Topic: This pre-order stuff is crazy....... (Read 2228 times)

I'm not sure whether there's actually been a large-scale Kickstarter project that's actually delivered yet. In particular, a lot of the high-profile ones for electronic doodads have been massively delayed, and most of the really huge gaming ones aren't even due to give anything to backers for some time.

I would just assume they're buying below-spec rejects directly from the manufacturer, which is probably why they have a ton of xxxmh/s profiles to try and get the most out of them as possible.

Absolutely. Not to mention how BFL appears to be getting extremely good deals on the FPGAs in their gear. While a BFL Single sells for about $650 the list price on Digikey for the two FPGAs inside of it is $2,000 each. While they're fast FPGAs they are a generation old so it's not unreasonable to be able to get a much cheaper price. However that does mean they have very little room to maneuver if that supply dries up, or if it turns out that some of their parts held in storage from a bulk-buy are broken.

Keep in mind that the rule of thumb in electronics is you should think really hard about what you're doing if you plan to sell your product for less than 10x the parts and assembly cost. Anything less and cost-overruns and engineering time will leave you with a loss. If things work out, only then can you think about lowering the price. I suspect BFL isn't following that rule strictly.

Well...

* This is bitcoin, meaning the fees would not be anywhere near as steep.
* KickStarter is not the same as pre-ordering.  Some rewards are equivalent to pre-orders, others are not.


That sounds like a direct quote from a brick-and-mortar investment banker, trying to steer you away from KickStarter and other JOBS Act innovations.

Dust off the inbred assumptions about funding...  we are reinventing finance here

Kickstarter's good for certain types of projects, although the fees are a bit steep.  Pre-ordering's not really a good way to fund things which have significant development costs.  Those types of projects are better financed by debt or equity.

KickStarter has shown upfront financing can be highly effective.

Sure, there are flame-outs.  That does not detract from the successes.

I think that's what people are overlooking.  Each of your component manufacturers will likely have different minimum runs and different lead times.  Your delivery date is to some extent defined by your slowest component manufacturer and if you want additional runs you may have to wait for them to squeeze your run in between other orders.  Do we know if BFL is even putting together the end product themselves or whether the unit assembly has been contracted out?  Small businesses often use the Dell model to save on the costs of multiple handling, storage of components not yet able to be used, renting physical space for longer than is absolutely necessary, etc.

You guys haven't bought much industrial equipment have you?

I work as an electronics designer, and often I wind up ordering components that take months to arrive due to shortages. Accepting payment for something to be delivered in 6 months, or even a year, is not usual in many industries, and yes, those payments wind up getting spent on making and even designing whatever it is that you ordered. Hardware production just doesn't move fast, nor can you scale it up quickly.

Frankly I'm not at all surprised that Butterfly Labs had some major problems with their first product. Designing and building volume electronics is not easy, especially when what you're doing hasn't been done before. Estimating power consumption of any electronic device is tricky, and their explanation that the unusual power consumption in their single-purpose FPGA design overwhelmed standard filtering techniques sounds pretty reasonable to me. Ever looked at a motherboard up close? Notice all those little grey-looking ceramic things about the size of a grain of rice sitting right under your CPU? (and for that matter, scattered all over the board) Those are capacitors, which serve to temporarily provide electricity to the CPU when it turns on a bunch of transistors on at once, too fast for the rest of the power supply system to catch up. A very important part of FPGA design is analyzing how many, and how big, those capacitors need to be, and crypto is unique in that a heck of a lot of transistors can turn on at once, far more than the design tools the manufacturer provides you usually assume. This is hard to predict in advance and eats up power like crazy, as well as making your first try at the design flaky because you just can't feed the FPGA with power fast enough.

The problems Butterfly Labs has had in the past shipping product is not fraud, it's just standard issue teething pains in brand new hardware for a brand new application. If anything I'm impressed that they worked through the problem and got working hardware out, rather than quitting, in the face of a community solidly against them.

It's even worse than the old "paper launch" system that AMD and Nvidia used to do because they take money in advance!

I used to be into the hobby of playing, how can I put it, low-production run electronic musical instruments (analog synthesizers).

Time and time again, you'd see people pay in full up front for gear from certain manufacturers that hadn't entered production with promised delivery date of "12 weeks" or so. Then after year or 18 months of getting nothing but excuses, the people who gave them their money would slowly start whining en-masse on internet forums. The product would finally get released after 2-3 years. The sad part is that even after continuously breaking promised dates, these people are still in business (and still breaking delivery promises) because people just *have* to have them.

The thing BFL has going for them with this ASIC stuff that gets you hooked into pre-ordering is that it would literally be a very bad investment to buy any other mining hardware options at this time, so you might as well put that money somewhere.

Granted, there's now at least two other firms promising ASIC's at this time, but they have nowhere near the brand recognition.

Wow, someone finally really gets it !!!

I agree 100% with your statement, i've seen so many vaporware unreleashed products in my lifetime. The only thing i would consider pre-ordering would be an iphone.

I did put down a pre-order on a car once, but thats because I was able to test drive a prototype at the company proving grounds before hand.

Also, when  you pay with bitcoins, you go thru bit-pay. I believe they pay bfl with fiat cash. So, it would be bit pay that ends up the winner when the bitcoin shoots up in price.. When I paid for my first sc mini-rig, I believe the coin was around 9....

Oh, i know they can't change the rules now, Im talking when they first announce the asic line up. But, they did refund one person that pre-ordered the sc mini rig.. It took them a couple weeks to get him the coins, but he did get refunded.. I do believe that they will take it on a case by case basis if you absolutely want a refund, but those that ordered in the first month would probably be crazy to want their money back now, after waiting so long, lol...

Anyone who puts all the money upfront for an unreleased product without final specs deserves any waiting period and product they end up with.

They seem to be self-funding a lot of their operation. So, they're likely covering upfront production costs - preorders may not account for the necessary minimum run quantity, so requiring 100% prepayment guarantees them the maximum funding for the run of asics (and thus helps them lock in profits on sales above those preorders). IIRC, they didn't take any reversible forms of funds transfer for preorders, suggesting they needed to pay for the asic run, and not have any buyer's remorse refunds to have to pay out of pocket.

The worst thing they could do right now is change the order process & not require 100% deposit (even though they've surely paid for the production run) - the original preorder customers would be furious (having popped for a 3 or 4 mo, interest-free loan to BFL, they'd be upset if newer customers only loaned 50%)

(oh, and the BTC/USD appreciation probably didn't hurt their bottom line at all )

and, finally, if they're late....there's (almost) no loss of customer base..while it's not quite the same as locking in market share, it's pretty close. they've prevented a large portion of their customer base from going to a competitor by tying up the customers' funds.

Then why does BFL require full payment and not a deposit? I can guarantee that BFL would have received more pre-orders had they just required a 50 percent deposit..

Im not complaining, just wondering...

AR

Neither is BFL, FYI.

Apple or not, there are specific laws regarding pre-payment for orders.  I'm not sure of the specific timeframe but if they accept payment and then cannot deliver, they'll be offering to refund the full amount paid.  It isn't ten weeks or whatever down the road, it is maybe 14 days, or 30 days, something like that.  

That's why most merchants in the U.S. only collect your credit card info and don't actually charge it until the order is about ready to be shipping.

Also ....



You can be assured that Apple is not using the proceeds from pre-sales as capital to fund their R&D.  i.e., your money is not being put at risk.

what businesses should do is know the stock amounts.
EG 2mil stock
as pre-orders come in. when it reaches 2mill they then simply say "new cutomers purchasing will get theirs in batch #2 dated xx/xx/xxxx" so the existing customers get theirs on time.

its not that hard to put in a system with a cut off pre-order limit for date #1 and then orders after this limit show date#2

something all companies should use. secondly the use of the word pre -order does not give you the same legal standing (powers) as the rights you get via purchasing PRODUCTS.

in the UK for instance. the sales of goods act protects uses against goods and services, but has limited power against pre-orders.

even credit card companies cannot (as easily) chargeback pre-orders as they can with actual product purchases.

so be careful with pre-ordering. it will give you a headache if things dont go right

A minor difference : Apple has been showing a working Product with final product specifications before collecting any pre-orders.