Yash Gupta is the founder and president of Portable Fun Instruments (PFI), a company that has had great success in the handheld game market. Its first products were dedicated handheld devices that each offered a specific game, such as backgammon, checkers, or chess. As the power of microprocessors for handheld devices grew, and the size and cost of those microprocessors shrank, PFI was able to build better and more complex games into its devices. Today, PFI offers a wide variety of dedicated handheld devices on which users can play card games, adventure games, and sports simulations, and solve various kinds of puzzles. Most of the elements in the game displays are graphics, not words. This helps PFI sell the devices in many different markets around the world without having to build separate interfaces for each language. PFI’s game devices have retail prices that range between $20 and $40, but the retailers and distributors buy them from PFI for prices that range between $4 and $18. PFI is profitable because Yash has worked hard to keep development and production costs low. Most of the programming is done in Bangalore, India, and the devices are built in production facilities located in Xixiang, China, and Penang, Malaysia. Although Yash has been successful in controlling production costs, he worries about continuing to operate the company with a long-term strategy that requires PFI to build a new physical device for each sale. The large retail chains that have become PFI’s main customers are always asking for discounts and reduced prices on new orders, and production costs are creeping upward even though the facilities are located in some of the lowest-cost areas in the world.
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