HoangNhatAnh said:
It seems even at $499, Sony still take a loss |
Obviously. And no shop I'm aware of sells stuff without a minimum margin (which depends on the kind of stuff being sold).
In short, not going into the intrinsic parts of the process, every good produced requires a certain markup to be profitable, all things considered. The markup heavily depends on the question "What does it take to sell the product?". That question includes about 1234 things people tend to overlook. Some examples: For Haute Couture, this markup is way above 1000%. For high end electronics and special equipment, it is several hundred %, for good clothes, it is around 80% (actually higher for cheap clothes), for bread and butter electronics, like toasters for example, it rarely reaches 30-50%. So the question is: where do consoles fall? As a rough guess, I'd say it is somewhere between 30% and 60%.
So if the bill of material alone is around $450 (I certainly doubt that Bloomberg article for reasons given before), a console would require a sales price in the $600-$700 region. That would be the fair price if the console had to stand on its own.
So if that $450 components only bill were true, even at $599 at your retailer's cashier, a console would sell at a loss to the manufacturer. There is a reason the regular price of a PS4 still is over $300 over here (outside of promotions),, that tells us mf costs still are around $200 (and Sony doesn't want to lose money on it).
The problem for Sony and MS is the question on just how much money they are willing to lose on their hardwares. The question is not whether they take a loss, the question is how much. From a corporate standpoint, both want to sell in the $600-$650 region, but both know the customers would not buy (even if that is a fair price). So they are both waiting for the other company to show its willingness for taking losses.
Last edited by drkohler - on 15 February 2020
