***RESPONSE FROM FIIRE'S GENERAL MANAGER***
I am the general manager of Fiire. As an open company, Fiire is happy to reveal all there is to know about our products.
Fiire contracts the fulfillment, system assembly, RMA, warranty, etc., to Polywell Computers, who builds hundreds of thousands of systems for OEM builders like Fiire.
Although the FiireStation is more exotic, you are correct that the FiireEngine is based on standard PC parts. NewEgg is the big granddaddy PC online reseller that buys in massive quantity, and sells with very tiny profit margins of only a few percent. NewEgg's prices are almost identical to Polywell's hard cost on the equipment, and in fact, supplies a lot of parts to such mid-size system builders because NewEgg's sales price is often lower than the wholesale price they can negotiate directly from the manufacturers. The numbers you mentioned being shown on Polywell's internal pic-list document don't correlate to costs; Polywell just uses the document as a check list for all the parts. You can see this because the component prices you mentioned added up to more than the full price. No matter, we can use NewEgg to calculate the cost of the components of the FiireEngine. Here is what it would cost to buy the raw components from NewEgg:
Asus M2NPV-VM 90 3
AMD Athlon X2 BE-2350 AM2 109 3
2x DDR 667Mhz 512M PC5300 46 3
Hitachi 160G EIDE 50 3
Keyboard/Mouse 20 3
Lite-On High Speed 20X DVD+/1RW Dual Layer 36 3
SPDIF adapter 10 3
Realtek 8139 10/100Mbit PCI Ethernet 10 3
Case + Power supply 55 10
The second column is an approx cost of inbound shipping for each part, so the total raw material cost is $484. You are correct that Polywell charges approximately $88 which includes a) system assembly, b) 72 hour burn-in, c) repackage the system d) RMA handling, e) warranty repairs.
If that $88 seems excessive, remember that over $40 is just for the packaging materials: box, manuals, styrofoam, etc. So the actual labor cost to build the system, test it for 3 days, and fix it when it breaks is about $40.
Polywell charges Fiire 20 points (ie 20% margin) for their profit, overhead, loss prevention such as write offs from bad credit cards, administrative costs, etc. That is actually very low in the industry. Fiire shopped around a lot, and most system integrators charge 35%. This was the best price we could get. If you found a local PC builder and asked them to buy the parts for you and build a system, they would likely mark it up a lot more than 20%.
This means the out the door cost to Fiire for a FiireEngine is $715. ($715 * .80 for the 20% margin = $572 finished goods cost - $88 packaging and assembly = $484 which is the raw material cost from NewEgg).
Fiire pays 3% to Visa/Mastercard for credit card handling. So, on a FiireEngine, which sells for $799, Fiire's profit is $60 ($799 - 3% - $715).
I would like you to consider what you get for that $60 profit per FiireEngine.
First, Fiire has 12 full time people in our support center providing our customers AND THE GENERAL LINUXMCE community support 24 hours a day, 7 days a week. Whenever the support staff isn't assisting customers, they are doing testing of LinuxMCE and testing all the new hardware with LinuxMCE to keep track of what works well for our future versions. Fiire has created over 700 test plans for every feature in LinuxMCE. As Paul mentioned during his last release, Fiire provided most of the equipment he needed, and provided lots of q.a. testing and bug fixes.
Further, Fiire sponsors 2 full time developers who work on LinuxMCE. We have offered the LinuxMCE team a bunch of new code, which will likely be in the 0710 release, to now support HD-DVD and Blu-Ray, which will be part of our new 1080p FiireStation due out next month. This was *not* a trivial task by any means. It required re-writing a bunch of code in LinuxMCE to use MPlayer instead of Xine. And our developers are now working on adding support for HD-DVD menus, sub titles and audio tracks in mplayer under the GPL, which will benefit not only LinuxMCE, but all MPlayer users.
It is true that if you are a do-it-yourselfer you can build a FiireEngine for less because there is a 20% profit margin built in for the system integrator Polywell, and $60 for Fiire. But these markups are really quite conservative in this space.
For the FiireStation, Fiire's price is actually *below* wholesale cost. This is because the manufacturer, Via, wants to sell more products into the home / living room market to supplement their sales into the embedded market and saw Fiire and LinuxMCE as a good vehicle for this and agreed to offer the products below cost. In exchange, Fiire agreed not to offer the product to anybody in the embedded market where the prices are still higher. Here is the same FiireStation sold through a low-margin/high-volume distributor: http://www.logicsupply.com/products/vm7700
. Note their price is $1,100 for the same hardware Fiire sells for $799, and they are low-margin distributor like NewEgg. Similarly with the set top box FiireStation based on the EPIA EX platform, the motherboard with 512MB RAM, PCI Riser, SATA + PATA cables is $306. The brushed aluminum chasis is almost $100, and the 120 watt power supply is around $90. Again, Fiire's retail price is *below* the wholesale cost of the raw components because we negotiated very special pricing from Via to target the home market. On top of it, Fiire pays a license fee for each unit for special proprietary drivers and codecs.
And there's a new version of the FiireStation that will be on the market in approximately 6 weeks that Fiire had custom developed to our specs which has HDMI and supports 1080p with HD-DVD and Blu-Ray playback.