Roondar, you're way off on the retail markup. Retail markup for game consoles is zero -- retailers make their money on games and accessories just like the original manufacturer does. Yes, I am seriously suggesting that retailers sell Playstation 3s (and Xbox 360s, etc.) at a breakeven price. I know this because I used to work for one for two years.

If you're talking about asset value for a financial report, the value of an asset is how much money you can be expected to sell your asset for, nothing more, nothing less. So the assessed value of a Playstation 3 is $600, which is the amount of money Sony can be expected to get from selling one to a retailer.

Well, that might be (altough that does lead me to more questions, for one: how do you handle storage costs and other financial aspects of stock you own but do not sell if the net profit in case of a sale is zero even when you sell it immediatly?*), but that still doesn't add in warehouse and distribution costs which cost someone money. Or is Sony taking that loss as well and are the PS3 losses higher than iSupply thinks?

*) Or perhaps better said: keeping stock costs money, so a retailer buying something at $600 and selling it at $600 as well is actually losing money on the sale, with more money being lost if the product doesn't sell well. In that light, having a stock of PS3's is more of a liability at this point (they don't sell well) than an asset.

And even more confusing to me in the zero-margin model would be bundle sales (by the manufacturer naturally, not by the retailer) where they bundle all you need to play (including game, leads and controllers) and quite happilly sell those. Surely those bundles would be 'the enemy' of retailers around the globe since they are a) all you immediately need and b) give zero profit (remember, if I buy a console at your shop there is no guarantee whatsoever I'm going to buy the rest I need for the device at your place as well!).

Likewise, I've bought a few consoles (replacements etc) without any extra's from retailer and they where all to happy to sell it to me like that and didn't push for me buying extra's.

Note, this is not meant to say I don't believe your post about retailers having zero profit (on consoles), but rather that I don't fully understand how this can work on the long term. To me it seems like a liability to sell at-manufacturer-price even if you think you can make up on it later on.

 Good point...  if the PS3 costs 800$ to make, Sony sells the system to the retailers for aprox 585$, a price drop of 100$ would actually cost Sony around 315$+ for each console they sell at 500$.  Ugh... this money losing scheme Sony thought up to push the PS3 was just all around dumb.  It would have only worked if the PS3 was in such high demand, for consoles and games that they'd both be flying off the shelves.  Considering there has been few too many games to move stock, this has been a huge problem.  Hopefully Sony can get this under control sooner rather then later.  I also hope quality is not the first thing to go on the PS3, as of right now it's got a good thing going in that department.

Some notes on zero profit for retailers:

I owned a video game store during the PS1-N64 era (1995 - 1999) and I can tell you that back then, there was in fact zero profit on new consoles.  It sucks on the surface, but there actually is alot to be gained for the retailer by selling them.  When I sold a customer a console, chances were extremely good that they would keep coming back to my store for games.  Another benefit that it was rare for me to just outright sell a new console, in most cases the customer would want to trade in either an older system (or systems in some cases) and/or games for other systems.  Used items are by far the most profitable items for a retailer because it's your only chance to buy low and sell high.  But in the long run, you will profit from the sale of a new console, even though the actual sale of it gives you nothing at the time of sale.

As for keeping them in stock, you just have to be smart.  For a small independent store like mine, I had to be very careful in my ordering.  I would normally keep 2 to 4 PS1's in stock and replenish them as I sold them.  You actually have to be even more careful in ordering games.  On some occasions (not all), when the price drops on a console, the manufacturer will actually reimburse you the difference on remaining units in your inventory.  Sometimes.  Sony did this for us on the first 2 rounds of price cuts on the PS1, but not after that.  But they NEVER do this for games.  So if I ordered 4 copies of a game and sold none of them, when I drop the price on them it cuts directly into my profits.  And eventually they will be sold at a loss.  That part really sucks, but it's the same concept as the consoles:  If I don't have the new games, I won't get any used games in trade.  So I would generally only order games that I knew would sell based on customer's talking about it and if they were sequels how well the previous titles sold.  Some were just instant money, like when the new Madden would come out I'd get as many as I could get my hands on and sell them the day they arrived.