heprof00 said said:
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.
Demand for 120gb and 250gb is like an hourglass. They both make up the whole 'demand for playstation 3'. If you have supply for 250gb but none for 120gb, you want to shift the sand over to the 250gb so the excess demand on the 120gb get allivated and 250gb gets sold (Retailers are not going to order 250gb if they have storeroom full of them). To shift the sand, you can just lower the 250gb cost. Its not called phasing out the 120gb, its controlling the supply and demand.
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$, or 6.3 cents per piece of fruit. Notice that I make 6.3 cents per piece of fruit, on average, despite the fact that I obviously lose 2 cents per apple.
Its basic math: currently its: (X*n1 + Y*n2)/(n1+n2) = -0.06 where X and Y are the Income margine of 120gb and 250gb respectively. n1 and n2 is the respective # of 120gb and 250gb console shipped to retailer. There is only 2 real explanation to why this equation would equal < 0:
1. Sony's marketing is not smart enough to play with n1 and n2 such that it would be > 0.
or
2. Both X and Y are negative so there is no way to be > 0.
No, otherwise they would have said they are profitting 6 cents per console or whatever. They are losing money on console sales overall, however, the 250g helps reduce that loss substantially by being profitable. Just like the oranges help boost that profit per fruit to 6 cents. And no, the whole debate isn't whether they are profitting or not, it is about you doubting that the 250g is profitable. Here is the answer, the 250g is either profitable, breaking even, or losing maybe 1-2$ 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 250gb is losing $1-2, then its not profitable, breaking even is not profitable. Profitable = getting more money than what you are putting in. From my previous statement, the math says either Sony marketing is stupid or 250gb is currently making a loss. Your answer contradicts your own statement.
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.
Hmm, how do you think the company who sued Sony and Microsoft for the controller rumble managed to claim so much cash? Ps3 have a lot of software and hardware licenses.
These are the software license that Sony have on their site:
http://www.scei.co.jp/ps3-license/index.html
Hardware, they have a dozen more like Nvidia's PhysX and other ones they are adding as they go along:
http://www.trustedreviews.com/video-games/news/2009/02/05/Sony-Licensing-amBX-Technology-For-PlayStation-3/p1
Bottomline is that a lot of these license go by %, every hardware Sony sell they pay % of their 'profit' to these company. If 250gb garner them more 'profit' the licenser gets more cut.
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.
I think 'excuses 'is a poor choice of word. I am not responsible for failure or proftiablity of Sony. I do however, make hypothesis that I deem resonable, which you may not agree to...
Finally, are you saying that lowering 250gb's price will increase demand is a wild conjecture?
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