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So what does it cost to make an HR20

Discussion in 'DIRECTV HD DVR/Receiver Discussion' started by Tom Robertson, Oct 29, 2007.

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  1. Doug Brott

    Doug Brott Lifetime Achiever DBSTalk Club

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    Ah .. I think I see the disconnect. The thread may be titled incorrectly then as that is not what it was originally about. It was more about what it costs for DIRECTV to get the HR20 so we are talking about apples and oranges here.

    Is the $400 cost to hand over to consumer? perhaps. It's not clear where the installation/transportation costs are embedded in the equation.
     
  2. bhelton71

    bhelton71 Cutting Edge: ECHELON '09

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    I think I found 2 prices - $55.00 in 2 chips

    price #1

    The BCM7401 appears to have cost $30.00 when it was announced. Since the HR20 was released 1 year after this was published I assume the order was placed for the processors at about that price. It should be safe to assume with time - the price has come down on both chips.

    "The BCM7401 and BCM7402 are currently available in sample quantities to early access partners. Each of the chips is packaged in a 676-pin BGA. The BCM7401 and BCM7402 and are priced at $30 and $27, respectively, in quantities of 10,000."


    Source:
    http://www.investors.com/breakingnews.asp?journalid=30951640

    And price #2

    The BCM4501

    The BCM4501 DVB-S2 satellite receiver chip is available today and is priced at $25 in quantities of 1,000 units or more. The BCM4501 is packaged in a 208-pin MQFP.

    Source:
    http://www.managingautomation.com/m...ver_suits_satellite_broadcast_equipment_14618
     
  3. 40yearfan

    40yearfan AllStar

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    Now this makes sense. I believe you have got the correct answer. The cost is the total cost to DTV and that's what the CEO was referring to.
     
  4. 40yearfan

    40yearfan AllStar

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    I don't think anyone is saying DTV is lying. Maybe it costs DTV $400 or $500 a unit to get these units and have them installed. That includes the manufacturing cost, but isn't only the manufacturing cost. So the question becomes, what are we talking about?

    I was referring strictly to manufacturing costs as I'm sure others on here where also doing. I just have a hard time believing DTV is paying $400 each for units it is buying in the hundreds of thousands or maybe even millions.
     
  5. 40yearfan

    40yearfan AllStar

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    You are quoting quantities of 1,000 and 10,000. I'd be willing to bet you get a better price break than that if you buy 100,000.

    Truthfully, unless we get someone from upper management of DTV to answer this question, all any of us can do is speculate and we don't have enough information to make more than an informed guess.
     
  6. Tom Robertson

    Tom Robertson Lifetime Achiever DBSTalk Club

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    Chase Carey is about as upper management as it gets... :)
     
  7. 40yearfan

    40yearfan AllStar

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    Manufacturers don't do retail sales. Retailers do that. DTV isn't the manufacturer of this unit. They are the end user.

    Broading the distribution chain makes sense if you haven't got the were-with-all to get the units out to the public as fast as you'd like to.

    Everyone keeps referring to DTV losing money and making it up on the fees. That certainly is possible, but if you look at their profit margins, not as likely as some may think. There should be a large expenditure up front showing loses until they start to recoup their cash outlay with service fees.

    http://money.cnn.com/quote/quote.html?symb=DTV

    According to this DTV made $1.4 Billion on sales of $14.8 Billion. That's amazing considering some of the costs of launching those satellites and getting them operational had to have happened this year. Of course they will spread those costs over a number of years by depreciating the asset.
     
  8. 40yearfan

    40yearfan AllStar

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    Yes, but is he talking manufacturing costs only or the total cost to DTV?
     
  9. 40yearfan

    40yearfan AllStar

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  10. bhelton71

    bhelton71 Cutting Edge: ECHELON '09

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    Just something to do while waiting on MRV :lol:
     
  11. 40yearfan

    40yearfan AllStar

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    Another web-site showing their stock prices since 2004.

    http://money.cnn.com/quote/quote.html?symb=DTV&time=5yr

    Prior to that time, they were owned by GM and were part of their earnings reports. If you will note, they started out at around $16 a share and are currently going for over $26.
     
  12. 40yearfan

    40yearfan AllStar

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    :D :goodjob:
     
  13. jwd45244

    jwd45244 Hall Of Fame

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    Part of the problem with this thread is that we are trying to say that an HR20's costs are the sum of the component parts and the labor it takes to assemble it.

    That is just the tip of the iceberg. Software to run the box is going to be the largest cost of the box. This is true regardless of if you do the software in-house (have to pay those salaries) or you out-source that work.

    Without the software, it is just a paperweight. Software changes as requirements change. So when the HR20 was first delivered it was built with OTA hardware inside. That software was not added till much later (and is still being worked on). The HR20 has the hardware to support SWM, but that software was added later. The HR20 has had the hardware to do OnDemand, software much later.

    Once you have a have a hardware and software solution like OnDemand, you costs go up with all of the infrastructure for that.

    So, given all of this I am not sure how to figure out what an HR20 costs but it is certainly more than "the sum of the component parts and the labor it takes to assemble it"

    And of course we are not counting all of the taxes and tariffs associated with these boxes.
     
  14. 40yearfan

    40yearfan AllStar

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    I certainly agree with what you are saying, however, the original question was what do these boxes cost DTV. You can look at that in two ways. Cost only from the manufacturer they purchased them from or total cost to put into operation. Two very different items with a large spread of cost between them.

    Maybe we need to define exactly what we are talking about?
     
  15. jwd45244

    jwd45244 Hall Of Fame

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    I suspect that part of the impetus around this thread was to begin understand the some of rationale behind not including OTA in the box in the HR21.

    If that is the case, then you can look at the first set of easily identifiable costs: the components and the labor to assemble.

    Then you look at not having to have and maintain the entire code base for the OTA. This means to can have programming staff working on other stuff.

    Then you look at not having to pay TMS for as much of the guide data (just a guess but I suspect DTV pays TMS based in part on the number and kind of boxes in question. I have nothing to base this but, it makes sense that DTV would pay TMS a higher rate for guide data for an H20/HR20 than an equivalent H21/HR21.).

    The you get a lower installation costs. No 3rd cable run (or "funny" BBC diplexer games).

    You get lower support costs as you are not having to deal with any OTA related questions.

    Given all that you could say the same for any feature that the HR20 has.

    Not to stir up any old discussions about the fairness of not having OTA in the H21/HR21. But it is clear that there are a bunch of costs in OTA (and every other feature) and a business must balance costs against revenue.

    This is a very simplest look at what might be part of the rationale (not that I like it) behind not including OTA. A real analysis would look at the Microeconomic factors (Marginal Variable Costs and Revenue).
     
  16. dms1

    dms1 Legend

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    Actually, the price difference between 10000 and 100000 (or higher) for most electronic components is minimal. You have to remember that the parts cost the supplier (Broadcom in this case) a finite amount to make and that cost isn't particularly price dependent. The reason that the buyers price goes down with quantity is that the supplier is willing to cut their margin in exchange for large value orders. However, there is a limit to how much discount they can offer without making a loss themselves.
     
  17. Nov 7, 2007 #157 of 160
    RAD

    RAD Well-Known Member

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    Dripping...
    On the 11/7 earnings call Chase said DVR cost now are $430/$440 but going to $250, guess that answers the question.
     
  18. Nov 7, 2007 #158 of 160
    Doug Brott

    Doug Brott Lifetime Achiever DBSTalk Club

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    RAD, thanks for the update .. $250 cost will be a much better number for DIRECTV. Maybe it will reduce the "owned" retail cost from $800 down to $499 whenever that happens.
     
  19. Nov 7, 2007 #159 of 160
    mhayes70

    mhayes70 New Member

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    Thanks!!! Hopefully that will satisfy some people about the cost.
     
  20. Nov 7, 2007 #160 of 160
    nuke

    nuke AllStar

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    BOM cost would appear to be around $160 or likely much less, (presuming lower volume production than I'm used to working in) to my eye and I work in the industry.

    No idea about the amortized HW/SW engineering costs, tooling, etc.

    The shareholder info includes all the paperwork padding that goes on. As leased equipment, the more they tack on, the more they can improve their tax treatment.
     
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