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Thread: Profit margin and Quality Products.

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    Diamond Member tec0's Avatar
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    Profit margin and Quality Products.

    For the past few months I have noticed a drastic decline in quality computer equipment in the local stores. The most obvious is the GPU market. Now performance graphic cards are a simple must have but lately our local shops are selling crap.

    The cards they are selling cannot even be compared to their older counterparts and cannot give high performance yet there cost is very high. The same is also true in the CPU market... there is simply no choice... For an entry level system an “i3” for example you are expected to pay more and yet its performance is
    not that much better than some of the older CPU’s. So it is not even a proper upgrade!!!

    This brings into question why is the profit margin so low that prices became so high? Then there is the question of quality. The simple truth is that the GPU’s for example are not up to standard. They are no better and sometimes weaker than older “entry models” yet there is no choice? It is this or nothing and I have seen people spending up R7000 for a computer and it is worth nothing.

    That said I never thought I would see the day that a R6000 notebook can out preform a desktop system that cost R7000 and up???

    Your thoughts?
    peace is a state of mind
    Disclaimer: everything written by me can be considered as fictional.

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    Site Caretaker Dave A's Avatar
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    HP announced a while ago that they were going off hardware and heading towards software / cloud computing as their new focus. Reason - the hardware game has become over saturated.

    However, that doesn't stack up against what you're saying about a lack of choice. You should be overrun with choices then.
    The trouble with opportunity is it normally comes dressed up as work.

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    tec0 (18-Sep-12)

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    Diamond Member tec0's Avatar
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    Can we compare the world market with the South African market? DƎLL I know for a fact is making a killing and they are dominating the industry at the moment. DƎLL hardware may only be serviced by DƎLL technicians and this was a devastating blow for the local IT industry.

    Fact is if you are not affiliated with DƎLL chances are you will be looking at the wrong end of a doorframe really soon. The downside is your service and repair industry suffers because DƎLL only use DƎLL parts and normal replacement parts may not always work.

    The downside to specialized hardware is your normal hardware and their suppliers becomes a problem. Simple computer equipment once again demands very high prices thus the reseller suffers even more. Our biggest suppliers became picky on who they supply and their demands are unjust.

    Sadly this will conclude in a vicious circle, people lose customers thanks to crappy parts and DƎLL get those customers. It seems the IT industry is heading towards economic suicide. A really basic computer will cost you about R5000 to R7000 and then it is basic as in you need to do a lot to get something out of it. Now people will not spend the money. They can get a better notebook for R7000 and notebooks are strictly supported by there brand. Again the Normal computer shop suffers.
    peace is a state of mind
    Disclaimer: everything written by me can be considered as fictional.

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    Diamond Member Justloadit's Avatar
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    Well you can attribute it to higher wages being paid in the manufacturing sector.
    Your wish for higher wages is showing what the domino effect is creating, cost of any hardware is going to climb very quickly.
    Victor - Knowledge is a blessing or a curse, your current circumstances make you decide!
    Solar and LED lighting solutions - www.microsolve.co.za

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    Diamond Member Blurock's Avatar
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    My view is that you have to protect the integrity of your product if you want to build a strong brand. Should you use "pirate" parts and the product fails as a result, your guarantee is nul and void. One can not expect a manufacturer to extend his guarantee to someone else's product or service.
    Excellence is not a skill; its an attitude...

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    Diamond Member tec0's Avatar
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    Quote Originally Posted by Justloadit View Post
    Well you can attribute it to higher wages being paid in the manufacturing sector.
    Your wish for higher wages is showing what the domino effect is creating, cost of any hardware is going to climb very quickly.
    Fact is that an international company is going head to head with all the small time locals and the locals are losing out heavily. Secondly our suppliers are adamant with their prices and keeping the prices high thus the reseller suffers more and more. There is a domino effect here but I don’t think Lonmin is to blame...

    If you can actually import parts from England cheaper then what you can buy it here you need to ask questions...
    peace is a state of mind
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    Diamond Member Justloadit's Avatar
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    Quote Originally Posted by tec0 View Post
    If you can actually import parts from England cheaper then what you can buy it here you need to ask questions...
    I do not understand your line. I suspect you meant, If you can buy it cheaper in England, why you can not buy it here...

    Simple, let me paint you a scenario which I personally experienced. This is not here say.
    We were contracted to upgrade a 3 layer co-extruder which manufactures plastic bags. To do this we required some special equipment to monitor the thickness of the plastic while the machine is in motion. A Swiss company had a product which they manufactured. We went to visit the factory. When we arrived at the factory, we were amazed to find that there was only one operator per extrusion machine, and he did everything, from collecting the pellets from stores, loading the hoppers, controlling the machine, packing the completed rolls, labeling the rolls, printing the invoice, and attaching it to the rolls, and delivering to dispatch. Granted this chap was being paid extremely well, as much as a local shop supervisor.

    The equivalent machine at the South African manufacturer, required some 9 employees to do most of what the single Swiss chap was doing, and excluding the paper work trail. The total wage bill was far higher than the Swiss chaps salary.

    On the face of it, our workers as individuals are cheaper, but collectively, they were more expensive, and required constant supervision, and excluded the errors that were made, resulting in scrap and redoing the job. Remember now there is also all the other support required, like coffee, lunch, over alls, change rooms, showers, clocking cards, wage klerks, medical aid, etc.

    The product from Switzerland was cheaper and better quality than what was being manufactured here.

    So, with this huge increase in wages, so the running cost is climbing and climbing, so where is this going to leave manufacturers...........
    Victor - Knowledge is a blessing or a curse, your current circumstances make you decide!
    Solar and LED lighting solutions - www.microsolve.co.za

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    Diamond Member tec0's Avatar
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    Last time I checked computers were made by robots. I remember seeing it on Discovery the process is so sensitive that human hands are hardly required. Atomisation is not new thus one worker can do more but if you want to feed people water and bread and keep them lock up in shacks with no health care and or training then yes you will have 9 workers each making mistakes because of obvious problems.

    Right now the public is seeing crappy components selling for supper high prices. Part of the blame is large companies eating up small businesses profits. The second problem is suppliers with unreasonable requirements thus regulating stock and supply.

    Thus the consumer must now make do with "cheap-crap" sold at bloated prices. Now we have a real problem because we get low quality goods and must pay a lot for it. The reseller also has a problem because they must supply "cheap-crap" at high prices and make less money at the same time. How is this healthy?
    peace is a state of mind
    Disclaimer: everything written by me can be considered as fictional.

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    Diamond Member Blurock's Avatar
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    Quote Originally Posted by Justloadit View Post
    ... we were amazed to find that there was only one operator per extrusion machine, and he did everything, from collecting the pellets from stores, loading the hoppers, controlling the machine, packing the completed rolls, labeling the rolls, printing the invoice, and attaching it to the rolls, and delivering to dispatch. Granted this chap was being paid extremely well, as much as a local shop supervisor.

    The equivalent machine at the South African manufacturer, required some 9 employees to do most of what the single Swiss chap was doing, and excluding the paper work trail. The total wage bill was far higher than the Swiss chaps salary.

    On the face of it, our workers as individuals are cheaper, but collectively, they were more expensive, and required constant supervision, and excluded the errors that were made, resulting in scrap and redoing the job. Remember now there is also all the other support required, like coffee, lunch, over alls, change rooms, showers, clocking cards, wage klerks, medical aid, etc.

    The product from Switzerland was cheaper and better quality than what was being manufactured here.
    So, with this huge increase in wages, so the running cost is climbing and climbing, so where is this going to leave manufacturers...........
    Proves my point. We do not require cheap, uneducated labour. Illiterate people are a burden on our economy and resources. We need trainable people that can understand instructions and that can educate and better themselves, aspiring to better positions with more responsibility and thus better remuneration.

    Our education system needs to be improved and both government and industry will have to find ways to provide adult education for those that were left behind for whatever reason.
    Excellence is not a skill; its an attitude...

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    Diamond Member Justloadit's Avatar
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    Quote Originally Posted by Blurock View Post
    Proves my point. We do not require cheap, uneducated labour. Illiterate people are a burden on our economy and resources. We need trainable people that can understand instructions and that can educate and better themselves, aspiring to better positions with more responsibility and thus better remuneration.

    Our education system needs to be improved and both government and industry will have to find ways to provide adult education for those that were left behind for whatever reason.
    Hi Blurock,

    Could not agree more with.

    Unfortunately the lack of any education being implemented was recently highlighted by the text book debacle in the Limpopo province. One would think that after 19 years, the education department would be humming like a well oiled machine, but its failure is now being blamed on Verwoed, who has been dead almost 50 years.
    Victor - Knowledge is a blessing or a curse, your current circumstances make you decide!
    Solar and LED lighting solutions - www.microsolve.co.za

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