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Path: utzoo!linus!genrad!decvax!cca!dee
From: dee@cca.UUCP (Donald Eastlake)
Newsgroups: net.misc
Subject: Re: Artificially Different Products
Message-ID: <5068@cca.UUCP>
Date: Sun, 3-Jul-83 10:05:54 EDT
Article-I.D.: cca.5068
Posted: Sun Jul  3 10:05:54 1983
Date-Received: Mon, 4-Jul-83 07:22:04 EDT
References: utcsrgv.1663
Lines: 33


	I have heard some faintly rational arguments for artificially
different products.
	Assume you design and sell the Wizz-Bang Frammis which is the
greatest thing since sliced bread for the high ticket end of the frammis
market.  It is also so cleverly designed that you have a very wide
profit margin and still beat out all the competition (effectively these
high profits are your reward for cleverness, investing in research,
etc.).  The only problem is that your Wizz-Bang Frammis is too expensive
for the low ticket end of the frammis market.  What do you do?  If you
ignore the problem, your competitors keep selling to the low end market
and may be able to hold on to customers when they migrate to larger
frammises.  It would seem that the rational thing was to design and
manufacture the Fizzle-Bang Frammis which uses your clever design
principles and would also enable you to dominate the low-ticket end of
the market; however, when you consider the high costs of designing,
manufacturing, and maintaining a completely different design, the net
profits become questionable.  By simply installing a few jumpers so that
the Wizz-Bang Frammis skips two out of three cycles, you have a product
which seems just right for the low-ticket market.  You retain the
advantages of volume production, having to stock parts for only one
product, etc.  And, due to your high profit margins at the top of the
market, you probably still make money at the low end.  So you announce
the Fizzle-Bang Frammis which is just a disabled Wizz-Bang Frammis.
	You might even figure it is better to loss a bit of money on
each low end machine you sell to try to dominate the entire market.
	Of course, this whole thing falls apart if the market is
competitive enough and large enough as a produce designed for the low
end market is bound to make more money eventually.
					Donald Eastlake
					dee@cca, decvax!cca!dee
PS: The above explanation does not decrease my general feeling of disgust
at artifically disabled products.