Canon says: more EF-S lenses

Started Oct 6, 2004 | Discussions thread
ChuckH
Contributing MemberPosts: 994
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Re: How much can FF sensor cost?
In reply to bds231, Oct 9, 2004

bds231 wrote:

I don't think it always will. Peter is very correct that
miniaturization plays a major role, but transistors also simply
tend to get cheaper over time. And as plants become better at
manufacturing sensors, the price can plummet. Remember, that's one
of the main resons the 300D came out at half the price of the 10D
-- same sensor, but Canon made "manufacturing refinements" or
whatever they called them. Whatever they did, it clearly resulted
in a higher yield, presumably for a lower production cost.

Ben,

I agree with what you wrote above. However, I think there is another factor that had an even greater influence on the pricing of the 300D. Namely, the fact that digital SLRs are priced not so much as a function of the cost of manufacturing, but rather as a function of the R&D costs that went into the original design. I am convinced that the manufacturing costs are but a small fraction of the retail price.

In the case of the 300D, R&D costs were essentially nil since all of the technology was taken from its predecessor, the 10D. When Canon introduced the 300D, they had already amortized all of their R&D costs through sales of the 10D, and thus were overjoyed at the prospect of creating a new revenue stream through sales of much larger quantities of a much cheaper camera.

The same, I believe, can be said about the cost of manufacturing a full-sized sensor. While it obviously costs more to produce than the smaller sensors incorporated in the 10D/300D bodies, I suspect the difference in actual manufacturing costs is much less than most people would believe. The major cost, once again, was almost assuredly in designing the prototype and perfecting the manufacturing process. At some point, Canon will have fully amortized the R&D costs and it will then be up to the company to decide if the competitive environment is such that it would be advantageous or wise to incorporate the larger sensor in its less expensive bodies. By that time, I doubt the manufacturing costs would be much of an issue. Competitive pressures will dictate their course of action.

A useful analogy for people to consider, I think, would be the case of Intel and how it prices its CPUs. It costs a great deal to design a new CPU, but once it has been designed and the kinks have been worked out of the manufacturing process, it costs almost nothing to manufacture. The manufacturing costs are roughly the same to produce a $50 Celeron or a $1000 high-end CPU. The difference in pricing is not dictated by the manufacturing cost, but rather by the (as yet, unamortized portion of) R&D costs and the willingness of purchasers to pay top dollar for a device early in its life cycle.

This is very different from producing a commodity item like a bicycle or a washing machine where the price is set simply by adding a fixed markup to the cost of manufacturing.
--
Chuck

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