But do you really think, that mass production is really done at that much lower costs, just because it’s made amass?
Mass-production is no magic-wand, that is reducing costs by 50%. The thing you can safe money on are the fixed costs (i.e. e.g. programming the machines, that produce the pcb, that solder the parts etc.).
Labour costs etc. will rise with every new part you make, as will costs for raw materials. When producing a phone, I would not expect the fixed costs to be so high, that they make up 50% of the price of a FP.
Much of the lower prices for mass production are due to the fact, that big even giant companies like Apple or Samsung have the power and use it to press small companies until they squeak (so to speak).
Example from Germany: Aldi (a global super-market chain)
They were negotiating about 0.1 Eurocent with manufacturers and demanded total compliance.
E.g. they offered some farmer producing eggs a major deal, that guaranteed him to sell vast amounts of eggs at a certain price. Therefore he invested in producing more eggs and he terminated other contracts he had, because he could not produce enough to fulfill all contracts. So his business grew by 100% and he sold 70% of all his eggs to Aldi.
Two years down the line another farmer offered the eggs at 0.1 cent less; so Aldi terminated the deal with Farmer 1.
Farmer 1 then went bancrupt, because he had loans, lots of fixed costs, an overproduction and no other customers to sell his eggs to.
And that’s the same - in my opinion - all over the world.
If Samsung, Apple or H&M come along and offer a company / factory a very good deal, they will do everything to get it. That’s, why cocoa beans are collected by child slaves in Africa, why tees are sewn by “slaves” in asia and why constructions are build by subcontractors employing illegal aliens at low wages.
Another example right around the corner: Workers from eastern Europe in meat-factories in Germany get 900 Euro netto, and have to pay 150,- Euros of that money for a place in a 5-bed room. They are employed by subcontractors, who are responsible for tax and social security. Those subcontractors are paid e.g. way less than 2 Euros for cutting up a whole pig.
Besides the fact, that I don’t eat meat and never could work in such a place, the cheap meat is not just available because of treating the animals badly that you eat, but also the humans that work in those factories.
When you reach a certain amount producing even more will probably not significantly drop the production cost for each device any more, but I’m sure Fairphone is still far from that point.
And those are a lot. For each product you produce you first have to design it, then get certificates and port software for it and then maintain it.
Even those running expenses will drop relatively if you produce more. That’s how the economy works. If you order more raw materials you’ll get them cheaper, if you order more components you’ll get them cheaper, if you order more final products the factory will produce them cheaper - per piece.
I don’t know where you are taking the 50% from. All I said is that mass production vs. low quantity production makes a bigger difference than fair production vs. exploitative production.
That is true. That’s an unfair advantage they are making for themselves, but even if you’re not a company that uses their power for evil, producing more will give you better negotiation power with your partners.
I’ll quote an earlier post from myself here where I wrote about a talk by Tina Trinks (former FP employee) gave in Vienna. I took notes and made that post shortly after the speech, so I think back then I remembered most of the important talking points correctly:
According to the cost breakdown more than 10% of the product cost is royalties for licenses and patents.
Also almost all of the €33.19 “Investments” seem to be fixed costs.
But let’s see if a cost breakdown will come out for the FP3 and if that will shed some light on this question. Until then let’s just agree that both mass production and exploitation make products cheaper and that they usually come together.
True, that’s how economy works. One point being, that for suppliers the fixed cost factor is the same. But - given the numbers of Samsung etc. phones - another (I guess more important) point is that much lower prices for higher quantities are in the end paid for by the workers. At least I have never heard, that a company has paid lower interest rates to shareholders for increasing production, while I have heard, that wages were not increased or new employees were paid less, even though production was going up?
I take that from the phones that are comparable to FP3 by the specs costing around 200,- Euro instead of 450,- and I am being generous with that margin, giving the difference in prices.
True.
Here is the cost-breakdown for FP2. 230 of 340 Euros for the product are costs for materials, while 39 Euros is for patents an IP holders.
33.19 Euros is external investment and internal resources, as you said. Take that off the phone price of initially 525 Euros and you are nowhere near the price of a Samsung (and those company even makes lots of profit off those phones).
And with 100,000 sold phones 1 million investment equals 10 Euro per phone. Sure, that drops to 1 Euro for a million phones.
As I perceive it, most (for sure not all) of the higher price is due to the higer costs for fairer production.
And I just hope, that Fairphone would not use a higer market share to make tougher contracts for their suppliers. As soon as that happens they are no longer fair.
Edit:
But I really would like to know, what could be saved off the price, if the could produce more phones.
My guess would be, that the FP3 already has been produced on a business plan, that is based on higher sales numbers. Therefore the lower price compared to the FP2.
As I work for a very big industrial company in the electronics production in Germany I can tell you that there is always room for improvement. Nearly everything could be produced in an automated factory, the only question is, when it makes sense. As soon as production numbers raise, the calculation starts what invest in machines will gain a return and when. This carousel always turns and never stops.
And this is nothing special. We all thinking in the same manner. If you need to handle some boring work with recurring working steps it is likely that you block your workings steps to get the work done faster. This is the first step of automation. The big players just bring it to perfection. And that saves a lot of money.
While you are absolutely right for sure, I have my reservations, that this factor is of real importance in this (the Fairphone) case.
Automation, i.e. replacing workforce with robots, saves lots of money when producing lots of devices. Therfore mass production really has the potential to be way cheaper (but costing jobs of course).
In the case of Fairphone on the other hand, the phones are produced in already highly automated factories, where other devices are produced as well.
I really can’t imagine, that the production of a FP2 or FP3 involves more manual work than the production of any Samsung or Apple Smartphone.
The cost breakdown for the FP2 shows, that labor (including a workers welfare fund) came at 12.11 Euro, while line and equipment at the factory cost 15.60 Euro, general administrative and handling 9.50 Euro and handling and configuration 4.00 Euro.
I guess, that does not leave too much room for money saving by automation.
I would also reason, that an only economic perspective will not really lead to complete view and an answer for you.
The fairphone is more expensive as it complies with a lot of sustainability, fair trade and social values other telephones don’t. Therefore it comes with a higer (more realistic) cost. Therefore for me it has this meta-perspective that the 450 € is the price of a sustainable, medium high tech, highly repairable phone, which also shows other people and telephone manufacturers that the production of such a phone is at least possible (not having a price of 2000 € or higher).
And for sure it is a totally personal choice if you want to afford or if your personal situation allows you to afford the fairphone. What I would like to try is to split this reasoning and keep it serparated.
So in case your personal situation gives the economic perspective the highest rank, don’t go for the fairphone. Having a used phone and getting this repaired is a really good and highly valued option.
In case you are able and willing to support the cause of this sustainable alternative, please go for the fairphone.
But social values here are often neglected. Savings by any means are often the central matter. Miele actually thinks different here. Social values seems to be considered here. (in case someone gets his fingers on the [german] report -> Familiendynastien Miele)
Automation is done where it makes sense but not by any means, let alone longevity - for which the name Miele almost stands as a synonym.
This is the reason why I buy Miele products.
My company take their social responsibility in similar ways, fortunately. And do not automate at any (social) costs.
And one should never forget, that not everyone is cut out for complicated work demanding intellectual skills. If we do automat all that work, what are they supposed to do?
In my humble opinion, our society is measuring the worth of one’s labor way to much by the education/brain/intellect; 'cause where would we end up, if no one would be doing all the hard bodily work?
That’s right. And I don’t get why such work is being looked down upon most of the times … I keep saying the worth of somebody’s work can be measured by the impact of when this work isn’t done for a few days or weeks. According to the well-known old joke … Who are you going to miss first - middle management or the cleaners ?
Probably on Mars…hm, what made me get to this thought…
@AnotherElk
Hm, are you sure this was a joke? Maybe I did not get it…
Unfortunately I do see quite some analogy to true life…hence I did not fully crack up on laughing…
Do you have another? Now I’m in the mood for more…
Well, if your cool with people in the RDC being robbed and murdered and people in China being treated like slaves by all means buy a phone for less than the FP.
Na, highend ist das nicht gerade. Beim FP2 habe ich mich von Anfang an darüber geärgert, dass es technisch USB3 schaffen würde, aber keine C-Buchse hat. Und Langlebigkeit bezweifele ich mittlerweile sehr, nach den Erfahrungen mit den Vorgängermodellen. Mir ist faire Produktion auch sehr wichtig, aber ich habe den Eindruck, dass es vielleicht besser wäre, mehr Energie in das Produkt zu stecken, um es besser marktfähig zu machen und mehr Absatz zu haben, und damit auch bessere Möglichkeiten zu haben auf die Produktion einzuwirken. Und das Format des 3er gibt mir den Rest!! Nach Apple schielen und noch größer??? Und es wäre auch nett gewesen, mal die treuen Fans zu fragen, anstatt sie mit blöden Infos zuzuschütten. Ich bin schwer enttäuscht.
Wo hast Du das Gefühl, dass das gerade beim FP3 nicht der Fall ist?
Das Design ist mit dem verschraubten Display, den kompakteren Modulen und dem nicht nur aufgeklipsten Cover wesentlich stabiler. Hinzu kommt ein Bumper, der beiliegt und vor Stößen schützt. Wir FP2 Nutzer waren da quasi die Produktentwickler.
??? Du hast doch selbst nach besserer Marktfähigkeit verlangt.
Deshalb das Design und die Größe, die nun aber überhaupt nicht spezifisch für Apple sind. Also nach Apple schielen habe ich jetzt noch nicht gesehen.
Zwei Punkte dazu:
Die treuen Fans haben hier im Forum in diversen Threads ihre Wünsche geäußert (kleiner, größer, high-end, billiger …) und FP hat das sicherlich gelesen.
Wieso die treuen Fans fragen, wenn man gerde neue Käuferschichten erschließen will (und muß!). Als treuer Fan erwarte ich gerade keine Sonderbehandlung, sondern dass FP weitermacht und den Markt “umkrempelt”; und dafür braucht es eben die Masse, die offensichtlich große Smartphones haben will (Samsungs Galaxy Note 10(+) ist jetzt 6,3" und sogar 6,8" groß).
Edit:
Wirf vielleicht auch einmal einen Blick in die Liste mit FP3 Artikeln, die EU-weit in der Presse erschienen sind. Da fehlen allerdings noch etliche Länder. Ich werde das vielleicht noch mal ergänzen:
I know it’s a difficult situation, but remember, it’s also about the ethics, the values, principles. It’s like saying, why employ someone and pay them 10 euros an hour plus holidays, plus pension, with rights and benefits and safety, when i can just get a desperate person to do it for 1 euro an hour and no additional stuff, and if they suffer, too bad? For me, we can stick together and value human beings all over the world , or buy cheap phones and support exploitation. Just try not to lose your phone!!!
For me it is shameful to always discuss just the price. Any phone you have in hand except the FP is full of blood and discrimination. Today, someone who wants to be “modern” and “uptodate” buys and carries things from companies that fight for a more sustainable and fair world. Someone who thinks a new iPhone is the last thing to have is already late! **Only if WE of the 1st world start from changing to ordering and buying differently we can change the unsustainable capitalism!**Not the slaves. If someone thinks an iPhone worth 1000, - € is justified - he is wrong, because it has not been reported that manufacturing only costs Apple 120, - €. Do your eyes open a little now? I thank you for doing it!
Furthermore, the topic with the spare parts: In our rich world, it seems perfectly normal that a cell phone is constantly broken. Most of them break because they just do not handle it carefully! If it were difficult to get a new phone, everyone would be more careful with this sophisticated computer. If I watch people using their cell phone, I’m not surprised that they charge that cell phones cost only $ 100. - I just suggest: treat it well, and 100% you will not have a single complaint in 4 years - I can testify to you. Then you will not find it difficult to spend 530, - €. Take a step forward! Love and appreciate your things you can buy, made by other skilled hands! Thank you!
Second hand smartphones, including iPhones, should be fine though. These are also a lot less expensive.
Everyone has different priorities. I don’t think it is useful if we are going to offend people for their smartphone choice. Why not? Because it does not allow for a dialogue, and it won’t change someone’s viewpoint if you’re going to offend them either.
Case in point. There are also smartphones which are able to sustain a bump as they’re rugged. CAT (Caterpillar, Inc.), for example. I think HMD/Nokia is also going to release one (forgot the exact name).
If I were to buy a smartphone for my kid in a year or 10 or so, it’d be a rugged one (though I am not sure if I would value that higher or below privacy…). That’d be my first two priorities, and then I’d look at fairness.
And other people want a vegan smartphone, or an environmentally friendly one, or a worker friendly one, or a modular one, or they only want to rent one and not buy one, or one with killswitches for privacy reasons. All these choices and abilities to vote with your wallet is great (but only one product anyway).
FP only offer a 2 years guaranty… So you could be paying 450 EUR every 2 years with your FP too… The only viable argument speaking for FP is the Fairness. That is why I would suggest to someone who is not sure about FP to check for other alternative (not that much I know) like maybe Shift?..
In fact if that would happen it would still fall under warranty. Because it is obviously a design flaw which can be proven. Just don’t wanna take Fairphone to small claims court. Apple is more fun
?
Maybe I did not get it…
