Manufacturing tablets that is as the Silicon Valley grand dad has just announced that it will do a second however (read my lips) last run at a final batch of tablets to send forth into the Apple starved iPad “want-a-haves” world. So what does this mean, as is this the world’s largest marketing fumble or yet a brilliant move to get their fledgling product into the hands of the mass’s clamoring outside of the Best Buy for the 99 dollar reading wonder. As it would be a stretch to say the venerable HP is making any kind of money from selling a product for one fifth of its retail offering so a second go?
So what gives with “Leo’s Logic”, as in the end should he get enough units in the hands of the buying public might he awake to the same enjoyments as the Cupertino darling Apple has with an App Ecosystems large enough to support his vision (assuming he has a vision in the first place). As this paradigm was quietly whisked in with the cell phone era where carriers are happy to give you a 400 dollar handset today for the consumption of their product tomorrow marking the birth of the “ecosystem economic model” as its free today, however you WILL pay me tomorrow.
The interesting thing here and frankly I yearn to see some solid financial work done on this as there has got to be a Nobel Prize in economics hiding here in what I’ve come to coin as the “Wimpey Effect” as to borrow from the Popeye ™ cartoon series we see the ever loveable freeloading Wimpy who is always happy to “pay you next Tuesday for a hamburger today”. As here we see our top hat wearing childhood friend always willing to take something of value today in exchange for a “weak” promise to pay at a later date.
However let me ask you this; do you remember what happened to Wimpy most of the time? Yes he would end up being tossed out of the restaurant by his ear at the hands of the disgruntled owner who saw no value (or humor) in Herr Wimpey’s transactional request for goods exchange. Yet as kids we would laugh as the seemingly harmless oaf would land upon the pavement as we would think “such a foolish man to think he could get something for basically nothing”.
Yet today those same kids who laughed are the ones buying into the counter logic now being offered by the magic marketers of Madison Ave as least we think its only Disney who can spin a yarn. So how could this happen and what does it mean, while for starters there is this thing called “the time value of money” which in the financial world which is a kin to “friction” in the world of Physic’s as its always and brings to the picnic its own costs. As lets go back to the cell phone for a minute as our working example, so Acme Telco hands you a 400 dollar hand set for free (the same works for a subsidized smart phones too)! The catch is you have to buy a minimum of something for x period of time therefore they are floating the “time value costs” of the handset into the overall ecosystem.
While all this can get a little messy the point is the “time value of money” is logarithmic and not linear as the further you defer it the faster it will grow, and the faster it grows, well let’s say you get the idea the here as its not hundreds any more, its millions taking part…