Why aren't consoles priced like HDTV's?
by LenSp - 11/17/06 6:50 PM
When TV makers introduce a new TV type, they price them very high at first. This way they can match their limited early production, i.e. supply, with a reasonable demand level since most people won't be able to afford it initially. It also keeps their losses in early production runs to a much lower level (perhaps even generate a small profit). Plus, it helps to limit the black market since there's little unmet demand at the higher prices. As the months go by, the price drops as production increases.
Sadly, MS and Sony have with very low prices on limited production managed to create a situation where most customers can't get the product unless they pay a super high price many times the official price. So most of their customers get frustrated knowing that they could afford the official price but can't get one. Sony and MS take a loss on these limited supplies because they're only getting the low official price. Black marketers are getting the vast profits between the official price and the market price but it's MS and Sony that are getting customers' anger. And their retailers get the expense and trouble of dealing with angry crowds for the limited profit between the wholesale and official price. It's their clerks and managers getting abused.
Sony and MS would have been better off with the HDTV model. Customers who couldn't afford the early production run high cost consoles would know ahead of time that they'd have to wait months longer for prices to drop down to an affordable range. But they wouldn't be teased as they are now nor would you get lines days ahead of time. It would also allow MS and Sony to work out the beta bugs with a much smaller base of customers (fixes are cheaper overall). And customers who buy early at high prices are often used to glitches and thus less likely to panic.