Last-Gen Console Discussions (PS3, Xbox 360, Wii)

I think Sony actually has a viable marketing strategy here, as evidenced by Mr. Preysin up there.

They have the $600 price tag for the first week or two after launch, during which time all the obsessive, mentally challenged fanboys and "cutting-edge-cool" rich kids will buy it.

Then, after Sony's made a couple hundred bucks off those few, they drop the price to something that normal people might consider buying.

Fanboys lose, averge people come off about equal, and Sony wins. Don't you love business marketing?

Originally posted by General Kaliero
I think Sony actually has a viable marketing strategy here, as evidenced by Mr. Preysin up there.

They have the $600 price tag for the first week or two after launch, during which time all the obsessive, mentally challenged fanboys and "cutting-edge-cool" rich kids will buy it.

Then, after Sony's made a couple hundred bucks off those few, they drop the price to something that normal people might consider buying.

Fanboys lose, averge people come off about equal, and Sony wins. Don't you love business marketing?

In the history of consoles being launched, I have never witnessed suck a retarted marketing tactic ever.

Originally posted by El_NINO
In the history of consoles being launched, I have never witnessed suck a retarted marketing tactic ever.

Doesn't have any bearing on the fact that it WOULD work.

Originally posted by General Kaliero
Doesn't have any bearing on the fact that it WOULD work.

Im guessing you have never sold something before.

Lets say the PS3 build cost is $1000.
Now the sale price was anounced to be $600

How much of a loss does SONY make from every sale according to this example... a loss of $400, and thats without taxes.

Now lets take your "wicked" marketing tactic and say the system will sell for $400.

Build Cost: $1000
Sale Price: $400
Total SONY Loss on every console: $600

So SONY would lose $600 for every console they sell at $400. If I was SONY president I would want to make as much money back before lowering the price and not lose anymore money than was already spent designing the system.

Its not as simple as that though. You may think "why would they sell it at a loss?" but its all part of a bigger plan.

Remember Microsoft just didn't spring out of nowhere. It took careful planning and a lot of make or brake moments to succeed.

Originally posted by Zen2nd
Its not as simple as that though. You may think "why would they sell it at a loss?" but its all part of a bigger plan.

Remember Microsoft just didn't spring out of nowhere. It took careful planning and a lot of make or brake moments to succeed.

ya the bigger plan to become bankrupt.

Even Microsoft didnt lower their price until a year later so why would SONY lower their price a month later? Fact is any console that is on sale will sell at a loss, so why make the situation worse especially a brand new console that cost them a lot of money to make?

They have a better chance of making up the loss and turning it to a profit by selling it at a lower price from the start, though, then selling it at a very high one.

It's simple -- at a very high price, few people will want to buy. At a lower price, Sony will take more of a hit at first, but more people will want to buy, and as the technology to make the systems becomes cheaper, they will make up the loss faster as people will be buying.

Just remember that Microsoft make a loss on every console they sell as well.

I feel safe in saying that they probably are making a loss on each Xbox 360 sold too.

It will take 10 years before a clear winner comes through.

Microsoft is going to fight hard to win the console wars. the true battle, this time, is between Sony and Nintendo. I don't know about you all but I think that Nintendo will win the console wars, well atleast this battle. I mean the PS? STOLE the Motion sensitive controller idea from Nintendo. And even then 1. the controler looks EXACTLY the same as the PS2's and it doesn't even have the same amount of motion sensitivity as the Wii's.

And yes I did say PS?.

Originally posted by El_NINO
Im guessing you have never sold something before.

Lets say the PS3 build cost is $1000.
Now the sale price was anounced to be $600

How much of a loss does SONY make from every sale according to this example... a loss of $400, and thats without taxes.

Now lets take your "wicked" marketing tactic and say the system will sell for $400.

Build Cost: $1000
Sale Price: $400
Total SONY Loss on every console: $600

So SONY would lose $600 for every console they sell at $400. If I was SONY president I would want to make as much money back before lowering the price and not lose anymore money than was already spent designing the system.

I'm guessing you are missing the point of selling things. You don't sell something because you lose money by making it at a high price and then selling it at a low price. You make something with the most inexpensive materials available to achieve your goal, and then sell it for some amount more than it's worth.

Take your average game CD. The materials used are essentially plastic and aluminum, both very inexpensive. The data is transferred during the "burning" process, which takes a negligible amount of energy. You can buy a spindle of 50 CDs for about $18. That would be about 36 cents per CD, and that's if you disregard the spindle itself and the packaging. And remember, the store is making a PROFIT off every 36 cent CD. Even with the data on the game CD, I'd be surprised if each game CD cost more than a dollar to make.

Yet, what do consumers pay for a game? $50-$60 is the going price for a brand new game. Sure, there's the casing itself and the printed paper, but that's not worth the extra $49.64. The fact is, the company is going to make at least a $48 profit off each game sold.

Consoles themselves are the same way, just on a larger scale. You don't sell something at a price at which you are going to lose money, unless you are already losing money in the first place. In that case, you sell lower because you hope to reach a wider consumer base, and therefore lose less money, with the purpose of eventually making up the loss through quantity. You never want to sell something for less than it's worth, that's called "bad business."

Originally posted by El_NINO
Im guessing you have never sold something before.

Lets say the PS3 build cost is $1000.
Now the sale price was anounced to be $600

How much of a loss does SONY make from every sale according to this example... a loss of $400, and thats without taxes.

Now lets take your "wicked" marketing tactic and say the system will sell for $400.

Build Cost: $1000
Sale Price: $400
Total SONY Loss on every console: $600

So SONY would lose $600 for every console they sell at $400. If I was SONY president I would want to make as much money back before lowering the price and not lose anymore money than was already spent designing the system.

You just lowered the price of the PS? from $600 to $400. Oh, and by the way I agree completely with Kaliero.

Basically you mean Economies of scale. This is where the Japanese thought idea Total Quality Management comes into play. That the more material that is ordered the lower the unit cost of each one. Plus ordering the material so that it arrives just on time.

Originally posted by General Kaliero
Take your average game CD. The materials used are essentially plastic and aluminum, both very inexpensive. The data is transferred during the "burning" process, which takes a negligible amount of energy. You can buy a spindle of 50 CDs for about $18. That would be about 36 cents per CD, and that's if you disregard the spindle itself and the packaging. And remember, the store is making a PROFIT off every 36 cent CD. Even with the data on the game CD, I'd be surprised if each game CD cost more than a dollar to make.

Yet, what do consumers pay for a game? $50-$60 is the going price for a brand new game. Sure, there's the casing itself and the printed paper, but that's not worth the extra $49.64. The fact is, the company is going to make at least a $48 profit off each game sold.

Your example of a Spindle of 50 cds for $18 is not relevent because those are reject cds or refurbished cds. I buy those all the time and I pay $12 for them and in every case there are at least 5 cds that are bad. Go to Best Buy or any major store and check the price on 50 cds.

I do agree that selling to a vast amount of people at a lower cost would be better but then again your still losing money.

Originally posted by Lana
They have a better chance of making up the loss and turning it to a profit by selling it at a lower price from the start, though, then selling it at a very high one.

It's simple -- at a very high price, few people will want to buy. At a lower price, Sony will take more of a hit at first, but more people will want to buy, and as the technology to make the systems becomes cheaper, they will make up the loss faster as people will be buying.

I agree but again they would still sell at a far greater loss.

Originally posted by LORD JLRTENJAC
You just lowered the price of the PS? from $600 to $400. Oh, and by the way I agree completely with Kaliero.

I was just taking kalieros marketing suggestion and using it as an example, He said SONY should sell at $600 for the first few weeks than lower the price.

The lower the cost of the console the more of a lose you will recieve.

Originally posted by El_NINO
Your example of a Spindle of 50 cds for $18 is not relevent because those are reject cds or refurbished cds. I buy those all the time and I pay $12 for them and in every case there are at least 5 cds that are bad. Go to Best Buy or any major store and check the price on 50 cds.

The lower the cost of the console the more of a lose you will recieve.

Interestingly enough, my figure of $18 for 50 CDs was taken from Best Buy's website, and the product was a set of professionally manufactured, ready to be burned, quality CDs.

For that console remark, you only start to lose money once you drop the price below the manufacturing price per console. I'm gonna take an educated guess and say that a single PS3 costs around $150-$200 to manufacture. Using that figure, Sony can lower the price of the console in increments a total of $400 without having to even think about worrying about a financial loss. That amount is, of course, only an estimation, but it's probably fairly valid.

Also, I never said that Sony SHOULD do anything. I merely remarked that what I explained would be one possible route that would prove to be a viable business strategy.

Originally posted by General Kaliero
Interestingly enough, my figure of $18 for 50 CDs was taken from Best Buy's website, and the product was a set of professionally manufactured, ready to be burned, quality CDs.

For that console remark, you only start to lose money once you drop the price below the manufacturing price per console. I'm gonna take an educated guess and say that a single PS3 costs around $150-$200 to manufacture. Using that figure, Sony can lower the price of the console in increments a total of $400 without having to even think about worrying about a financial loss. That amount is, of course, only an estimation, but it's probably fairly valid.

Also, I never said that Sony SHOULD do anything. I merely remarked that what I explained would be one possible route that would prove to be a viable business strategy.

Ya... Best Buy has cd sales every week no surprise there especially since I used to work at Best Buy. I highly doubt that the PS3 manufacturing cost is $150-$200, thats ridiculous especially since they created a brand new CPU, using Blu-Ray (also new tech), brand new Next Gen NVIDIA card just for the PS3... hmm and non of this will cost money, get real man.

Originally posted by General Kaliero
I think Sony actually has a viable marketing strategy here, as evidenced by Mr. Preysin up there.

They have the $600 price tag for the first week or two after launch, during which time all the obsessive, mentally challenged fanboys and "cutting-edge-cool" rich kids will buy it.

Then, after Sony's made a couple hundred bucks off those few, they drop the price to something that normal people might consider buying.

Fanboys lose, averge people come off about equal, and Sony wins. Don't you love business marketing?

So you didnt say should however you still mention they "should" start the sale at $600 and then lower the price.

Okay, this argument on CD prices is silly. They're incredibly cheap, as are blank DVDs. One thing you don't seem to take into account, is that Sony would be getting them at manufacturers prices, NOT store prices, so really, the prices would be cheaper than what they are at the store.

The more units they make, the more the price to make each unit drops, as the initial production price for making the CPU and the technology is one flat price that's not going to change, and then an additional cost per unit. So they'd be better off making more and selling them lower than selling them really high.

Originally posted by El_NINO
Ya... Best Buy has cd sales every week no surprise there especially since I used to work at Best Buy. I highly doubt that the PS3 manufacturing cost is $150-$200, thats ridiculous especially since they created a brand new CPU, using Blu-Ray (also new tech), brand new Next Gen NVIDIA card just for the PS3... hmm and non of this will cost money, get real man.

You know, I find it somewhat amusing that I provided you with exactly what you asked for("Go to Best Buy or any major store and check the price on 50 cds."), and you brush it off as a "sale." That is Best Buy's average price for an average spindle of 50 CDs, and other stores have, on average, the same price.

Also, you forget that each of these pieces of hardware is a partnership with the company that makes each piece. Since part of the partnership agreement is that the manufacturer of the hardware gets a percentage of the sale per unit sold, Sony "buys" each piece from the other conpanies at the price of what each piece is actually worth, not an upped MSRP meant for making money. Sony does not spend as much money for the whole console as you would if you were to go out to a store and buy each piece of hardware and assemble it yourself.

...Well, Lana just said the same thing more quickly and succinctly...

So you didnt say should however you still mention they "should" start the sale at $600 and then lower the price. [/B]

Actually, it was Sony themselves who said that the price "should" be $600 when they decided that would be the debut retail price. But Sony on the whole is smart enough to know the average consumer will not pay that much money for a single console, and therefore they will be prepared to lower the price as soon as all the fanboys and rich kids have stopped buying. I'm just saying that Sony can do that and make money. I don't personally approve of it, I'm just saying it's a likely, possible, and profitable course of action.

Originally posted by Lana
Okay, this argument on CD prices is silly. They're incredibly cheap, as are blank DVDs. One thing you don't seem to take into account, is that Sony would be getting them at manufacturers prices, NOT store prices, so really, the prices would be cheaper than what they are at the store.

The more units they make, the more the price to make each unit drops, as the initial production price for making the CPU and the technology is one flat price that's not going to change, and then an additional cost per unit. So they'd be better off making more and selling them lower than selling them really high.

So making more XBOX360s will lower the price? Last time I checked the price was still $399 american, $499 canadian and they have 5 million consoles on sale right now.

If im wrong then im wrong but I dont see how something that costs a lot of money to make will sell at first at a much lower price will be profitable to sony.

These 2 articles which are short descibe what I mean.

http://www.next-gen.biz/index.php?option=com_content&task=view&id=3021&Itemid=2

http://www.gamespot.com/news/6151425.html

Originally posted by General Kaliero
You know, I find it somewhat amusing that I provided you with exactly what you asked for([B]"Go to Best Buy or any major store and check the price on 50 cds."), and you brush it off as a "sale." That is Best Buy's average price for an average spindle of 50 CDs, and other stores have, on average, the same price.

Also, you forget that each of these pieces of hardware is a partnership with the company that makes each piece. Since part of the partnership agreement is that the manufacturer of the hardware gets a percentage of the sale per unit sold, Sony "buys" each piece from the other conpanies at the price of what each piece is actually worth, not an upped MSRP meant for making money. Sony does not spend as much money for the whole console as you would if you were to go out to a store and buy each piece of hardware and assemble it yourself.

...Well, Lana just said the same thing more quickly and succinctly...

Actually, it was Sony themselves who said that the price "should" be $600 when they decided that would be the debut retail price. But Sony on the whole is smart enough to know the average consumer will not pay that much money for a single console, and therefore they will be prepared to lower the price as soon as all the fanboys and rich kids have stopped buying. I'm just saying that Sony can do that and make money. I don't personally approve of it, I'm just saying it's a likely, possible, and profitable course of action. [/B]

Do you not read my posts or even taken a look at PS3s specs, I dont make stuff up. Brand new CPU, brand new video card, new dvd technology, yes I know they are partnered and get a sale price not the same as a store but these are technologies that had to be created from scratch. Theres no CPU on the market that the PS3 will have or no video card that NVIDIA had to create from scratch and yet you take an educated guess and say the actualy manufacturing price of the PS3 is $150-$200.

All that the links you provided show is that with a $600 price tag Sony will not be able to attract enough buyers to turn a profit. Of course, that only stands if the price remains at $600.

Sony undoubtedly knows this, and also undoubtedly knows that there is a certain amount of people who will buy a $600 console either out of blind company support or a "techno-junkie" attitude that what costs the most is the only thing worth having. Big-time companies rarely have any love for their customers, so why WOULDN'T Sony use a bigger price tag on the ones that will buy no matter what, and then turn to a more reasonable price to attract everyone else?

Theres no CPU on the market that the PS3 will have or no video card that NVIDIA had to create from scratch and yet you take an educated guess and say the actualy manufacturing price of the PS3 is $150-$200.

Yes, I do. No "high-end" technology, no matter how new, costs anywhere near as much to make as to buy. Technology consumers have shown repeatedly that if a new graphics card is slightly better than the last one, but is simply called "the best," the average techno-junkie will shell out an extra couple-hundred bucks without question.