| heprof00 said said: 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. The demand of the 250g is one number and the demand for the 120g is another. There is a 50$ price difference, and an 8-10$ cost difference. 120g loses 36$ per console. Your suggestion is to then lower the cost of the 250g? To what, may I ask. What price do you actually believe is going to alleviate 120g demand and at the same time exist for the reason it was designed (to be profitable). There is none. Even a 10$ drop potentially obliterates the profit, the only reason the 250g console exists in the first place. What I find so absurd about your argument is that you assume you know what the demand is for both of these products. You assume that you know better than the group who has done the research and found the model for their price points. The 250g is already a difficult sell as there is virtually no difference between the two, and it's 350$. 70% of consoles are sold in the 200$ and under mark. 300$ price point is exponentially more marketable than 350$. Below, we have confirmation of that personality in action. "Sony marketing is not smart enough..." You keep insisting that making a profit on consoles is the most important thing in the business. It's not. The 250g model is a trick. It's a way to charge people 50$ for the same product. Nothing more. 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. If 250gb is losing $1-2, then its not profitable, breaking even is not profitable. Profitable = getting more money than what you are putting in. From my previous statement, the math says either Sony marketing is stupid or 250gb is currently making a loss. Your answer contradicts your own statement. Your statement is based on faulty reasoning and silly logic. Hmm, how do you think the company who sued Sony and Microsoft for the controller rumble managed to claim so much cash? Ps3 have a lot of software and hardware licenses. They got so much because the technology is so crucial to the playstation brand.
These are the software license that Sony have on their site: http://www.scei.co.jp/ps3-license/index.html Hardware, they have a dozen more like Nvidia's PhysX and other ones they are adding as they go along: Bottomline is that a lot of these license go by %, every hardware Sony sell they pay % of their 'profit' to these company. If 250gb garner them more 'profit' the licenser gets more cut.
When you brought up royalties, you brought them up as evidence which contradicts the 42$ increased profit. I am curious to know what you expect the licensing costs to be. I am thinking maybe 1-2 percent of total revenue, which turns into 35-70$, which is already looking improbable. In this case, the increase from 300 to 350 only costs an extra 50 cents-1 dollar.
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? It is wild conjecture in the way you think it works.
...You know what? This discussion will not continue until you can reasonably explain why the ps3 demand is an hourglass. That assumption figures that a buyer MUST buy one or the other without other options. Options include "waiting", or buying from the competition. From now on, we are going to go through each and every one of your points until you realize that your statements are indeed "wild".
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