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r505Matt on 30 November 2009
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theprof00 said:
r505Matt said:

Well, first, I don't think having the attitude to push a competitor out of the way is necessary for there to be a price war. Whoever cuts their prices first or second is irrelevant. If M$ didn't cut their price, or if Sony didn't cut the price in the first place (and then M$ did), that would be different, but since they both cut their price, regardless of the reason, they're still competiting through price.

Yes the reason is important. I'm going to try and give a simplified example to illustrate. If I make a one-of-a-kind item and sell it at one price, and then drop it down to another price, who am I competing with? Nobody, because I'm not. I'm trying to get more people to buy my product because there comes a time when the more people have my product, the more I make. According to the idea of demand, as product recognition and brand grows, more people will buy the product now then at launch, because a lot of people are simply unaware and could not buy it at any price. This is the fundamental concept I am trying to explain. This is the "fine line" I was talking about.

Though I will concede that MS most surely did it completely in response to Sony's price cut. In otherwords, I wouldn't be surprised if they'd talked about it months in advance and said "let's just wait until Sony cuts the price on the PS3".

I think your 3rd paragraph doesn't matter. Comparing the success of the competitor-free PS2 to the current situation is just silly.

I'm not comparing the success, I'm describing the environment. For example, if a competitor suddenly appeared 3 years after I made my product, not only would they have to deal with being where I was at launch (with only 1 out of 50 people knowing my brand and product), but they have to additionally overcome an environment in which people swear by my product. So, for them, it's not just 1 out of 50, it's 1 out of 100 due to circumstances. 1 in 50 know about it, but there are 40 people saying, "I am very happy with my _________, theprof00's company did me a great service"

Also, M$ isn't at a loss with their system.

Yes they are, they've lost billions growing the brand

If they really needed to push Sony out of the way, they would be selling elites are 200-250 by now.

They don't need to sell elite for 200-250. They have the arcade for that. I didn't address the first post I made to you, so you probably didn't read it, but as I said earlier, the problem with Sony sales was that people didn't yet find value with its components. MS, realizing this, and having plenty of removable and recoverable components, like exclusive HDD, capitalized on this by offering a barebones system. This in turn both challenges the price of their own, and their competitor's consoles. However, Xbox fans will still go with the Elite because they want the best. The idea is to get people saying "why should I buy PS3 when I don't need a BR player or a harddrive, like on xbox".

BUt that's unnecessary, Microsoft, as a brand, is a more recognizable name than Sony, even if not in the gaming market.

Not in the gaming market, but now they are.

If you live in the US and don't know about Sony, then your uninformed. If you live in the US and you don't know about M$, then you may be a hermit. Nothing wrong with that, but at least in the States, Microsoft has a strong enough name that they hardly need to take losses to get anywhere. And they aren't taking losses, they've been reporting profit (enough to cover the RRoD fiasco too).

I'm sorry, but MS is in the whole by a lot. They've been reporting profit, but not overall profit. They are still in the hole several billion (I think 5-6B) and have only made (I forget the number and am too lazy to look it up) about 800M$, if that. Brand isn't everything. You can't just expect to make money from your brand, and just being widely known doesn't mean your brand is connected to anything good. In fact, it will be interesting to see how sales go for MS after this gen. RROD is starting to become a more mainstream gaming concern. MS really really hurt their brand this gen.

PS: When I'm talking about their "brands" I'm talking about xbox and playstation. While MS hurt the XBox brand this gen, it did little to affect the MS brand.

 

 

First off, the blue is painful -.-

Second, been doing some research, I thought M$ had broken out of the negative, but that was wrong. At the end of Fiscal 08, they were at about 2.6 billion loss, not including RRoD, so now it's more around 3 billion loss (including the profits they've posted so far this fiscal term). Now, obviously, those numbers include much much more than just the xbox, so who knows.

When I was talking about brand recognition I was referring to directly outside the gaming market.

The point about PS2 was that if it had any serious competition, it most likely would not have been as successful. Well maybe, and that's the issue, and that's why you can't really compare different generations of consoles.

And to the first part (yes I went in reverse order), your logic works, IF xbox360 and wii didn't exist, but because PS3 DOES have competition, it doesn't really apply here. And to say the PS3 is a one-of-a-kind item is silly, then the Wii is one-of-a-kind (for now) with motion controls, and xbox is one-of-a-kind for, say, streaming 1080p instantly. I'm not saying you think that, but its somewhat implied so I'm responding to it upfront.

So since PS3 is competiting with 360 and Wii, it changes the context. Dropping a price when you have no competition to increase consumer penetration, versus dropping a price when you have stiff competition to increase penetration; they are VERY different. So, while I completely understand and agree with the logic in your point, I do not think it fits here.

 

I think the funny part is that I'm not sure I care about any of this, but it is fun to talk about I suppose haha.