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Massachusetts: still punishing success

By now, everyone's seen the Playstation 3 hype. It's nuts. Crowds rioting to get one of the machines. Armed robberies and burglaries. Knifings. Shootings. People getting 4-5 times list price on EBay. Sony (a corporation I've learned to loathe) has not a hit on its hand, but a genuine phenomenon.

So, what's the Mayor of Boston doing about this event?

Is he blaming the people who are going certifiably insane over it? No. Is he blaming the stores for not anticipating the reaction? A little.

It's Sony's fault. You see, they should have known that they were making the equivalent of electronic crack, and done something different. Maybe made it suck a little. Or abolished labor laws and had their factories crank out even more machines. Or... well, anything that would have cut into their profits, but made the mayor of Boston's life a little less chaotic.

The economic formula is simple: if the supply of an item is greater than the demand, then you probably should cut your prices. If the supply is below the demand, then you are almost guaranteed to sell all you have on hand for your set price.

Sony, in this case, is doing everything right and nothing wrong. They have designed a very, very popular item, and they are supplying all they can. If the demand is greater, then so be it -- they are under no obligation to make so many that the price falls and everyone who wants one can have one.

Because, in the end, one fact trumps everything, even the petulant whining of the legendarily inarticulate Mayor of Boston, the Honorable Thomas "Mumbles" Menino:


Good luck with your efforts to collect from Sony, Mumbles. Maybe they'll decide that they simply won't ship anything to the city of Boston, just to avoid the headaches.

Comments (16)

Does this represent a step ... (Below threshold)

Does this represent a step up from "taxing success?" to "fining success?"

"If Sony didn't, nearly ... (Below threshold)

"If Sony didn't, nearly everyone else seemed to know that limited supplies and high demand were a formula for trouble."

Everyone but Sony and in some places, the police.

A) Sony is not in the business of security nor are they responsible for the behavior of their customers. Period.

Lines of hundreds of people standing in the rain for, in some cases, over a day for a hot item should be the first clue that somewhere in that crowd tempers will flare. The responsibility of behaving lies first with those in line. Secondly with police who "didn't expect trouble".

I saw the footage on the ne... (Below threshold)

I saw the footage on the news with the mute on and thought I was watching a scene of the last space ship leaving before the earth blew up.

I grabbed my family and we hunkering down in our survival bunker.

Thanks for the "All Clear". We are chalking this up as "only a drill".

I think they should have in... (Below threshold)

I think they should have increased the price. Not just because the eBay auction prices will show that the first PS3's were priced well below the market-clearing price, but also because I understand that Sony is making a $300 loss per PS3 at the current price.

Correction: ~we "are" hunke... (Below threshold)

Correction: ~we "are" hunkering down~

And rumor has it Sony will make more so that everyone that wants one will have one.

Me, Me, Me, Me, Me, Me, Now, Now, Now, Now, Now.......

Oyster, exactly, large masses of people gathering for long periods in foul weather should signal to the authorities that trouble might be anticipated.

What is the Mayor's defense? That Sony knew in advance that these crowds were going to gather? I guess the mayor was wearing his "tin foil" the day the message was sent out by Sony.

What's the frequency Thomas?

Drop their prices? Sony is ... (Below threshold)

Drop their prices? Sony is already selling the PS3 at a loss, approximately $240 per unit, if memory serves. The idea is to get it out there, undercut the buzz about XBox 360 and other game consoles, and get more people interested. I'd say they've done just that. Now if they can only get the problems with the blue laser chip yield squared away. That will allow them to build as many PS3's as people want....

Are these customers the sam... (Below threshold)

Are these customers the same people the mayor panders too every once in a while to get elected?

Sony can make as many or as... (Below threshold)

Sony can make as many or as little as the want.

But its naivety to believe Sony isn't taking full advantage of the shortage and playing it off to full effect to generate future interest. Perhaps even moving the release date up or holding back product to ensure a shortage. I mean releasing with plenty of time to Christmas so that you can release 1 or 2 more waves of product to similar effect. You can't buy advertising that good. It gets known as the console people will riot for or stand 48 hour in line for or pay 4,000 for.

That's all within their right, but Sony IS playing this situation.

The real problem is people. The children of the 60s and 70s and their offspring are so materialistic, that they will do those insane things so they be the one that has it now. There is massive loss of perspective in the country today.

Here's a YouTube of me viol... (Below threshold)

Here's a YouTube of me violating the Sony webcam's warranty: http://www.youtube.com/watch?v=5qgujfGYapM


LS: More evidence that livi... (Below threshold)

LS: More evidence that living with cats can cause mental instability.

JT: Perhaps those folks in line that couldn't cope were all owned by cats. Does the Mayor of Boston live with one? Maybe that could explain things.

That's right you liberal mo... (Below threshold)

That's right you liberal moron, it's always somebody else's fault.
Damn those evil big corporations!
Damn capitalism!

Five years in the making, 2... (Below threshold)

Five years in the making, 2 years of advanced hype, release date set a year in advance, corporate ownership shared with biggest media concglomerate in the world...

...and they only supply 16 units to each retail store....

Not an accident.

I do believe that Sony and ... (Below threshold)

I do believe that Sony and Microsoft have taken the wrong tack with the PS3 and XBox 360. They should have followed how TV makers handle the introduction of new equipment. Since the early run of production is always prone to problems and rarely able to produce great quantities, TV makers price their initial new stuff very high. This minimizes losses and sometimes even creates a profit. Problems with the equipment is easier to fix when the customer base is still small (and the high-end base is often more used to initial glitches -- they've had them before with other products). As production increases, the price begins to drop as costs drop, sometimes fairly quickly, and demand increases as the price reaches levels more people can afford.

However, MS and Sony have chosen to price the initial run so cheap that they're losing big money right out the gate -- hoping to make it up in eventual game sales. The problem here is that they create a huge demand that can't be met for many months. That creates an instant secondary market that drives up the actual price drastically. MS and Sony still get the anger of customers who can't get it or afford the street price. Worse, profit is being made on the consoles, just not by Sony or MS. So the makers get the blame but not the cash. Add in the usual early problems with early production models and you get a mess that makes Sony and MS look bad with customers. Finally, they've permanently priced the machines at a loss for at least several years. If they'd started high, they could have worked their way down to a price that wouldn't have hurt so much.

Contrast this with Nintendo who makes money on every machine they sell. But Nintendo doesn't have the deep pockets that MS and Sony have to subsidize a money losing division in a potentially fruitless fight for market share. However, you'll note that Nintendo has a much better customer reputation.

Last of all, this practice doesn't irk retailers. Retailers are the one's who have to directly face unhappy customers and deal with the violence. I'm surprised that more retailers just don't stay away from such openings. Midnight openings are rough on their employees and probably stress their insurance agents risk tolerance.

...and they only supply ... (Below threshold)

...and they only supply 16 units to each retail store....

16?? They must use a different allocation system for the military stores. Here at Ft.Bragg (one of the largest Army posts in the US) our PX got a total of 4 PS3s. Fortunately, our PX manager thought ahead and put out emails and notices to this effect and had a lottery to see who would be allowed to purchase one.

He's doing the same thing for the Nintendo Wii, but at least we are getting 18 of those!

Thankfully, my son is grown and can gt his OWN PS3 or Wii! ;)

When will people learn and ... (Below threshold)

When will people learn and buy Nintendo? The Wii(godawful name, I know) looks to be a better system for your money.

Let's see:(1) Sony... (Below threshold)
John S:

Let's see:

(1) Sony could charge $2,000 per for the first units. Or we could hit them with federal anti-dumping charges for selling them at a loss.

(2) The feds could go after those making 2,000% profit on e-Bay and make them pay income taxes (at the corporate rate) on their windfall profits. In fact, there should be a Pelosi tax on all e-Bay profits.

(3) Jail the geek campers waiting 96 hours in front of Best Buy on trespassing charges and hold them until every unit is sold.

(4) Summarily execute those involved in a knifing or a shooting over a f#&ing stupid video game. And then hang their putrid rotting corpses in front of Best Buy as a warning for the other geek campers.

(5) Ban the sale of all video games between July 1 and January 1.

Have I missed anything?






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