To All: I know numbers are dry and boring, but I'm not sure if anybody read the thread about numbers.

It seems like only Bodhesatva has at least read and understood the numbers.

As mentioned originally - IF Walmarts margins are 6% for their goods. Let's even assume it's 10% to be generous. Then the cost of the Gift Card is $90 to them IF FULLY REDEEMED. NOTE: The 6% operating margins are from Walmarts publicly released financial statements, please check them out.

Therefore, as a BUSINESS, Walmart is losing $90 less the margin on the PS3 in this example. Assume Walmart makes $50 per PS3 - which according to Bod would be INSANE.

For the PRESENT transaction, Walmart loses $40 on the PS3.
For the FUTURE transactions, which some of you has pointed out that Walmart will make money on - Walmart has to sell the equivalent OF $400 worth of OTHER items just to BREAK EVEN on this specific promotion.

Unless the Gift Card is RESTRICTED to just electronics/games purchases - it is NOT REASONABLE to assume that the Gift Card will be used to buy those items with the HIGHER MARGINS (like software and games).

That is why for me and Bodhesatva, it makes the MOST SENSE that the manufacturer (in this case SONY) is shouldering some of the load - EITHER through additional DISCOUNTS for future orders, greater MARKETING ALLOWANCE or any other financial incentive that will make this PROMOTION SPECIFIC TO BLU RAY - financially worthwhile for them.

If you were the MANAGER of this division of Walmart - you have to present a valid financial reason (projections, assumptions, etc) in order for this PROMOTION to be even approved by your higher ups.

Note: On the EA financial statements (if anybody reads those), they claimed that in 2007 (page 5), they said that sold 13% of their packaged revenue was to Walmart compared to 12% to Gamestop.

*sigh* Well, you must be right. I mean, you did use all those caps. ...and clearly either Sony is really dumb, and wants to pay Wal-mart money to sell Blu-Ray players and increase their future Blu-Ray marketplace, or Wal-mart is really dumb, and just wants to lose money.

Gosh darnit, someone tell those guys they are dummies, and they need to take the VGChartz sales course. Someone stop Sony from giving away money... what are they thinkin, upsetting all the other retailers, in hopes of capturing the heart of the monopoly of rural America? Also, someone stop this darn recession and the oil crisis. We don't like that, and it can't be explained to us, so just stop.

Generalizing Wal-marts profit margins to fit into this particular sales gimmick is a pretty major assumption, based on some pretty major assumptions about profit on HW (and you're discounting investment into future market), and in my opinion, a major error. But, believe what you will -- I find myself getting frustrated in trying to explain what I believe to be reasonable decisions on Wal-mart's part, and that usually just ends up as a flamewar and a waste of my time.

>bumidan

Again you are making false assumptions. The check is for buying blu-ray players only, so WM is assuming that those people _will_ use (most of) this check not for potatoes and rice, but for blu-ray discs to actually use what they just bought (doesn't take a genius to figure that one out, does it?). You could start your own little pet project and watch people buy a blu-ray player at WM and count the number of blu-ray discs they buy with it (assuming that the discs are "conveniently placed near the players" at WM. And again, it would be bad business practice for Sony to single out a sole distributor and grant them "a freebie".

It's called a 'loss leader'. $100 off a Blu-ray player, that also included PS3. Walmart will make money on the extra Blu-ray movies/ PS3 games sold etc as the Blu-ray/PS3 userbases increase.

@ mifely.. Next time then.

I never said that I am correct - I am just posting an analysis and trying to figure out what is reasonable. Of course, I can be wrong because I do not have inside knowledge of Walmart.

And like I mentioned before, if you are going to have a different opinion, at least back it up with numbers, even assumptions. Because as you already know, we can't refute with statements such as "Walmart has a rural monopoly".

That's all.