heprof00 said said:
The concept of supply and demand is for supply to meet demand. For the case of 120gb and 250gb, its essentially a zero sum economy. If you increase the demand for 250gb, the demand for 120gb will decrease(unless you have some odd group who would purchase both 120gb and 250gb). So their best plan is to just lower the 250gb price a bit, to alleviate the demand for 120gb and increase the demand for 250gb.
No. What you just said doesn't make sense. Lower the 250g price to increase demand and shrink demand for the 120? If you phase out the 120, you're basically creating a price increase, which will result in lower sales. Demand is based on price and 300$, for right now, is where they want to be. You lose more on the 120, but you level it off a good amount with the 250. If you phase out the 120, the 250 needs to be 300$, otherwise sales drop. Profit increases, but sales drops, and like I explained earlier, it doesn't matter if they lose 20-50$ on a consle because they make that loss back on one game and one controller, or just on two games. It's not a big deal. Not only that, but the more console marketshare they get, the more willing developers are to dev a game on ps3 and port to 360, rather than the other way around, and also increases the chance of getting exclusives, or at least keeping exclusive games exclusive.
I don't think you understand the meaning of 6cent loss/dollar. I will reiterate: On a shipment of say 3 (120gb) and 1 (250gb), their loss for the shipment is 3*300*0.06 + 1 *350*0.06. This is what they given us. It doesn't matter if no consumer buys the 250gb, because its the retailer already purchased that shipment. So every 120gb console that they ship is a $18 loss and every 250gb is a $21.5 loss.
No, you completely misunderstand, again. The .06 cent per dollar sold is an average. It is physically impossible to be losing more on the 250 than on the 120. That is a cold concrete fact, sir. That number is factored in based on worldwide sales totaled, and then losses are divided among those consoles. It is the same as this:
I sell fruit: bananas, apples, and oranges. I sell teh oranges in mexico, where I make 20 cents per orange. I sell the apples and bananas here at a loss of 2 cents per apple and profit of 1 cent per banana. Each one retails at 25cents. If I sell the exact same amount of each (100), I make a revenue 75 dollars. However, my costs are this. 5 cent per orange, 27 per apple and 24 per banana. So as a total, the costs are 27$ +24 + 5=56$ So, my profits are 19$, or 6.3 cents per piece of fruit. Notice that I make 6.3 cents per piece of fruit, on average, despite the fact that I obviously lose 2 cents per apple.
Are they making profit off console overall? Thats the point of this whole debate.
No, otherwise they would have said they are profitting 6 cents per console or whatever. They are losing money on console sales overall, however, the 250g helps reduce that loss substantially by being profitable. Just like the oranges help boost that profit per fruit to 6 cents. And no, the whole debate isn't whether they are profitting or not, it is about you doubting that the 250g is profitable. Here is the answer, the 250g is either profitable, breaking even, or losing maybe 1-2$ per console. The 120g loses 36$ per console. Being 50$ more expensive and 8-10$ more costly, the math says that the 250g is profitable by 4-6$ per console. End of story.
If thats sarcasm, then lets say, you manage a swimming pool, your clients tells you that the swimming pool is freezing cold, then of course you would get a thermometer in there. The point of the thermometer is not for you to believe but to convince other that you are right. Thats the basics of a debate, facts -> argument -> conclusion. I am using the WSJ report of the 6cent/dollar loss to draw my argument and conclusion. You claim you have other facts that contradict my argument, such as the cost for making a 250gb is just $8 more, and they would earn a whole $42 more than 120gb. I inclined not to believe that, because I know most royalty and costs scale with price. Of course I can't argue if you have proof, but it sounds like you don't want to spend the effort to present.
I've already presented the proof. The only difference between the consoles is the hard drive. The licensing they use is not scaled to price and I don't get where you are coming up with that. Even so, the only licensing they pay is to MS for a couple of codecs and to the Blu ray association, which, a good portion of goes right back in their pockets. Licensing for a product is only a couple of dollars at this scope and would even so only increase by a couple tens of cents. The difference in hard drive prices based on storage size is minimal. In fact, the smaller the amount of data, the less money you save. This is due to demand. There is less demand for smaller drives and more demand for larger ones, therefore, they are in greater production which distributes costs and reduces price based on economy of scale.
I apperciate that you have invested so much time to this thread, more so than I have. It is a shame to see you just give up but I guess I am just the type that needs facts and sources to slap me in the face.
The facts are there and you are just inventing these excuses and coming up with wild conjecture to combat my argument. Like, lower the 250g price to increase demand? This is simply ridiculous conjecture.
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