The Hidden Costs of Bargain Electronics 689
Fill Dirt writes "Mike Langberg of Knight-Ridder newspapers wrote an interesting article on the the hidden costs of bargain priced consumer electronics. I saw it in the Seattle Times business section with the title Can't lose with bargain DVD player, but low cost carries price ."
Fatwallet (Score:5, Informative)
As many great deals that I have found in fatwallet forums [fatwallet.com], I'll be damned that it seems I get more and more broke everytime I visit there...
Of course, whenever my bookoo of rebate money rolls in, I'll be doing much better.
Damn you fatwallet!
AC
not really "our" environment (Score:5, Informative)
Life is just grand, isn't it?
Apex... (Score:4, Informative)
I sell them at a national department store, and roughly 80% of them sold come back defective... usually the drive door breaks, or it eats a dvd, or the components come loose in the back.
Not worth it. Spend 50 bucks and get a decent one.
Josh
Re:Apex... (Score:2, Informative)
However, it died. Dead as a doornail.
Opening it up, I found several leaking transistors...
My "n of 1" is that I agree. Cheap Apex DVDs suck.
AC
Re:Apex... (Score:3, Informative)
Re:Apex... (Score:1, Informative)
Most low-cost DVD players are unlicenced. (Score:5, Informative)
The Dutch electronics giant has set up a dedicated website -- www.licensing.philips.com -- which features a list of licensed manufacturers from its licensee database. Philips maintains the website is kept up-to-date with the latest licensing information.
A leading importer of DVD players, who asked not to be named, told ERT Weekly: "This is big news. We have found most low-cost DVD players do not hold the necessary licences.
A Philips spokesman said: "There are a number of manufacturers that don't have the necessary licences.
IIRC but cost of a licence is around $25.
Chinese economics (Score:5, Informative)
no assembly-line workers in China able to enter that country's growing middle class
Yes, the companies hiring these people are really holding them back. Just imagine if they couldn't find a job how quickly they could join the growing middle class!
Please, give me a break. The economy in China is completely different than what this 'journalist' is used to. The number of people living here just boggles the mind. I would say that over 90% of China's problems can be traced back to the fact that it's population is FAR too high. Too many people, not enough schools. Too many people, not enough jobs. Too many people, not enough land. If the workers had something past a middle school education, then yah, maybe they could enter the so called middle class. But they don't. Usually the workers are glad they have a job at all. If they don't want the job there's plenty of other people who would be glad to take their place.
Even though their wage is well below the poverty line in the west, they usually have an average salary for the area they're living in. For instance, at the kindergaten I'm working at now the Chinese teachers get around $100-120 USD / month. The cleaning staff gets perhaps around $70-80, I forget exactly. And these are considered good wages for the job they are doing. Hell, I don't think there's a single person at the school who doesn't have a mobile (cell) phone! And remember this is in a large metropolitan Chinese city, not out in the country where most of the manufacturing plants are. The cost of living is even lower where most of the plants are.
Re:Cheap But Won't Be Durable (Score:1, Informative)
Desktop Macs are great -- I've owned dozens -- but still not the best bargain for my particular situation. However, I was recently *very* surprised to find that their Xserve servers actually work out cheaper than a roughly equivalent Dell server after Microsoft license fees are factored in.
(The Dell machines were faster and had more memory in the base model. Apple prices were also higher for additional memory and drive space but this was offset by the included Gigabit ethernet. Because of hardware contract, third party hardware did not appear to be an option. Dell server running Linux was about $2000 less than the Mac option once an equivalent RedHat license was included.)
DVD Comes On Everything These Days. (Score:4, Informative)
This raises an interesting point-- it's no wonder manufacturers are dropping the prices on their players to next to nothing; the market is saturated and people aren't likely to shell out $60+ on something "they already have".
I did, in all fairness, pick up a DVD player (as opposed to my PS2 etc.) in May of last year, but only because it was a feature of the 5.1 stereo "receiver" (actually a bookshelf changer-type system) that was on clearance anyway ($200). If the system had been full-priced (about $400) I would have said "screw it" and gone with the $250, 5.1, non-DVD-playing system sitting next to it. Both were by Sony, and I think the DVD system is no longer being produced. The point is that with all the el-cheapo DVD players floating around, I still went with a name-brand because it was "included" with the other item I wanted.
Re:I'm sorry, but this just does not surprise me. (Score:3, Informative)
A 555 timer chip is not a quality problem. It is a relatively old but very common device - it is good example of "tried and true". They have been in production for decades, and compared to more complicated chips are extremely reliable and rugged.
You are also increasingly unlikely to find such a device in a DVD player or in other modern consumer electronics. Complex modern consumer equipment tends to revolve around either a CPU/microcontroller or other highly integrated digital electronics, combined with the minimum amount of analog circuitry required to interact with the real world. The kind of functions a 555 timer might have performed (one shot timing or oscillation) are dealt with in the digital domain, and this functionality is developed as software. Using a 555 is the expensive way, not the cheap way, as hardware is expensive compared to the cost of software, which approaches zero for sufficiently large production runs.
There are quality factors in consumer electronics - it's not all the same - but it's not so simple as the use of a single device. Factors include:
With increasingly high levels of integration, more of the product is dependant on software (either in a CPU or as a way of describing custom silicon). Quality depends extremely heavily on design. Now, much of the complicated design isn't even performed by a hardware manufacturer. For example, take a look at the many usb key type MP3 players on the market. Notice how they're all almost identical in specifications? This is because the manufacturers don't start from scratch each time, but use the same chip set as all their competitors and often the same reference design from the chip designers. The guts of one of these players is just as good as the next, but one may be better overall due to better design and construction of the case, or a better user manual, or better headphones, etc.
Mass production electronics... (Score:5, Informative)
The reason they had that level of quality was they pre-tested and stress tested each component that went into the production of their consumer electronics. They spent literally billions of dollars on test equipment from companies like Aetrium [aetrium.com] and others.
As soon as Sony (and other electronics manufacturers as well) started seeing serious competetion coming from cheap Chinese imports, the easiest way to add to their bottom line was, among other things, to cut out the pre-testing.
The failure rate of each individual electronic component is pretty small, but when you have several thousand components that go into a VCR or camcorder, each component having a .001% chance of failing, the combined failure rate of all the components amounts to 1-2%. Now, when a particular component fails, the unit may not die, but something marginal like picture quality will suffer.
Sales at companies that sold test equipment plummeted - I know from personal experience.
Nowadays, a Sony VCR is pretty much just as crappy as a cheap Chinese import. The premium you pay goes to marketing, product design and adding sometimes unique and hopefully useful features - which usually backfires and winds up being a bloated and unusable product.
The lower cost leads to higher failure rates in a shorter time span, but now the technology has become disposable and it is not uncommon to replace these cheap items every 3-5 years instead of 5-7.
Think about it: When was the last time you actually took an electronic item in for repair?
I bought a camcorder last year. The tape handling sucks, it will casually eat the occasional tape. The batteries that came with it? Lets just say that I've had erections that have lasted longer. Its not a problem with the battery, but something about the unit is just sucking the juice.
When I inquired about warranty repair I was told that the unit had a 90 DAY WARRANTY! And YES, it was purchased NEW, not a refurb. I was, needless to say, shocked - but what else should I expect from our new, disposable goods economy.
Re:This speaks for itself. (Score:2, Informative)
Sure. I think this testimony to a Senate Committee [mapi.net] should explain it well enough. Some key excerpts (make that some long-ass paragraphs):
Chinese exchange rate policy is an important special case which spells currency manipulation in a different way. The Chinese currency has a fixed rate to the dollar but is nonconvertible on capital account. Over the past year, there has been a $25 billion trade surplus, a $45 billion net inflow of foreign direct investment--which also puts upward market pressures on the exchange rate--and over $50 billion of central bank purchases of foreign exchange. In this case, the central bank purchases offset almost three-quarters of market-generated upward pressure on the yuan from the trade surplus and the FDI inflow combined. Moreover, these official foreign exchange purchases may have been even larger except for an unfolding financial scandal involving billions of dollars of missing reserves.
Based on the IMF definition, China has clearly been manipulating its currency for mercantilist purposes. The Bank of China has made protracted large scale purchases of foreign exchange--$150 billion since 1995--in order to maintain a large trade surplus as an offset to poor growth performance in the domestic economy. A direct measure of the manipulation is not possible because of the nonconvertible fixed exchange rate. There is no doubt, however, that if the central bank had not purchased $50 billion in 2001, there would have been strong upward pressures on the yuan in formal and informal markets. The bottom line is that the Chinese yuan is substantially undervalued and should certainly not be devalued as the Chinese government occasionally threatens to do.
The unique form of Chinese currency manipulation provides a mix of benefits and costs for China and for the United States. The most direct result is a larger trade surplus for China, which means more export-oriented jobs in the Chinese economy. From the U.S. point of view, of course, it means a larger trade deficit with China and the loss of export-oriented and import-competing jobs. In 2001, U.S. imports from China were $102 billion, or more than five times larger than the $19 billion of U.S. exports to China.
A similar conclusion can and should be drawn about China as an economic aid "graduate." There is no longer any justification for China to receive several billion dollars per year in long-term loans on favorable terms from the World Bank, the Asian Development Bank, and some bilateral donors, when there are $220 billion of unutilized funds stashed away in the central bank. And yet the development banks continue to lend large sums to China!
Finally, and more speculatively, China at some future point could use its official dollar holdings as foreign policy leverage against the United States by threatening to sell large quantities of dollars on the market, or merely shift its reserves away from dollars and into euros and yen. This will not happen anytime soon because the result would be a decline in the dollar and an adverse impact on Chinese exports. At some future point, however, if China were to become less dependent on exports to the United States for economic growth, such a threat could become credible. For example, the threat of substantial Chinese sales of dollars, with its implications for a disruptive decline in the dollar and the U.S. stock market, especially during a downward phase in the U.S. economy and/or an election year, could influence the course of U.S. policy toward Taiwan. Chinese military officers, in fact, in their studies of nonconventional defense strategies, include reference to George Soros and his attack on the British pound in 1992 as a template for disrupting a rival's (i.e., the United States) economic system.
Re:Pollution? (Score:3, Informative)
Workers are only part of the system. Money going into a country at all is a big benefit, wether it goes to workers, a corporation, or a government.
Money is made to be spent. Eventually that money works its way into the hands of the workers, wether it's the company president getting themselves a new yacht built, or a politician buying a new jet.
>She makes many technical (but important) observations about how the system is set up to take advantage but not benefit these workers and these countries.
Of course it is. They're going (quickly) through the same steps that took us through the industrial revolution. Right now they're at the foothills of it, getting the short shrift.
>Employers in the west never volunteered minimum wage, child labour laws, working hour restrictions, etc, etc, etc. It had to be fought for, and these people don't have a voice in the marketplaces where their goods are being sold.
I'll argue the other point: Did a voice in the marketplace even make the slightest difference to getting companies to implement these policies? Or, was it in fact mob rule (Unions) that did it?
I'd hedge my bets on the latter. The people of the US, as a whole, really don't (and never really did) care if their ketchup was made by a unionized Heinz or a non-Unionized local company.
There's so many more workers in China it's only a matter of time (and very little at that compared to the US, IMHO) before workers there demand more, and decide to demand it in groups.
Re:Pollution? (Score:5, Informative)
Re:Stupid tax law (Score:2, Informative)
I would rather see the sales tax as an add on so I know what the retailer is charging before the government gets their cut.
Our gasoline taxes are always included in the advertised price. Gas is about $1.70 a gallon right now. $.18 is included as federal tax and another $.184 is state. Then there is also sales tax (7.25% where I live). With everything included, most people don't realize how much they are paying in taxes per gallon (over 25%).
Point is, keeping the tax separate from the price of the item makes it stand out more and is a good thing.
Don't buy brand name... (Score:1, Informative)
Because the cheaper models lack these features:
1) They lack the "feature" where you can only watch "your" DVD region
2) The lack the Macrovision feature that stops you from making a backup copy
3) They lack the feature that won't play DVD+/-R (Toshiba)
4) They lack the feature that stops them from playing VCD's (Toshiba, some Sony's).
With all the "Features" the big names have, I don't understand who would buy the cheap ones that "lack" these "features".
Re:Stupid tax law (Score:2, Informative)
Hehe
Re:Short term, yes. Long term? (Score:3, Informative)
I too, agree with everything you've said apart from this.
Workers rights during a boom are not such an issue - when everyone's making money, there's no need to unionize. If you're talking about the official "abolition" of the six day week in Japan, then that was not at the behest of the workers but in response to the lack of money being spent on leisure in Japan.
Even now, if a typical Japanese worker had their way, they'd work Saturdays too (many still do anyway). If you don't know why they'd want to do that, then you're not familiar enough with Japan to comment on it's workers rights.
Re:Short term, yes. Long term? (Score:4, Informative)
As someone who has lived and worked in Japan, I'd like to correct this. No one I knew enjoyed all the unpaid overtime. They did it because they felt compelled to by their company.
Actually, there was one programmer who would have worked even if the boss/company hadn't demanded it, but the other 500+ would gladly have taken the time off.
In fact, in seven years, I met three people who told me they enjoyed their work. One was the aforementioned programmer, the other two were the presidents of their companies.
Re:Short term, yes. Long term? (Score:5, Informative)
There are only so many things that can be imported. Take, for instance, Kuwait. 95% of Kuwaiti exports are in petroleum, which makes up over half of GDP, since it is essentially their only natural resource. Nearly 100% of food is imported as agricultural capacity is nearly zero. The United States, on the other hand, has no reason to import anything except to lower the price. There are very, very limited exceptions, mostly in precious and semi-precious metals used in manufacturing where trading is based on necessity. Relying on unnecessary imports (note that something being "cheaper" does not make it "necessary") creates a succession of structural unemployment, depressed wages and/or government subsidy to keep uncompetitve sectors from producing millions of homeless people. At some point you simply must accept that the guy across the street in New York will not be able to produce anything for you at the price available in New Delhi and that some services must be provided in terms of your local economy, unless you envision a future at the homeless shelter.
Realize what is happening: production is MOVING not dramatically INCREASING. If production moves and is not quickly replaced, your GDP suffers because, obviously, you're no longer PRODUCING. We haven't found anything yet to replace what we're shipping offshore, so hey, if you've got any ideas on the "next big thing" that can only be produced here, you just fire away.
The total global economy is now about $110 Trillion, or about ten times that of the United States. The total global population is about 6 billion. That's an average GDP per capita of $18,333/year, which is HALF the current GDP/capita of the United States, but it is twice that of Poland and nearly five times that of China and almost ten times that of India. Now, considering the amount of production moving to China and India, which represent a third of the world population, and that the United States represents 10% of the global economy, one can assume that for every $1000 increase in GDP per capita in China and India, it will cost the United States $868 in GDP per capita. Why? Getting India and China to $18k/capita through exports would take transfers of $34,000,000,000,000 per year in production, 10% of which by definition would come out of the United States (in reality the US takes 20% of their exports, while India imports half as much and China practically nothing), unless new production is created, which to date has not happened (remember all the talk of "jobless recovery?"). That $3.4 Trillion would represent nearly a third of our economy, say, equivalent to losing California, New York and Texas.
Since 1983, GDP in real terms has only increased by about 18% while imports have increased from 8% to roughly 14% of GDP. In current dollars, that's $750 billion in production already shifted, equal to $2,900 in GDP/capita. The minimum wage of $3.80 in 1983 would require $5.70 today, but that wage is now only $5.15, which is a loss of 11% in standard of living, or about $1100/year. Since this is generally the wage we pay our manufacturing line workers, do you think these things are unrelated?
I don't reject the idea of equalizing incomes globally through trade. However, the current pace is suicidal especially when thinking in terms of moving production to countries with more than five times the human resources and one tenth the cost of labor already used to export to the United States three times what is imported. That kind of relationship cannot possibly be mutually beneficial to any sustainable degree. We already have a trade deficit of nearly $550 billion, which is $2000/year for every man, woman and child in the country, thus a family of four is already supporting $8,000 in trade-related waste. Escaping that scenario would take a miracle that cannot be imported from China.
Mom and Pop store attention no longer necessary (Score:1, Informative)
Re:Short term, yes. Long term? (Score:4, Informative)
http://www.bea.gov/bea/dn2/gpoc.htm
You will notice that we have dropped from total manufacturing being about 18% of GNP to 14% of GNP between 1987 and 2001. You will also notice that we have added roughly 30 million in population. In terms of electronics manufacturing, we've lost nearly 30% in that sector just between 1994 and 2001 (.020% of GNP to
As for your statement about "bogus zero-sum economics," well, having studied economics, and given the above facts, I see no problem with what is an accepted model in such obvious cases. Ask any unemployed software engineer if he thinks Indian outsourcing is a zero-sum game and I'm sure you'll get a "yes." He loses a job, India gains a job. It may be part of a larger game, but at that level of analysis, it is a zero-sum game and it is perfectly reasonable to view it as such. In terms of trade deficit, if China exports twice as much as it imports, it IS a zero sum game. They win, we lose. Make no mistake, trade deficits are -bad-.
The median income, that is the maximum of what the bottom 65 Million Americans earn, is $28,117 per year. That's $13.50 per hour. I'm not sure where you got your figures, since you didn't bother to provide a reference, so here's one of mine:
http://www.irs.gov/taxstats/article/0,,id=10288
Of that, 13 million make less than $5,121. So we have 78 million out of 130 million taxpaying, working adults who make less than your purported "average blue-collar wage."
Admittedly, it is quite difficult to really see the entire picture in a
Recycled cars (Score:3, Informative)
Tires are a particular problem -- 270 million tires are discarded every year. Except for truck tires, there's no market for retreads any more. Extracting the metal and rubber for reuse is not economically feasible. You can't throw them in landfills, because they don't compress, and they also tend to "float" above the other trash, destroying the landfill cover. They make dandy fuel, but nobody wants to live next to a tire incinerator. About the only thing you can do with them is grind them up for building material, a market that doesn't use more than a small fraction of them. Which is why a billion tires are stored illegally, causing groundwater pollution and breeding mosquitoes in the trapped water.
Also, as with computers, cost and laziness prevent proper recyling of car stuff. When you have a mechanic change your oil and other fluids, he sends it off to a recycling service -- for which he pays a fee. But lots of people change their own fluids, and avoid the hassle and cost by pouring their waste down a storm drain, where it kills wildlife and screws up the water supply.
I have to go back to the original topic and mention another aspect of electronic gadgets -- batteries. All batteries, especially rechargables, count as hazardous waste, and need to be recycled accordingly. But how many consumers even know about this? And even the ones that do won't find a convenient place to dump their old batteries.
Re:However... (Score:2, Informative)
Re:CAD vs. Sliderules - why stuff doesn't last lon (Score:3, Informative)
Somewhat OT, but unibody cars are more rigid than full-frame cars. Full-frame cars are notorious for twisting and flopping around under stress. High-powered full frame cars need the frame "boxed" if they have C-shaped rails, which they usually do; A boxed frame is just a semi-monocoque design, though, where the load is transmitted to its skin, or in other words, a bad parody of unibody.
This is why sports cars were amongst the earliest vehicles to go unibody. There are some exceptions, such as backbone-chassis cars like many Lotuses, but those vehicles are not exactly designed for crash safety, either. (Until you install a cage.) They're designed for minimum weight; YES, there is something lighter than a unibody.
Given a lack of collisions, and with all else equal, a unibody car will last longer than a full frame one because the full frame car is less rigid and simply has more places to fall apart. It's often considered desirable in trucks because a unibody does not offer significant weight savings over a full frame vehicle when it comes to a frame that rigid and full-frame is cheaper. Of course in a unibody car the frame of the car still exists, it's just been moved inside the unibody. Unibody is more expensive to manufacture, but in light-duty vehicles it saves so much weight that it's an essential part of modern automotive design.
Finally, China will eventually wake up and have environmental laws, when the people can afford it. Right now most of them are worried about subsistence.