Making Electronics Cheaper Requires Detective Work
DAVID GREENE, HOST:
Now as for your own personal economic planning, it seems like the cost of everything is rising - college tuition, health care. Well, some things have actually become cheaper. Let's focus on one - consumer electronics. Some new gadget comes out, costs a thousand bucks - two years later it's 500. This happens over and over again. Jacob Goldstein from our Planet Money team visited a company called Monoprice to find out why.
JACOB GOLDSTEIN, BYLINE: Monoprice started out selling cheap cables that connect your TV to your cable box or your DVD player or whatever. And when you visit the company's warehouse in Southern California, it's clear that cables are still a big deal to the company.
UNIDENTIFIED MAN #1: Here's some cables, more cables, a thousand-foot cables - got cables everywhere.
GOLDSTEIN: The warehouse is attached to the company's headquarters where people sit all day and try to figure out how to make stuff get cheaper. One of those people is Chris Apland. Among other things, he oversees Monoprice's monitor business. Pro tip - if you want to sound like a savvy tech insider, don't call a monitor a monitor. Call it a display, like Chris does.
CHRIS APLAND: This is our newest 4K display, utilizing some of the fanciest things on the market right now. I should turn it on for you.
GOLDSTEIN: The story of how Monoprice got into the fancy monitor business reveals a lot about how Monoprice works and about why consumer electronics keep getting cheaper. The story starts about four years ago when Chris was walking through a Best Buy. He goes there sometimes to check out the competition.
APLAND: So I was walking by and the images of a honey bee buzzing around the screen, caught my eye.
GOLDSTEIN: It was one of the most beautiful monitors Chris had ever seen.
APLAND: I could see the pollen on their abdomen. It was spectacular.
GOLDSTEIN: And what did you think when you saw it?
APLAND: I got to have it.
GOLDSTEIN: The monitor was made by Apple. And at the time, Chris says, it cost more than $1,000. Chris wanted to come out with a Monoprice monitor like this one, but one that was cheaper and made for a PC. For Chris, a monitor like this was - and I'm quoting him here, "a white unicorn."
APLAND: That really was my, like, mythical creature.
GOLDSTEIN: Making stuff cheaper can require a lot of detective work. So Chris started digging. He learned that Apple did not have a patent on the panel, the screen that's at the heart of a monitor. And the panel, Chris learned, was being made at a single factory in Korea. Chris even managed to buy a few factory rejects off of eBay. But he couldn't get his hands on the best panel. Apple had the supply locked up. Then about a year later, Chris heard a rumor. Some of those top-quality panels were starting to become available. So Chris flew to Korea.
APLAND: Once we were able to verify that we did, in fact, have our little white unicorn, we showed up with a lot of cash and ordered as many panels as we could.
GOLDSTEIN: They put a plastic case on it - no Apple logo, of course - and started selling them online.
APLAND: We sold it for, oh, it was 425.99 at the time. That's what it was.
GOLDSTEIN: Four-hundred-and-twenty-five bucks, and Apple's monitor using the same screen was how much?
APLAND: Double our cost at 999.
GOLDSTEIN: So you sold it for half the price?
GOLDSTEIN: It's a happy ending for Chris. But in the electronics business, happy endings don't last for long. Chris wasn't the only one chasing the white unicorn monitor. In the two years since that monitor came out, more factories have started making similar panels. More companies have started selling the monitors. How many people sell that monitor now?
APLAND: Samsung, BenQ, Dell - five, there's five factories out there. It has definitely gotten a lot tighter than what it was.
GOLDSTEIN: More companies selling the monitor means more price competition, less profit for the companies. This week, a version like that monitor that used to cost $1,000 is on sale for $279.99. Jacob Goldstein, NPR News. Transcript provided by NPR, Copyright NPR.