Squilliam on 11 May 2009
| Words Of Wisdom said: The razorblade model is what has gotten Microsoft and Sony into plenty of trouble this generation. It's good when it pays off as you can gain marketshare nicely but painful when it doesn't (as we've seen). |
Well, the model works better for Microsoft because they can sell more razors (Xbox Live), and if you look into the E+D reports you'll see that they are far more profitable than it appears on the surface.
But as for this price cut, a 25% increase in sales long term from a price cut doesn't sound at all unreasonable with Blu Ray adoption increasing and generally a good lineup for allcomers towards the end of the year.
I price cut war on the otherhand really turns the razor blade model upside down. If both parties cut deeply then the weaker party in this exchange (Sony) would take a hellish beating, which is why I didn't dare propose a $100 cut be worthwhile.
Tease.
