Playstation 3 Economics !
We all know that there is a huge hype on the release of the lastest Playstation 3 (and also the Wii) when we see people lining up on the streets for a week just to get their hands on one.
Interesting to note that the people at Sony manage to ship around 100,000 sets of the new Playstation and that's just not enough. The consequence to that is people have been paid to queue for a week! Also, non-Playstation fans are queuing up to buy just so that they can auction it off at Ebay. If I'm not wrong the new PS3s are selling about 3 times more than their retail price. What a gross mismatch of supply and demand!
Another interesting point to note, Sony actually loses money for each machine that they sell. It's true! The Playstation is supposed to cost even more than the price it's selling now. Now, you might be thinking...why in the world would anyone do that ?! It turns out to be a clever strategy by Sony (Microsoft did the same thing too, I think) to increase it's initial market share, and then gain back through the sales of the Playstations games. Makes sense to think of it, because you will only buy one $500 machine, but buying that machine you'll need to buy more games in too which cost around $50-60 a piece. So, lowering the price for you to buy the machine makes economic sense.
For me, I'm sure which one to get. The Wii looks cools too. I'll probably wait till the price drops futher :)
3 comments:
Once the exuberance had died down, the prices will fall.
Good to see you back.
Thanks for the tip regarding Kremer's theory. I have replied to it.
it's lyk the two tariff marketing strategy we learnt in micro 2000 where people are charged a low entry fee(which is the machine here) and afterwhich,the user fee they pay will help Sony to get back their profit.besides,its gross rent seeking behavior(though it's kinda smart;p)to monopolise because it's the consumers(us) who will suffer ultimately:(
Hey... dropping in to say hi.. =)
seems like this blog is really really econs... haha!
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