Very nice analysis.
Now to pick it apart. Somewhat.
"Many parents however, understand that their teenage children may like video games also, the same goes for many 30 to 50 year old men with low salaries. These people see that they can pick up a PS2 today for 129, and they get a DVD player, and there is a huge selection of games between 9.99 and 29.99. It is true that these people exist, the PS2 sells very well dumfounding many analists and hardcore gamers to this day."
Agree. As the price goes down, the market gets bigger (up to a certain point, probably around $99, where the reduction in price net out larger than the number of people brought in to get total revenue).
"When they pick up their brand new 40in HDTV in 2011 for 349, they are ready to go high def, and there sits a PS3 or Xbox 360 with the ability to play Blu-ray for only 149. Just remember these people."
The 7 year old / teenager / low salaries are NOT going to afford a $349 new TV, imo. At best, they might get one for Xmas, and that's it. So, even if they get one in Dec 2011, it's not until Dec 2012 / birthday or other special event that they can justify another video game system, even at $199 or $249. And by that time (Dec. 2012) a new Nintendo set might be coming out. At $249. No way will they raise the price if they can help it. Unless they get too arrogant about their win this generation.
Torturing the numbers. Hear them scream.
