The Playstation 3 has finally hit stores, and as expected, Sony's shipment is a disaster. There 400,000 consoles available at launch, but there were millions of people who were willing to pay the $500-$600 to get their hands on one. Now that is supply and demand gone totally awry. The PS3 has been profitable for retailers, but even more so for ebay sellers who took advantage of the low supply and sold their PS3's for over a grand. Unfortunately for the people that did not manage to get one, things are unlikely to improve anytime soon since Sony has only promised about 1 million units before the end of the year. Some hopeful people mentioned that waiting longer to buy would result in paying less, but the extremely limited supply makes a price decrease extremely unlikely anytime soon. While some people complain that it is too expensive for a gaming console; others view it as a bargain since it is also a Blu-Ray player (regular Blu-Ray players cost over $1000.) This is a good example of how mentality of the people changes the value of a product. The PS3 has also had quite a multiplier effect on other Sony products; PSP sales have tripled and PS2 sales have doubled since launch. It appears that Sony experienced the law of diminishing marginal returns when manufacturing the PS3 because they were unable to produce more than a certain number of the console. However, it is also possible that they are purposely withholding units in order to keep the price high and to keep more people interested in purchasing one. If that is the case, they are taking a big risk, but it may pay off in the long run.
-Ivan Kukharkin
2 comments:
The fact that people buy these consoles on eBay for such high prices always shocks me. I mean why can't they wait a while and buy it at the store price? I'm guessing that the PS3 is so popular that there is an inelastic demand for it.
It's like Mrs. Rees says: Everything comes down to supply and demand. This is just a regular supply and demand graph with the supply decreased dramatically. Since there are so few available, the people are willing to pay more money for them. And since they are not available in stores anyway, there is nowhere to buy them at store price.
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