Global HW up June 9th (updated with SW)

[Dodece]

@Troll_Whisperer

My point isn't that Sony would necessarily lose money by selling the Vita. That isn't really the problem. The problem is can retailers make money by selling the Vita. Retailers have to cover overhead costs. They need to pay utilities, taxes, employees, upkeep, and their investors. That means that every square meter of retail space must generate a certain amount of money. Retailers cannot stay in business by just selling. They need to sell enough to cover their costs. Otherwise they go out of business.

Lets say that a retailer gives the Vita, and its associated products thirty six square feet of retail space, and since it is a new product that space is probably their prime real estate. The place on their shelves that sell the most, and the place where their expectations are highest. That retailer may need to clear five hundred dollars in sales weekly in that space to break even. However the Vita isn't doing that kind of business, and is only averaging sales of half of that. Now the retailer has a problem to deal with. Those sales aren't wants at all. It needs those sales to cover all of those costs.

No retailer is going to want to lose money, or tolerate losing money if that can be avoided. So that retailer will in fact do the most logical thing. That retailer will decrease the space they are giving the product to a point where it thinks the product will meet the sales target. The newly free space will be given to another product which might do better with that space. So now the Vita has half the space to sell out of on the sales floor. You might at this point be saying hurray for the Vita. It is after all going to be able to meet the retailers expectations.

Hold that thought for a minute. The Vita was only selling half of what it needed to in the space it started out with. What happens if that trend continues into the smaller space. What if now having half the space means it will have half the sales that it had before. This shouldn't come to a shock to you, but when a product gets less shelf space it also gets less attention, and it doesn't look at attractive to consumers. So if the trend continues the retailer may take the next logical step.

The retailer decides to shuffle the order, and give the prime real estate to a product line that is meeting or even beating their expectations. Now the Vita is somewhere near the back of the game section. Where the retailer has very low expectations. Now you might be saying well it is in a section where it only has to sell one hundred bucks per week to break even for the retailer. The problem obviously being that the Vita is now somewhere that most of the customers at that retailer aren't likely to go looking for devices or games.

Worse then that other products even the one just ahead of the Vita in the lineup might start muscling the Vita for what little space it now has. Not only does it not have the good shelf space anymore, but it may even lose some of the eighteen square feet of space it has left. It might get pushed down to eight square feet, followed by four square feet, and then well retailers don't carry products that don't have a market anymore.

I know your probably saying to yourself pure melodrama, and to that not trying to be a dick mind you. That is just plain bullshit. This is the exact way every platform finds its way out of the market place. Whether it lasts for many years, or just a few months. This is how all of the current generation of consoles are going to vanish from those same shelves. Their sales are going to slow down, and retailers are going to cut their space, move them to the back, put them on clearance, and be done with them.

The problem for the Vita isn't just that the sales are low. The platform does have a grace period, but it doesn't by virtue of being have a indefinite one. The platform isn't going to get the better part of a year to just slink its way forward. Hardware sales are supposed to make up for software sales upfront. Without strong hardware sales it is obvious that software sales aren't doing much better if at all. So based on these sales figures.

The Vita is not selling at all in some locations, and it obviously follows that the software isn't selling either. There are more retailers in these regions than units being sold. Sure Sony isn't losing money, but I guarantee you that the middle man is the one taking it in the wallet. The product doesn't even have enough critical mass to maintain any prolonged demand. It isn't as if there are fifteen million units out there, and fifteen million users that will need games for it for years to come.