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[OM] WHY? WHY? WHY?

Subject: [OM] WHY? WHY? WHY?
From: William Sommerwerck <williams@xxxxxxxxxx>
Date: Wed, 21 Oct 1998 05:53:11 -0700
"ALL MANUFACTURER ALWAYS HAVE 1001 EXCUSES TO INCREASE PRICING. WILL THE
DAY COME WHERE THE PRICES SLASHED DUE TO WEAKER YEN???? I DON'T THINK
SO.

TAKE ELECTRONCS COMPONENT AND COMPUTER PRODUCTS AS AN EXAMPLE, PRICES
CONSTANTLY REDUCED WITHIN COUPLE OF MONTHS. WHY NOT THE CAMERA
EQUIPMENT?"

I don't know why Mr. Lee is screaming, though I share his unhappiness at
price increases.

A change in exchange rate does not necessarily have an effect on the
price the _manufacturer_ charges for a product, unless that product uses
expensive imported materials that represent a significant portion of the
product's cost, or have an indirect, long-term effect on inflation or
deflation.

If the yen becomes _weaker_, then the _importers_ of Japanese products
will pay _less_ for it, and they can lower the price to their customers.
This appears to be what Nikon USA is doing right now.

The reason electronic equipment gets cheaper is because companies keep
finding less-expensive ways to manufacture it. For example, when I
bought a Sony KV-1901 19" color TV around 1976, it cost $500
(discounted!!!) -- and that was at a time when the yen was worth less,
and Japanese workers were paid less.

The Sony KV-1901 used mostly discrete components. Modern TVs are smaller
and lighter -- and cost less to manufacture -- because large chuncks of
the circuitry have been reduced to ICs. (Moving manufacture to countries
where workers are paid less, or manufacturing the product in the country
where it will be sold, to reduce import duties -- helps, but this
applies to any kind of product.)

Actually, the same thing _has_ happened with cameras. Plastic-bodied
cameras are much less expensive to manufacture, _not_ because plastic
costs less than metal (it costs more) but because the injection-molded
parts do not require extensive hand-finishing. They are ready to use,
right out of the molding machine. Plastic parts can also have odd,
complex shapes that are not practical with metal castings, further
simplifying the camera's design and assembly.

As for the lenses, the only way to reduce their prices is to switch to
plastic housings and mounts. (There is no "IC" equivalent for the lens
elements, because you can't -- at present -- reduce the number of
elements without compromising performance.) However most of us feel
about plastic bodies, we generally squirm at the thought of
plastic-barreled and -mount(ed) lenses. It should be possible to make
plastic-bodied lenses that are actually sturdier than metal, but I don't
know that anyone is doing it.

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