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Author Topic: BFL and Capacity Utilization: Jalapenos to Jump in Price?  (Read 2546 times)
JMAHH
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August 26, 2012, 01:50:14 PM
 #1

Has anyone considered capacity utilization theory for Butterfly Labs's Jalapeno?
(capacity utilization explained here http://www.youtube.com/watch?v=LXrPdFn7Gn4)

It's pretty straightforward.

1. As far as I know BFL is not a "major" company in terms of employee numbers and capitalization (thus high absolute demand is harder to satisfy).
2. From what I've seen there is a consensus that they now have more than 2500 orders for Jalapenos.

We have all seen the delivery dates; 4-6 weeks, October, November, 2013... clearly BFL cannot keep up with the demand. Demand for Jalapenos is skyrocketing, supply is low. This is how inflation comes about; in the short-term a company cannot (or will not) expand production capacity and thus opts for the profitable alternative: upping the price Shocked

Thus is it reasonable to assume the price of Jalapenos is susceptible to a rise in the near future? If so, how much? If not, why?

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August 26, 2012, 03:05:11 PM
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A company selling a product rarely acts like a market.  They can if they choose to, but most don't.

Once the products start getting out into customer's hands, it is likely, maybe certain, that there will develop a secondary market with prices set, more or less, by supply and demand.

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August 26, 2012, 03:40:41 PM
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A company selling a product rarely acts like a market.  They can if they choose to, but most don't.

Once the products start getting out into customer's hands, it is likely, maybe certain, that there will develop a secondary market with prices set, more or less, by supply and demand.

However the market here is limited. The overwhelming majority of people on Bitcointalk buying ASICs for the purpose of mining are buying with BFL. I'm sure the lab itself is aware of the fact that they are somewhat pioneering this particular product. In the long-term above-average profits will be erased as others start marketing theirs ASICs too, but I'm especially interested in BFL's major market share at this point in time - and how they will deal with it.
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August 26, 2012, 06:07:42 PM
 #4

I don't think there will increase the price? Why? Because they seam to work very hard in being the best to discourage competition.
That does leave them with a dilemma though, if they cannot keep up with demand, it will be a great opportunity for a competitor to enter the market.

Also, they have a dilemma with the long term demand once everyone is upgraded.

It will be interesting to see how everything plays out.

My bet, is the wait times will just get very long and the secondary market for the devices will cost more.

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August 26, 2012, 06:11:17 PM
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Also, they have a dilemma with the long term demand once everyone is upgraded.


According to Moore's Law ASIC speeds should double every eighteen months.  It would be interesting to see if BFL keep there current trade in offer for there second generation ASIC's.

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August 26, 2012, 06:16:11 PM
 #6


Also, they have a dilemma with the long term demand once everyone is upgraded.


According to Moore's Law ASIC speeds should double every eighteen months.  It would be interesting to see if BFL keep there current trade in offer for there second generation ASIC's.

You don't know the time constant. Every IT component has it's own growth function.

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August 26, 2012, 06:19:22 PM
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I don't think there will increase the price? Why? Because they seam to work very hard in being the best to discourage competition.

You mean they are discouraging competition through low pricing? That's a valid point.

Nevertheless time costs money too. People not willing to wait two months might well pay 50 dollars more to get their product in 2 weeks...
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August 26, 2012, 06:57:37 PM
 #8

I don't think there will increase the price? Why? Because they seam to work very hard in being the best to discourage competition.

You mean they are discouraging competition through low pricing? That's a valid point.

Nevertheless time costs money too. People not willing to wait two months might well pay 50 dollars more to get their product in 2 weeks...

The business practices of BFL are despicable. The whole pre-ordering is a deception for consumers.
1) They buy a "promise" not a product. The final production will not meet specs.
2) BFL didn't specify how many chips they plan to produce. Thus you don't know whether you will actually get one. If they decide to give you your money back - you effectively gave them a 0% loan.
3) They didn't even specify what happens to the pre-order money if the chip production is a failure. Who carries the risk of a default?

The ASICMINER Project https://bitcointalk.org/index.php?topic=99497.0
"The way you solve things is by making it politically profitable for the wrong people to do the right thing.", Milton Friedman
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August 26, 2012, 09:51:40 PM
 #9

I don't think there will increase the price? Why? Because they seam to work very hard in being the best to discourage competition.

You mean they are discouraging competition through low pricing? That's a valid point.

Nevertheless time costs money too. People not willing to wait two months might well pay 50 dollars more to get their product in 2 weeks...

The business practices of BFL are despicable. The whole pre-ordering is a deception for consumers.
1) They buy a "promise" not a product. The final production will not meet specs.
2) BFL didn't specify how many chips they plan to produce. Thus you don't know whether you will actually get one. If they decide to give you your money back - you effectively gave them a 0% loan.
3) They didn't even specify what happens to the pre-order money if the chip production is a failure. Who carries the risk of a default?

I am as skeptical as you are, nevertheless they have proven to be a 'real' company, and I can't wrap my head around the idea that they would start this sort of scam after being legit. Have they simply overestimated themselves? That wouldn't be very professional, yet it's either that, a miracle or a scam.

I find the saying "Too good to be true", which is well-known for a reason, to apply exceptionally well here.

Nevertheless I'm still looking for a 'legit' way out for BFL, and that's why I was pondering a short-term upward price movement without any illegality involved.
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August 26, 2012, 09:59:08 PM
 #10

There is a reason why a company wouldn't lower the price. 

ASICs have interesting economics.  You have huge upfront cost both in dollars and time.  Once completed your per unit price is very low.   The Jalapeno per unit cost (excluding the NRE) is probably <$60.
The more units they sell they more ways the NRE cost is split.  Splitting a multi-million NRE over 10,000 chips makes all the products more competitive than splitting it over 1,000 chips.  The other thing to consider is that the perceived value of these are probably plummet once released and the hashrate explodes 10x current rate.  So by keeping the price low and securing a large number of preorders they may profit more than having a higher price and then having to sell more units after launch at a lower price.
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August 26, 2012, 10:01:32 PM
 #11

I don't think there will increase the price? Why? Because they seam to work very hard in being the best to discourage competition.

You mean they are discouraging competition through low pricing? That's a valid point.

Nevertheless time costs money too. People not willing to wait two months might well pay 50 dollars more to get their product in 2 weeks...

The business practices of BFL are despicable. The whole pre-ordering is a deception for consumers.
1) They buy a "promise" not a product. The final production will not meet specs.
2) BFL didn't specify how many chips they plan to produce. Thus you don't know whether you will actually get one. If they decide to give you your money back - you effectively gave them a 0% loan.
3) They didn't even specify what happens to the pre-order money if the chip production is a failure. Who carries the risk of a default?

I am as skeptical as you are, nevertheless they have proven to be a 'real' company, and I can't wrap my head around the idea that they would start this sort of scam after being legit. Have they simply overestimated themselves? That wouldn't be very professional, yet it's either that, a miracle or a scam.

I find the saying "Too good to be true", which is well-known for a reason, to apply exceptionally well here.

Nevertheless I'm still looking for a 'legit' way out for BFL, and that's why I was pondering a short-term upward price movement without any illegality involved.

If they produce they have to release at the announced price. Everything else would qualify as a scam. Now - there will be a market though. I suspect a lot of people just placed pre-orders to make profit from the valuation difference: They will sell their ASIC to the highest bidder the moment they have the unit. Hell - I even see people selling their pre-order at a profit!!!

If you want to learn about how to correctly start up an ASIC project, have a look at https://bitcointalk.org/index.php?topic=99497.0.

The ASICMINER Project https://bitcointalk.org/index.php?topic=99497.0
"The way you solve things is by making it politically profitable for the wrong people to do the right thing.", Milton Friedman
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September 03, 2012, 02:58:50 PM
 #12

The thing I am curious about is what will those first shipped units sell for on the aftermarket.

Depending on how many people want one and how badly, I wouldnt be surprised to see people paying $300-400 each for the first units.

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September 06, 2012, 07:06:28 PM
 #13

It depends upon when you are talking?  6 months after shipping, difficulty will have jumped 30 times and half the units wont work anyway.

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September 13, 2012, 03:00:33 AM
 #14

You're overthinking it.

BFL had to find a 'solution' to killing bitcoin completely by releasing ASIC mining hardware. The fact is adoption is a hard road, it's absolutely not in the networks interests to force out the hobbyist. The good thing about cpu mining was anyone could do it, gpu mining was better for adoption because it greatly helped reduce the power of a botnet-mining, while at the same time being accessable to anyone with a decent video card.

They've chosen to offer a very reasonably priced product, allowing the hobbyist to replace gpu with an asic device. This is a good thing, because it keeps the entry barrier lower... if they'd only offered sc rigs, or even singles they might have run the risk of driving out hobbyists - and the network doesn't need that right now.


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September 14, 2012, 12:46:55 PM
 #15

I don't think there will increase the price? Why? Because they seam to work very hard in being the best to discourage competition.

You mean they are discouraging competition through low pricing? That's a valid point.

Nevertheless time costs money too. People not willing to wait two months might well pay 50 dollars more to get their product in 2 weeks...

The business practices of BFL are despicable. The whole pre-ordering is a deception for consumers.
1) They buy a "promise" not a product. The final production will not meet specs.
2) BFL didn't specify how many chips they plan to produce. Thus you don't know whether you will actually get one. If they decide to give you your money back - you effectively gave them a 0% loan.
3) They didn't even specify what happens to the pre-order money if the chip production is a failure. Who carries the risk of a default?

We just saw pirate take everyone for a ride, lets sit back and watch BFL do the same while people defend their actions.

I may as well stoke this fire since I started it, hey inaba are you still spewing your hysterical pseudo logic rants ?

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