[Gta04-owner] Business strategy

[Martin Christian]

Hello Nikolaus,

thanks for the extensive answer. I'd like to add a few comments to your
point of view:

If the GTA04 is supposed to be only a mobile phone for geeks, it's
certainly accepted that you pay a considerable higher price for a really
free phone. But if you consider the end consumers, the price has to be
comparable to an HTC or iPhone. There is a trade-off between freedom and
price. I'm sure there are consumer which appreciate freedom and are
willing to pay more, but only to a certain extend.

Even though it's correct that at the moment barely any IT system is bug
free, systems with a certain maturity can be called "production" ready.
And the Linux kernel is certainly a mature piece of software. But I
think it is helpful to set goals to measure project progress and hence
maturity.

So I should probably rephrase my questions:
- When do you think the GTA04 is in a state that a typical iPhone user,
could use it?
- Which milestones do you see on the way and at what point in time?

Regards,

Martin.


Am 16.11.2011 18:51, schrieb Dr. H. Nikolaus Schaller:
> Hi Martin,
> 
> Am 16.11.2011 um 16:32 schrieb Martin Christian:
> 
>> Hello Nikolaus,
>>
>> by now I've collected some questions regarding the strategy of Golden
>> Delicious (I'll call it GD later) and the GTA04. I think they might be
>> interesting to others as well, hence I write them directly to the list:
> 
> no problem. We try to be "open" as far as we can (it has its limits if third
> parties are involved). But this is a question about "us" (GD).
> 
>>
>> a) In which role do you see GD regarding the GTA04? Do you want to sell
>> a component of a mobile phone only (the mainboard), a complete device
>> (including case and so on) or even a complete, ready to use mobile phone?
> 
> Our dream is a truly open and well documented handheld personal mobile tool,
> that is so open that you as the user have control about what is happening
> inside and outside. You can decide which software is good for you. And if
> you find bugs, you have the option to fix them. Not like the modern devices
> for which you don't get a bug fix for Java Script in the web browser, although it
> is a known security hole. And the device is just 2 years old. Or where someone
> tells you that some function isn't good for you.
> 
> And, a device that is so open that you can modify it and adapt to new functions
> and use cases. Or you can take it as a building block for another type of device
> (e.g. a tablet etc.). Ever tried to ask one of the major device suppliers to get a
> modified hardware? This is what we will provide. Individual solutions. To stimulate
> your creativity towards experimenting.
> 
> Generally, our idea is to make "digital tools for independent people". Independent
> in mind.
> 
> Now this was about the general dream, and bringing dreams to reality isn't simple.
> 
> So we have started to work on this dream and the GTA04 is the first (big) result.
> A smaller one was the Freerunner Navigation board.
> 
> And since we had to start somewhere, and don't have really big venture capital
> to burn, we started with some first step that did appear feasible two years ago.
> 
> It was clear that we can't have new cases because high quality production tools
> are very expensive. And since they are expensive the are too expensive to make
> beginner's mistakes. Therefore we did start what we all have in the Openmoko
> community. We have a working GTA01 or a GTA02 with case. And most urgently
> did need a new CPU and UMTS. This was the start of the GTA04 motherboard
> upgrade idea.
> 
> For the future of a personal mobile tool, we need of course to find out how
> to produce nice and robust cases (at low cost). First ideas have already been
> discussed on this list. So I guess the future will see a mixture of upgrades
> and new cases and complete devices.
> 
>> b) What is you time line for the GTA04 project? When do you plan to have
>> a production ready version of whatever your goal is (see a)?
> 
> Since we think the hardware as defined works well enough to have them duplicated,
> we have signed the contract for the production of the next batch of units. The first
> units are planned to be built before Xmas and so they will be generally available
> from January. A second (bigger) batch is scheduled for April. And then, we will see...
> 
> Of course, there will be modifications and upgrades in the future. If we start
> dreaming, it is easily described: OMAP4/5/6/7 (or others), bigger capacitive
> display, new types of sensors built in, 4G, USB3, (individual) cases. But also
> available in components that you can make something out of it.
> 
> This is like software releases. When is Linux ready for production? It is in
> production since 20 years, but each version has its bug fixes and introduces
> new features (and bugs :).
> 
> But we have to walk one step after the other. So there is no specific timeline.
> New things will happen and will be announced when ready.
> 
>>
>> c) What is your target price for the final version of your "product"
>> (see a)?
>>
>> Honestly, I've been shocked a little bit by your price quotes. I
> 
>> expected the board to be something around the beagle board. My idea was
>> to start with your board until I have a prototype and then present it to
>> my employer as a R&D project. However, 500 EUR is a little bit too much
>> for a "hobby" - and that's what it is right now. Hence, my employer
>> needs to be involved in a much earlier state. But that would require
>> some more details about your plans with GTA04 - and following.
> 
> I know that the price tag may appear shocking, if compared to some
> mass market devices. We would have been happy to have a much lower
> price, but there is no option.
> 
> One approach would have been to contact one of these "cheap"
> mass market producers in China and ask them to open their design.
> This has been tried several times in the past years and has a lot of
> big problems. Starting from long-term availability issues over language
> barriers to minimum order quantities in the range of 1000-5000 units. 
> And no chance to get modifications or you pay a lot of money. They
> are only cheap as long as you buy what you get.
> 
> So we decided to buy components from major manufacturers who
> support long-term availablility (e.g. the TI OMAP is a "Catalog Product"),
> and from distributors where we can get them starting at 1 piece. SO
> we can control the design and add nice things (e.g. sensors...).
> 
> As you can imagine, this strategy has its own drawbacks. The
> purchasing price for small quantities is much higher than for bulk
> purchases. To see an example, look here (I hope the link works):
> 
> http://de.mouser.com/Search/ProductDetail.aspx?R=DM3730CBPvirtualkey59500000virtualkey595-DM3730CBP
> 
> This is the CPU we use. You can see from 1 to 100 units, the
> price is going down to 82%. And for 1k units, you can compare
> the budgetary price from Texas Instruments:
> 
> http://www.ti.com/product/dm3730#pricingpackaging
> 
> Both are still quite high if compared to the sales price of a
> BeagleBoard.
> 
> The same is for the UMTS modules, the sensors, GPS, WLAN
> and all the other smaller and larger chips we have in the design.
> 
> Another factor is that many production steps have one-time cost
> (setup cost, shipment etc) that becomes lower per unit if we
> produce in larger batches.
> 
> This all makes purchasing the components and producing a
> GTA04 expensive in the current phase. And, since we don't
> have a money-source to subsidize the boards, we have to
> ask if you are willing to pay the (higher) price to get something
> unique, individualistic and be part of a community effort. Not
> controlled by "big money".
> 
> There is one way out of this trap of small quantities. It is to
> increase quantities. Therefore, we offer the group-buy approach.
> By this we increase our buying power for the future and can
> negotiate better prices for components and production. If we
> can also show that there is future demand, we may even get better
> prices than those published like the links shown above. This helps
> to reduce the price tag for the future. Or include new really cool
> features.
> 
> So this is the market- and economical mechanics behind the
> GTA04 project.
> 
> How did Openmoko make the GTA02 price? I don't know internals,
> but I think they did never reach their break-even. Mainly they
> were spending the Venture Capital.
> 
> The Beagleboard is as far as I know running in 3k batches - and
> has only 30% of the components value as we have it. They have
> no UMTS, WLAN, GPS, Sensors on board and just a 6 layers PCB.
> All this makes it less expensive to produce.
> 
> And do you know the OpenPandora? It is sort of a sister project of
> our GTA04. An open gaming console (sort of a PDA with game
> controller). They share the OMAP3 processor and many other
> concepts and ideas.
> 
> They started collecting pre-order money approx. 3 years ago.
> Last year they started to ship the first units. In the meantime it
> turned out that their production cost is higher than the pre-order
> money did sum up. So they had to collect new money (loans) to
> finalize the devices that already had been paid. So they are in
> the situation close to many organizations around the world, who
> are heavily indebted and need more money to pay back old
> debt. The debtees can now tell what one should do. Including
> closing the operation and auctioning the remains.
> 
> This is against our idea of "free individualists" and therefore
> something we must avoid. We want to stay here and provide
> many generations of Openmokos in the future.
> 
> Therefore we can only hope that there are enough enthusiasts
> around the world who share our ideas and dreams and find
> ways to pay for the (more expensive) components and
> production. And development of future variants.
> 
> Coming back to your question: there is no real "target price".
> It always depends on what is inside and how good we can
> manage the production cost.
> 
> And, if you think your idea is good enough so that your employer
> could be interested, I think he should be able to afford to sponsor
> some prototype for you. If you need some additional piece of
> information to convince him, please let me know.
> 
> 
> Hm.
> 
> Now, this has become a long "manifest". Much longer than I
> had originally thought :)
> 
> Finally, I have good news: we have apparently found a way
> to get a batch of Si4721 chips in time.
> 
> Nikolaus
>