First off, the blue is painful -.-

sry about that, how's this?

Second, been doing some research, I thought M$ had broken out of the negative, but that was wrong. At the end of Fiscal 08, they were at about 2.6 billion loss, not including RRoD, so now it's more around 3 billion loss (including the profits they've posted so far this fiscal term). Now, obviously, those numbers include much much more than just the xbox, so who knows.

Well, they said the RROD refund would be 1B$, but I'm pretty sure it has already exceeded that number. Figuring in paying for shipping and replacement of the unit...sooo about 100$ per console or more over 10M consoles, which is actually only about 29% failure rate. Which is under most estimates.

When I was talking about brand recognition I was referring to directly outside the gaming market.

yeah but that doesn't really matter. Sure it's helped here, but as someone who studies psych and social culture I wonder how much the XBox brand strength in America actually comes from it being an American company product. Consumer buying habits have shown a long history of nationalist tendencies.

The point about PS2 was that if it had any serious competition, it most likely would not have been as successful. Well maybe, and that's the issue, and that's why you can't really compare different generations of consoles.

I just explained that I'm not comparing the generations. I'm explaining the environment. Sony is coming off of very successful domination of the market. That kind of presence lasts for a long time. I'm not saying that people buy the ps3 because the ps2 was so dominant compared to the other consoles. I'm trying to say this in the simplest way possible, but you're throwing other variables into the equation like competition. Yes, if ps2 had better competition it wouldn't have been so dominant, but because it was dominant, it left a residue. It left an atmosphere. It's like Ipod. It became so dominant that the market was just very difficult to be penetrated by new entrants. This doesn't mean that Ipod is a good product. I'm not even commenting on quality of product in either instance. I'm talking about environment, market presence and brand strength.

And to the first part (yes I went in reverse order), your logic works, IF xbox360 and wii didn't exist, but because PS3 DOES have competition, it doesn't really apply here. And to say the PS3 is a one-of-a-kind item is silly, then the Wii is one-of-a-kind (for now) with motion controls, and xbox is one-of-a-kind for, say, streaming 1080p instantly. I'm not saying you think that, but its somewhat implied so I'm responding to it upfront.

This is the model of demand. It's fact. It doesn't need the xbox360 or wii to be nonexistant. The model exists WITH them but I tried again, to my failure and predictable rebut, to simplify the idea. My idea of a one-of-a-kind product is merely to get you to understand how demand works. It was meant to illustrate how a company would need to lower prices OUTSIDE of the scope of competition; sometimes, to make more money, companies lower price, regardless of whether competition exists or not. What I'm trying to explain to you is that Sony is following this demand-based pricing to a T. This is textbook, really rudimentary stuff. You see how many would buy your product at a cheaper price, and see if the costs make sense and profits are higher, and if they are, you change the price. At 400$, a PS3 was not selling that much. It was selling pretty well, but not for what it's value was. With a redesign, and a cheaper price, sony's research definitely showed higher profits. That is why I say they are not lowering price to compete, because in this (really basic) model, cutting price increases profits. On the other hand MS is not cutting price to increase profits directly. They are cutting price to grow the brand and push Sony over. MS even said in the beginning that their job is to kill Sony.

I just wish I was better at explaining how this works. I feel like I'm repeating myself, but I'm trying to make sure you understand because you've misunderstood me several times now.

Sony cuts price to improve the consumer vs product dynamic where MS cuts price to improve the product vs product dynamic. One cuts price to make more money through sales, and the other cuts price to hurt the competitor thereby creating a cascade of effects such as:

Investor fear
Missed forecasts
Increase pressure
Reduce sales
Create negative media image of competitor
Convince devs and others that the competitor is failing and should jump ship
etc etc

a price when you have no competition to increase consumer penetration, versus dropping a price when you have stiff competition to increase penetration; they are VERY different. So, while I completely understand and agree with the logic in your point, I do not think it fits here.

Like I explained above, they are the same. I knew you were going to try to make a point that my model only works without competition but it's not true. The model is first and foremost one of the most important tools for a company to use. Staying at the correct price/demand value is the best way to make money. I don't mean to sound rude, but I think you're grabbing at straws.

I think the funny part is that I'm not sure I care about any of this, but it is fun to talk about I suppose haha.

It is fun, isn't it? I love it.

First off, MUCH better color =)

2nd, HOT DAMN your responses are long, I love it, and hate it at the same time =)

The RRoD part was just stupid on my part, all that matters is the actual reported loss (which will include any costs from RRoD repairs/replacements)

The brand comment, that's actually what I was going for, even if I went quite a roundabout way to get there. I was pretty much trying to say that Microsoft has such a strong name in America that it doesn't necessarily need to cut corners.As you put it "consumer buying habits have shown a long history of nationalist tendencies".

I'm not sure why I went on about the PS2 thing because I already think/feel/agree with what you said so maybe my extreme tiredness yesterday was getting to me =)

Haha probably shouldn't have tried to debate like this on 3 hours of sleep yesterday.

I understand the idea of demand. I'm not saying I didn't understand what you were saying, because I do. I'm not saying they didn't lower their price with the intention of increasing demand, and not for the purpose of trying to undercut its competitors. The issue is that everything is so related and intertwined that you can't really seperate them. You can try, but I don't believe you can succeed. My point is that lowering the price of a product in a competition-heavy market versus a competition-free market are very different.

I'm not saying that lowered their price because of the existence of the wii and/or 360, what I'm saying is that because of the existence of the wii and 360, it changes the reasons to lower a price. Sony could lower the price solely because their graphs/models/charts/whatever show that with that $50 or $100 price cut, they can achieve maximum profit.

I wouldn't be surprised if they plan models (maybe more like templates, to be more variable/universal) up to years in advance; what I'm saying is that with the existence of competition, those models are affected. Maybe that's where we're seeing differently, I think we were just talking about 2 different things. How those models are affected will surely influence how a company like Sony acts, so yes, maybe they cut the price to follow their model for maximum profit and consumer adoption, but that very model cannot exist without taking MANY other factors into account. Just pretending some of the factors aren't there/don't matter isn't a proper way to run a business and I know Sony would not act like that. This to me is still a price war, so maybe we're just stuck on different defintions; not really saying one is right or wrong, but people think about different things in very different manners sometimes.

I'm not grabbing at straws, I just think we weren't on the same page. Also, all of this is based on an assumption that Sony really didn't do it to try and undercut MS, but it's always possible that was their intention.

It's fun, and TIRING online, I prefer debating in person.

Ugh now I have long responses -.- haha.

You and I came to very different conclusions in 2007. I looked at the 360 and it had the games I wanted to play so I bought one. I also bought a PS3 and was utterly disappointed in the machine because, frankly, its functionality was far behind the 360. It wasn't even close. No background downloading, the online system was shit, there were few games that weren't buggy as hell, voice chat was almost an afterthought, etc. The console is vastly improved now but I found it unacceptable that Sony released such a half-assed attempt at a multimedia/online console out of the gate. Now it's a non-issue but two years ago, the situation was vastly different.

In regards to the RROD, MS extended the warranty so I found it acceptable. I still didn't like seeing my box red ring, but knowing that I'd get a new one for free staved off a bit of my vitriol for the console's design quality.

It's all about what you're looking for in a console. I wanted to play the games I like (and later, use kick-ass features like Netflix) and those outweighed the negatives for the console. On the other hand, I could claim that anyone who bought a PS3 in the first year of its release is "retarded" like you did for the 360. The console was overpriced, there were few games, and the implementation of the XMB/online/extra features felt as if Sony slapped them together in a week. That sounds like a dumb purchase when put into that perspective, doesn't it?

That's why I said "tread carefully". It's against forum rules to say things like you did but since you're obviously making a point here, I see no reason to take action. You're allowed an opinion, just refrain from insulting language.