Canon says: more EF-S lenses

Started Oct 6, 2004 | Discussions thread
bds231 Regular Member • Posts: 404

ChuckH wrote:

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.

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.

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