July 1, 2010

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When will tech cost more?
I yuan, you yuan, we all yuan a floating yuan
By John “jaQ” Andrews  jandrews@hippopress.com

The economic news was abuzz recently with the announcement that China will allow its currency, the yuan, to float.

I won’t pretend to fully understand money supply and currency manipulation, but the basic idea is this: rather than having the yuan always worth the same number of dollars, the two currencies will rise and fall independently. For a decade, the yuan appreciated slightly but was kept to a little over eight per dollar. China officially stopped this “pegging” to the dollar back in 2005 and started doing it unofficially again in 2008, after the value rose to less than seven per dollar.

We care because China buys an awful lot of U.S. debt, and we buy an awful lot of goods made in China.

Specifically, electronics.

If the yuan, as it has whenever it’s been un-pegged in the past, grows more valuable in comparison with the dollar, then our gadgetry is poised for a price bump. Don’t panic yet, though — even healthy appreciation of the yuan won’t break our technology addiction.

Take the iPad as an example. Research firm iSuppli reported in April that each $500 iPad costs $260 to build. Much of that cost is incurred, yep, in China: parts manufacturing and labor to put it together. There are plenty of costs not included there, not the least being the considerable development that went into the thing, as well as transport to our shores, marketing, technical support, yada yada.

If the Chinese currency goes up 5 percent, and even if that affects the entire $260 hardware cost, you’re still looking at just north of a 2.5-percent increase in price. Considering that final assembly labor itself is more like 3 percent of an iPad’s cost (rather than more than half for the hardware as a whole), if individual components come from outside China, this will affect prices even less.

In fact, one Foxconn plant in Shenzen, where many Apple products are made and poor working conditions apparently prompted several suicides this spring, is increasing salaries by a whopping 20 percent. Apple is subsidizing most of that increase, yet the net impact to the iPad’s retail price is nothing, nada, zippo. They’re eating the increase because it’s relatively small. So as important as Chinese labor is for all the consumer goods we enjoy, their financial reward isn’t exactly handsome by our standards.

With the fast pace of technological development, a slowly increasing yuan will barely even dent the getting-more-for-less curve we’ve come to expect as new products outstrip their predecessors in features and speed after a few meager months on the market. The upgrade cycle might get a tiny, temporary respite, but we’ll barely even notice once the Playstation 5 or 6 is out.

And all this, of course, is just one small part of a larger relationship between two countries and between them and the rest of the world. Whether a stronger or weaker yuan would be good or bad for the U.S. is a matter of considerable debate, but most economists agree that a floating currency is better than a manipulated one, because it allows prices to reflect true value. If we end up paying a few bucks more for flat-screen TVs, we can probably handle it.not for the perpetual online reunion that is social media?


6/24/2010 Social media anxiety

6/17/2010 Hubba hubba
6/10/2010 Store it on USB
6/3/2010 Finance is personal
5/27/2010 Who says what now?
5/20/2010 Flash dance
5/13/2010 Geek chic
5/6/2010 Hewett Palmard
4/29/2010 Logo confusion
4/15/2010 Doubting my geek cred
4/8/2010 3D: Fad or future
4/1/2010 USB: The next generation
3/25/2010 What gadgets do to us
3/18/2010 Better netbooks afoot
3/11/2010 Kind of blue
3/4/2010 We want cheaper e-readers
2/25/2010 Know your vendor
2/18/2010 The Buzz is not good
2/11/2010 Process this
2/4/2010 Is the iPad worth it
1/14/2010 Kneel before Google
1/7/2010 Las Vegas shows the way12/31/2009 Reluctantly looking back
7/16/2009 What runs your phones
7/2/2009 Down with paint
5/21/2009 Laptop control
5/7/2009 Go organic
4/24/2009 Boot quickly with Linux
4/2/2009 Save cash with the Web
3/19/2009 Control from a distance
3/5/2009 Lucky number 7?
2/19/2009 Pop go the ads
2/12/2009 No DTV for you
2/5/2009 It's the internet ... on TV
1/1/2009 The road ahead
12/25/2008 Portability rising
12/18/2008 Video conversion gift guide12/11/2008 Audio conversion gift guide
12/04/2008 2008 photo gift guide
11/27/2008 Core to the core
11/20/2008 Frogs, Jackie Chan and Linux11/13/2008 How to tame the internet
11/06/2008 The mighty pen
10/30/2008 Eyeballs, meet video
10/23/2008 Be Buffy
10/16/2008 Trade in your stuff
10/9/2008 TV on the Web
10/2/2008 Netbook update
9/25/2008 Unified Gadget Theory

9/18/2008 The little MerChrome
9/11/2008 When in Chrome
9/4/2008 Busting a cap
8/28/2008 Web of politics
8/21/2008 One computer or two?
8/7/2008 Turning back time
7/31/2008 Cell phone projector
7/24/2008 Come on, feel the geek
7/17/2008 Adventures in China
7/10/2008 More memory
7/03/2008 Bringing China home
6/19/2008 Software fight
6/12/2008 Free energy
6/5/2008 Playing geotag
5/29/2008 Read on your screen
5/22/2008 Recession-proof?
5/15/2008 As in beer, and speech
5/8/2008 Whither XP
5/1/2008 Stuck on Craigslist
4/24/2008 Eeeeeeeeeeeeeeee!
4/17/2008 See the Silverlight
4/10/2008 WiMax vs. LTE
4/3/2008 GPS in reverse
3/27/2008 Your video choices
3/20/2008 MP3 ain't all that
3/13/2008 That's hot
3/6/2008 Why not to go Blu
2/28/2008 Digital TV is coming
2/21/2008 An elgy for CompUSA
2/14/2008 My nerdy Valentine
2/7/2008 Yahoo! It's Microsoft!
1/31/2008 Roll on up
1/24/2008 Media calls DVD war for Sony
1/17/2008 Delete everything
1/10/2008 The cable conundrum
1/3/2008 When technology attacks
12/27/2007 A look back
12/13/2007 Inside your digital camera
12/6/2007 Phone frenzy, part 2
11/29/2007 Phone frenzy, part 1
11/22/2007 Giving thanks
11/15/2007 Gray areas
11/8/2007 Fantastic music
11/1/2007 Tiny browsing
10/25/2007 What's a Webkinz?
10/18/2007 Famous on and off the Web
10/11/2007 Print in the third dimension
10/04/2007 Do it yourself — really
9/27/2007 An update on updates
9/20/2007 The more things change...
9/6/2007 Ink wars
8/30/2007 Woody gadgets
8/23/2007 Pocket mice
8/16/2007 A clearer picture?
8/9/2007 One less box on your TV
8/2/2007 Prescription for subscription
7/26/2007 Record every show
7/19/2007 Main screen turn on
7/12/2007 Lasers in everyday life
7/5/2007 Radio by wire
6/28/2007 Don't believe the hours
6/21/2007 Get where you're going
6/14/2007 Enlighten yourself
6/7/2007 USB is hot
5/31/2007 USB is cool
5/24/2007 Gadgets for nothing
5/17/2007 Make your gadgets better
5/10/2007 You may now unplug
5/3/2007 Mobile is nothing
4/26/2007 Expand your wireless network
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4/12/2007 Get a newer brain
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3/29/2007 Security can be free
3/22/2007 Paper that's not paper
3/8/2007 Use any file
3/1/2007 Audiobooks for free
2/22/2007 What's for sale today?
2/15/2007 Prints in your pocket
2/8/2007 Watch this
2/1/2007 How open is your source
1/25/2007 iPhone it now
1/18/2007 Simplify, simplify
1/11/2007 Vista time!
1/4/2007 Google killers?
12/28/2006 Tech that didn't happen
12/21/2006 Do not want
12/14/2006 Meet the new web
12/07/2006 Extreme price shopping
11/30/2006 They want what?
11/23/2006 Zat zany Zune
11/16/2006 Shop smart
11/9/2006 Your data's new home
11/2/2006 Hotkey heaven
10/26/2006 Computer to go
10/19/2006 Tech news roundup
10/12/2006 A different drummer
10/05/2006 Who needs TiVo?
09/28/2006 Disk drives without disks
09/21/2006 Movies, just click your mouse!
09/14/2006 Laptops for less
09/07/2006 GPS everywhere
08/31/2006 The printer dilemma
08/24/2006 A series of tubes
08/17/2006 More music, more places
08/10/2006 How big is your drive?
08/03/2006 It's a WiFi world
07/27/2006 Fancy a spot of memory?
07/20/2006 Under the sea
07/06/2006 eBaysic training
06/29/2006 You paid money for that?
06/22/2006 Processing ... processing ...
06/15/2006 C:\Run for the border
06/01/2006 The keyboard is mightier
05/25/2006 Geek phone home
05/18/2006 Super highway information
05/11/2006 How to host a site
05/04/2006 If they mated
04/27/2006 Apples to apples
04/20/2006 Flash uber-drives
04/13/2006 Web site, by you
04/06/2006 Ayyy, jaQ's right!
03/30/2006 Choose wirelessly
03/23/2006 Tax programs cometh
03/16/2006 And the Spammie goes to...
03/09/2006 Take in the Vista
03/02/2006 Cheap moviemaking
02/23/2006 Go directly to iJail

02/16/2006 Will you stamp your e-mail?
02/09/2006 War of the machines
02/02/2006 Faster than a speeding packet

01/26/2006 Free software made simple
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01/12/2006 Radio you
01/05/2006 Making Movies
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