Allwinner R8 Cortex A8 processor, very similar to Allwinner A13, but optimized for IoT applications, was first unveiled via the $9 C.H.I.P computer crowdfunding campaign, but at the time we did not have that many technical details. However, Olimex had already made several Allwinner boards in the past, such as A20-OLinuXino-LIME, so they decided to investigate if they too could use Allwinner R8 processor, or rather Allwinner R8 Module (R8M) with R8 SoC, 4/8GB NAND Flash and 512 MB RAM.
So they managed to get R8M datasheet, and got quoted $4.8 for Allwinner R8 and $16 for Allwinner R8M with 512 MB RAM and 8GB NAND Flash for 5,000 unit orders.
Wait… If R8M module is $16, how can C.H.I.P sell it for $9? One difference is that C.H.I.P module only has 4GB NAND flash, but the module quoted to Olimex appears to come with 8GB flash, but it’s not does not explain the price difference. At first, I thought they did like some eBay sellers: making it on shipping. As while shipping is $5 to the US, it was $20 to the rest of the world, although they’ve found was to reduce this to $12 to $15 at the end of the campaign. But I’ve been explained the reason for the higher cost is probably because they manufacture it in China, ship it to the US, and have it handled by a US logistic company (Backerkit) from there.
Olimex estimates the BoM cost of C.H.I.P should be close to $20, so that means they may be losing around $10 for each board sold. So the $9 was mainly for marketing purpose, but a potential issue is that it worked on they raised over $2 millions, and “we sell at a loss, but we will make it on volume” does not really work in real life. So does that mean the campaign is at risk as Next Thing Co. may not have enough funds to manufacture the board? Not necessarily, as many backers also pledged for accessory boards (HDMI adapter ,VGA adapter, and others) which are likely to have a bigger margin, and the average pledge is $52.37, so they might even be able to make some profits. But if money is tight, delays might be likely. We’ll find out late 2015, early 2016, unless Next Thing Co. decides to address the issues raised by Olimex and others.
Thanks to Jon and Brian for the post idea.
Jean-Luc started CNX Software in 2010 as a part-time endeavor, before quitting his job as a software engineering manager, and starting to write daily news, and reviews full time later in 2011.
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One thing people seem to miss when analyzing this is that this is all the cost now but in a more than 1 year prices will sure go down, way down so it might actually be that the BoM will be closer to $10.
The minute the pinouts for the CHIP are made public every one of those peripheral boards will be instantly cloned.
From their first update: “Also, to clear up a little confusion: when preorders do open up, thanks to your support and encouragement right now, C.H.I.P. will still be $9.”
When will we see companies start selling modules at soc margins?
Rather than put it down to selling at a loss/nefarious purposes (like some people seem to be suggesting) etc
As Next Thing came out of that Shenzhen incubator are we sure that
Allwinner don’t have shares in Next Thing and are just supplying them with chips at cost ?
They did mention that they worked with allwinner closely to get a sweetheart deal. And they are not shipping in quantity till 2016 so price and availability will be better then. Personally I did not ‘back’ them because I hate ordering things and waiting half a year to get it. If they are still selling at that price next year and I still want it then I will order when shipping time is reasonable.
Olimex opinion is correct, Thing will ear profit from accessory boards.