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Why are DVRs so expensive?

Discussion in 'DIRECTV General Discussion' started by Xsabresx, Nov 14, 2011.

  1. Nov 14, 2011 #41 of 186
    BAHitman

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    I think I read somewhere a while back that the BOM (Bill of Materials, or, each part) of the whole DVR cost somewhere around $250. this is cost of HDD, processor, memory chips, power supply parts, tuners, the case, etc...

    now you have to pay someone (pace, samsung, etc...) to put the hardware together, then there is packaging, and logistics (shipping, etc...).

    Before you can do any of that, you have to design it. this is not cheap... pay a bunch of engineers to think up a design, spec out the parts, etc...

    once you have the hardware, you load a bunch of software on it... some of the software that is used is free, others are not. the MPEG codecs that have to be licensed, regulatory fees (paying the FCC to test and put their seal on it) licensing for hardware (Dolby and HDMI, etc...) all have to be paid.

    I could easily see post-development cost beeing close to $400.

    The $6/month lease "fee" is simply to cover the cost of managing an additional piece of addressible equipment on the "network". I expect it also helps cover refurbishment when a defective unit gets returned and fixed to be sent out again until it's past it's lifecycle.

    I personally don't see a problem with the lease fee, either the up front one or the monthly maintenance
     
  2. Nov 14, 2011 #42 of 186
    veryoldschool

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    Cables, switches, connectors, etc. "I don't think" are part of a DVR cost, since they'd still be needed for a receiver.
    Build quantities may only be in the hundreds of thousands, and these may be split between manufactures.

    The mirroring fee is because "they can", since if the cable is already there, and when you bought receivers, you still paid the fee and what on earth does it "cost them" to mirror a receiver off another one on the same account.
    MRV cost them some to develop, but once that was done, there isn't any further cost, but it nets them $3/month/customer/account, and is making them millions.
    It shouldn't be a surprise DirecTV is in business to make a profit, while spending hundreds of millions launching SATs, paying program providers, etc.
     
  3. Nov 14, 2011 #43 of 186
    veryoldschool

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    You're in line with what I think too, "but" I don't think it's the monthly lease fee, but the $199 up front fee to cover the "recycling" [testing, repairing, shipping etc.] for the DVRs.
     
  4. Nov 14, 2011 #44 of 186
    Richierich

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    Why do you have to pay $400 to $600 for Ipad2 Tablets and other Tablets and $300 to $400 for a Smartphone with a 2 year commitment to Verizon, etc.

    They have to recoup investment money and those who buy them first pay a Premium to be the First on the Block to have an IPAD2 or a Verizon Droid Razr or an Iphone4, etc.

    It's just Marketing 101 and Steve Jobs of Apple was a Marketing Genius when it came to extracting money painlessly out of people's wallets even though his products were Innovative and Cutting Edge.

    Charge what the Market will Bear.

    If you and others refused to pay $199 for the DVR Directv would eventually lower the cost.
     
  5. Nov 14, 2011 #45 of 186
    Xsabresx

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    Except that we know there is $$350 worth of parts alone in an iPad2. I was just trying to get my head around how there is $250+ in parts in a DVR. Although I just looked at hdd prices and they seemed to have skyrocketed.
     
  6. Nov 14, 2011 #46 of 186
    Richierich

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    It is all about Supply and Demand and What The Market Will Bear!!!

    They have had Weather Related Problems in Asia ( Flooding in Thailand) that have stalled production of Hard Drives and Western Digital Hard Drives and others have skyrocketed in prices because of availability.

    In fact it is almost impossible to buy a 2 TB WD20EURS right now because of Flooding In Thailand!!!
     
  7. Nov 14, 2011 #47 of 186
    lugnutathome

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    You've got design, parts, labor, distribution, maintenance, etc all in a proprietary component that you really don't want others tearing apart and self re engineering.

    Control ownership with a "lease" and a high non return (or outright purchase) price and keep a secondary market from forming.

    I keep hearing some extremely high figure as being the cost to Direct TV for a DVR like in the 600 dollar range. One has to believe with economies of scale that is not an actual cost, rather a selling price number.

    They subcontract these things in mass quantities from factories that have OEM buying power from the chip manufacturers (or also possible is Direct TV negotiating the BOM item costs direct from chip manufacturers and distributing them to the factories as they are actually produced) so their actual per unit assembly and to shipping dock costs are probably not much above the 199.

    I work in the apparel industry and we come up with an unfinished goods estimate for materials and go forth for bulk pricing. Then after the price negotiation we split it onto colorways and quantities for distribution to the factories we've negotiated the manufacturing with.

    These factories then produce the garments and ship to either our distribution points or those of are larger customers directly.

    Like in our business model I doubt they itemize R&D to the individual unit prices and instead that's a "corporate overhead" cost on another GL account likely with sub accounts for the various technology layers that comprise not only their services but the internal infrastructures to support them.

    Again I'm just guessing here but I would suspect the high pricing is more about controlling the units so they can recycle them instead of always having to ship new.

    Don "I do not know if this is true, I only offer up an alternative view based on a different business model I've been involved in" Bolton
     
  8. Nov 14, 2011 #48 of 186
    veryoldschool

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    So you don't play one on TV and you didn't stay in a Holiday Inn Express last night, but you have an opinion. !rolling
     
  9. Nov 14, 2011 #49 of 186
    fwlogue

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    For some of us one DVR is not enough. There are times at my house all three of my DVR's are recording on both Tuners. That is 6 tuners at once recording.
     
  10. Nov 14, 2011 #50 of 186
    Shades228

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    They also have to pay people to test, and repair them when they're sent back.
     
  11. Nov 14, 2011 #51 of 186
    Richierich

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    I for one know he stayed in a Holiday Inn Express do Now We Know Where He Got His Information from!!!

    In fact I think he performed Heart Surgery on me a few years back!!! :lol:
     
  12. Nov 14, 2011 #52 of 186
    lugnutathome

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    Um yep. OK right?:goofygrin

    Don "the voices made me do it really" Bolton
     
  13. Nov 14, 2011 #53 of 186
    lugnutathome

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    Egads! How's that aquarium pump working out for you anyway?:contract:

    Don "I thought we'd wiped your memory" Bolton
     
  14. Nov 14, 2011 #54 of 186
    dubber deux

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    The fact that these are leased as well means that D* can keep leasing these old units out over and over and over again, which will net them a LOT of loot, add the monthly service fee and you have one heck of a windfall.
     
  15. Nov 14, 2011 #55 of 186
    debell

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    And this is a good point, but most people don't settle for whatever when signing up for service. My local cable co provides me with many promotions that, when bundling with phone and/or internet service ends up being a great value. This is another advantage as well.

    In reality, shelling out $200 for a DVR and not knowing if you're going to get the latest that's offered is a bit unfair. If you're going to pay $200 up front, you should at least be guaranteed a new or latest model receiver.
     
  16. Nov 14, 2011 #56 of 186
    dubber deux

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    But most buyers of D* I believe are caught up in the "deal" they think they are getting...they don't see past that at least initially. That sets in a month or two later when they realize they got a used DVR that is slow and possibly not functionally properly. By then it is too late. You only have 30 days to cancel your service if you are not satisfied I believe it is still that way today. Maybe not .
     
  17. Nov 14, 2011 #57 of 186
    dpeters11

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    Except that the HR20, the oldest model, has every feature of the HR24, except for local 3D playback, and they have a swap out plan for that. Well, and it doesn't have DECA built in, but to me that's not really a difference. It is true that the ones before the 24 were slower, but that is changing a great deal now.

    But they have done a great job at keeping the older boxes current where possible. It'd be a little better if the H20 had a network jack.
     
  18. Nov 14, 2011 #58 of 186
    debell

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    There's a reason it's a "newer model". It's a faster box and I'm sure it handles many things much better. It may not be extremely noticeable, but if I'm paying $200 I should be guaranteed a new box or latest model, not a model that has been recycled by about 3 different customers.
     
  19. Nov 14, 2011 #59 of 186
    dpeters11

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    I don't have a 24, but my 22 and 20 are pretty fast. Granted, I've never ended up with a box that looked heavily used or fell off a truck.

    I'd certainly take it over the junk the local Time Warner uses.
     
  20. Nov 14, 2011 #60 of 186
    dubber deux

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    Could have been "recycled" many more times than that . :lol:

    I mean if D* charges 199$ for each time they lease that old crummy unit out to a NEW customer plus the monthly fee that is one hell of a gravy train for them.

    I do understand that correctly..that OLD used lease unit is always leased to a new customer at 199/mo plus monthly fee .right?
     

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