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The poor overall margins are due to 80% of the revenue being hardware sales which has targeted gross margins of something like 15% (+/-5% or so). This is followed up by 5 to 20 years of SAAS and other income streams with 80% plus margins.

The battery razor and the AI blade? That would give Tesla's vertical integration a higher overall gross margin. It's similar to Tesla taking over the dealership revenue and profits in the car business. Dell made its name and fortune by eliminating the channel by going direct to consumer in addition to pushing just in time inventory to the extreme. Tesla's vertical integration reminds me of IBM's early days when they did everything from basic research to making IBM punched cards. Brand, name recognition, makes competing difficult.

Denny Schlesinger


Working at IBM in the first half of the 1960s was fabulous. Vacuum tubes were being replaced by transistors and "solid state" was the technical buzzword. At a weekly sales meeting at NCR (1966?) a fellow was demonstrating his sales pitch touting the "solid state" technology of the machine. I interrupted to ask what "solid state" meant, something that I did not yet understand. Like the great salesman he was, the rapped on the machine with his knuckles while saying with great confidence, "Solid, really well built!" which brought the meeting down with laughter.
 
BTW, it was at NCR where IBM founder, Thomas Watson Sr., learned the trade. Many veterans of the early days are sadly forgotten.
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