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    Economics of Mass custom laptops

    Discussion in 'Gaming (Software and Graphics Cards)' started by TheSolidStateSociety, Mar 15, 2007.

  1. TheSolidStateSociety

    TheSolidStateSociety Newbie

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    I have been a laptop user for quite some time now and I remember back in the good old days, 3 years or so ago, buying a custom laptop was fairly simple. The general requirements for buying a custom laptop, with gaming in mind was easy at that due to the lack of diversity. Recently though this trend has changed with the big two, Nvidia and ATI releasing a large number of graphics options mobile computers. This bring us to my question. "What exactly is the economics for the manufacturer/distributor.

    Now heres my main question here.

    Lets say you have two companies,

    The first, a large wholesale outfit(Dell)
    provides a base laptop for 1,000USD and with all the fixings for around 2,000USD. This computer will normally come with a decent, but not "grand" graphics card something like an X1400, or so. The interesting thing to note is the base price 1,000 includes a basic card but usually for only 200 dollars more you can upgrade to a faster graphics card in the same model, something like an x1800 or a GeForce 7900gs

    The second company, a reseller, or possibly a custom company will sell you the whole package for 400 dollars less, which makes sense because they don't have the supply as the first

    ... BUT... to upgrade to a model with a top of the line graphics card, the second company will usually charge an arm and a leg for the BASE model + all the bells and whistles (2gig of ram ect) bringing your total to well over 3,000 dollars.

    Heres the difference

    Sure, at Dell you can customize your inspiron E1705 with a geforce 7800 or now recently a 7900gs for 200 dollars in the same model, this upgrade will only cost a 200USD or so.

    But, smaller retailers instead re brand the machine to an "extreme" model and usually charge well over a thousand more. So for some reason smaller retailers are over running around 700USD per machine, because the chip set and motherboard are the same, so whats actually happening in this situation?

    I have a few theories, up until now laptops haven't been seen as gaming options. So smaller companies are reluctant to carry high end graphics cards for a 200 dollar more price-point, this may scare off would be consumers, instead they opt to brand a different class of laptop as the "extreme" or gaming edition then reap in the extra 700 for themselves.

    The other theory is the cost of the graphics cards themselves are only available at 200 dollars for large whole sellers, and as of yet Nvidia and ATi are purposefully inflating the prices of their higher end card to small companies in order to create scarcity of the high end electronics, thus creating a marketing grid for each consumer group.

    What this boils down to me is why the heck can't I Consistently find a 2,000~ laptop with a geforce 7900gs or a radeon x1800/1900? ;) Companies have proven that this price point is possible so whats the deal? Why the gap?

    or
     
  2. ZaZ

    ZaZ Super Model Super Moderator

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    Almost all laptop manufacturing is subcontracted out to a few companies called ODMs(Original Design Manufacturers) like Wistrom, Clevo, Asus, etc. Dell is no exception. Dell or the other brand names like HP or Acer handle marketing, sales and support. Dell and other larger brands that offer notebooks with the 7900 go like Gateway or Toshiba, sell many more times notebooks than the smaller boutique players which gives them a huge cost advantage. Dell gets a better price because they buy way more than the smaller companies.