By using this site, you agree to our Privacy Policy and our Terms of Use. Close
Soundwave on 30 July 2025
Edit Thread
Biggerboat1 said:
Soundwave said:

My general point is consumers in this industry have generally been spoiled. Virtually no one in any industry sells any important component at cost, let alone at a loss. 

What Microsoft was leading the industry into was only a direction feasible thing because they don't really give that much of a shit about gaming. They have an OS division that is embedded into business to the point where they have a quasi-monopoly and make billions of dollars of profit every year from that. The game business' numbers were inconsequential. 

Well since MS has generally failed miserably at trying to replace Sony in the business that setup was never feasible in the long term. We're really just seeing the game business run more sanely, this includes Sony now also. Game hardware does generally need to make a profit. It does need to adjust for inflation over time, like any other product. People who want the moon but don't want to pay anything for it are likely in for a harsh reality check in the coming years. 

The ROG Ally X is like maybe moderately better performance than a Switch 2 in practice for like $900-$1000. And for that price you still do not get an OLED. The hardware performance the Switch 2 provides is quite good for $450. 

I'm assuming that because you didn't provide a post that said what you said it did that it doesn't actually exist and that it was indeed a strawman.

'Virtually no one in any industry sells any important component at cost, let alone at a loss.'

Dude, what are you talking about? Products are frequently sold as loss-leaders. Google does it with it's Pixel phones, Amazon does it with many of its tablets & smart speakers, and tonnes of consoles launch as loss leaders, including all in this very generation, including the Steam Deck. Or how about any service that offers a discounted or free trial, of which there are about a bazillion?

And this is just off the top of my head, within the tech sector - across all sectors we'd likely be looking at many thousands of products or services.

This strategy is normally used for a few reasons, 1) a company wants to break into a market where it has limited presence and so takes a hit for a generation or two in the hopes of gaining a foothold. 2) they sell a whole bunch of profitable tertiary services off the back of said product which will more than offset that initial loss. 3) they hope that by giving you a free or discounted period of time with a service that you'll ultimately pay the subscription longer term.

The reason that you're less likely to see a ROG Ally X going at cost or at a loss is that Asus does't stand to make money from services following the purchase, whereas Sony, Nintendo, Valve & Microsoft do. And the handheld PC market is currently so nascent that it likely wouldn't make sense for them to lose a bunch of money to gain a foothold in a tiny sector.

Furthermore, according to some analysts, the Switch 2 costs approx $400 to manufacture. If my research & maths are correct then it's selling in Japan, net tax, at $306.

So the very strategy that you're asserting is extinct is being used today by Nintendo itself...

And this strategy has nothing to do with gamers being 'spoiled'. Corporations are not altruistic, if they're implementing a loss leader strategy its because they think they'll make more money down the line than they otherwise would if they sold at a profit from the jump.

I stand by what I said. Just because Google (a company that clears 10 billion+ in profit a year due to search + Youtube) subsidizes one product line (Pixel phones) and so does Amazon (another multi-billion dollar money machine from e-Commerce) doesn't mean even 1% of products are sold under that business model. 

Even for electronics, 99+% of hardware is sold at a profit. 

And that's fine and more than fair. 

Even the so-called "razor blade" model ... like people realize Gilette and other razor blade companies still make a profit on actual razor handle sales too, they don't just rely on profit from the blade refills. 

Nintendo isn't a trillion dollar market cap company with 20 other divisions. Sony isn't even close to that kind of market cap either, but Nintendo especially has basically this one business and these days it's pretty one hardware line. If they want to make a decent size margin on the Switch 2 hardware, that's entirely reasonable. Sony will likely be making a profit on future hardware too (hello $600-$700 PS6 base model).