I had to chuckle at the the CBC's newsreader last night declaring that the Xbox 360 would give Microsoft huge profits. It sells at a loss, the profit being made on the huge royalties imposed on the games -- which is why I stick to PC gaming, and wait for prices to fall to the $10-$20 range (just got Myst Uru couple of days ago).
And then there's the debate over the 360's "scarcity." On the CBC's "The National" newscast, the newsreader solemly intoned that Microsoft claimed the shortage was for quality reasons, while video footage showed hundreds of 360s being processed on the assembly line.
Over at Microsoft Watch we read "Microsoft is denying vociferously that it's using scarcity to augment demand." But why wouldn't Microsoft agument demand? I would love to see people queued up in the dark, in the rain, fighing past each each other get at my products and make me unembarassingly rich. Plus, there is the benefit of the free publicity that comes from reporters being drawn to stories about "shortages."
Other points from Microsoft Watch...
A Wedbush Morgan Securities analystsays Microsoft is trying to "turn this into the Cabbage Patch Kids," by publicizing news about stores that are sold out of the next-gen gaming console. I can see Microsoft marketing doing that: just scan headlines in Google News to see the story planting at work. Notice the similarity in wroding coming from apparently independent writers.
Or the wording at Microsoft's own Web site: "Xbox 360 Arrival Spawns Midnight Madness Frenzy". This is a press release that Microsoft marketing wrote before the event. "Droves of dedicated fans are expected to line the streets as more than 4,500 retailers open their doors at 12:01 a.m. to answer the demand for the Xbox 360 console and 18 launch games..."
Gaming Web log Joystiq.com says "We have conjectured in the past that the whole scarcity thing is faked to incite demand, but we've also noted that perception of a shortage is enough to make that shortage real."
I experienced that with one of the earlier Star Trek movies, which were terrifically popular around 1980. My girlfriend and I got into the lineup for the movie an hour before starting time, and we were glad we did, because the line-up went all around the block. When the movie began, the theatre was not full. From this experience, I learned first-hand about a false shortage that was self-prepetuated.
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