be much higher.
You are seeing the price cuts of simplicity.
There’s very little R&D cost. Possibly little cap-ex as the infra to build exists.