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[vudu]

1

General Gaming / RE:PS3 Estimated at $400

« on: July 14, 2005, 11:40:05 AM »

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Originally posted by: vudu

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BB didn't make but maybe a dollar on the release of the PS2 so the only way to profit was off of accessories.

Are margins on new consoles really that low?

I might have misspoken. I was thinking about the employee discount price rather than actual cost. At BB, employee discount was cost + 5%. I remember employee discount on most systems being something like 50 cents off, usually no more then a dollar. I am going to call a former co-worker and see if he remembered the exact pricing. If that was the case though, BB would only be making about $14-15/per PS2 @ $300, or less then 5% margin per console. I am fairly certain that retail stores don't really profit on the hardware, but software and accessories. Adding the cost to deliver the goods to the stores, and you are looking at very razor thin margins if anything. I will correct my original post if I am wrong on the number. Thanks for the question.

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General Gaming / RE:PS3 Estimated at $400

« on: July 14, 2005, 08:41:26 AM »

I am a lurker and wanted to try to steer this thread back on course. I worked at Best Buy for over 4 years from 1997-2002 in the Games dept. I sold countless PS1's, PS2's, GB Color, GBA, PS2's, GC's and Xbox's. I met people from many backgrounds and various levels of income. I share this because I think I understand the mindset of the average consumer.

The prices of the next-gen systems, I think, are going to be a huge problem. What people are forgetting about it the cost just to buy the unit. Remember, not everyone uses the internet, so sales tax has to be thrown into the equation, as most states have a local and state sales tax in the US.

$399.99 +$33 sales tax (@ 8.25%) = 432.99 just to walk out the door with the unit. I remember many times trying to sell a customer who wouldn't even buy a game because their kid only had $300 saved and the parents were covering sales tax on the PS2. Countless times you would sell a game but no memory card even after telling the customer the game was fairly useless without it. Now, in retail, the pressure to attach warranties and accessories in fierce. I predict will you will see many mainline stores doing forced bundles. At Best Buy, I knew for a fact many stores would lie about their stock based on what the customer was going to buy. If all you wanted was a system, "Sorry, out of stock." (I did not do this and this is one of the reason I left.) But if you were going to buy some accessories and maybe the warranty, they would just happen to be some in the back. If the demand for the PS3 is anything like the PS2, I see this happening all over the place. Remember, from my past experience, BB didn't make but maybe a dollar on the release of the PS2 so the only way to profit was off of accessories.

Now that we have the unit at $433, now what happens if they decide to buy a game? We have now jumped close to $500 for a system and one game @ $60. Controllers? Well if the PS2 launch is any indication, they will come out at $35. Some will have to correct me, but I don't think the PS3 needs a memory card so I will leave that out.

So if just to walk out the door for a game system and a game you have to spend about $500, that to me with scare anything all except the truly hardcore gamers. I also see forced bundles popping up everywhere. I just can't imagine BB or any other major retailer allowing someone to buy a $400 product with no margins on it.  

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TalkBack / RE:Nintendo Touts Big Holiday Hardware Sells

« on: December 02, 2004, 06:44:23 AM »

I just have a few observations about the iPod comparison. I assume Nintendo is trying to attach its name to a hot selling item for better recognition.

1. PRICE, PRICE, PRICE. The intro price of the iPod was $399, almost 3 TIMES the cost of the DS. The initial buyers of the iPod had money to burn and back then they had to be Apple Mac users, since at that time it only worked on the Mac. So a limited market to sell it to.
2. The iPod was introduced at an Apple special event, meaning there was not 6-9 months of pre-release hype to get users excited. If I recall I think it came out in April 2001: not exactly a big gift buying season. Also, before the announcement, their were only rumors of what was going to be released, nothing concrete.
3. It might have taken the iPod 19 months to sell 1 million, but I think the last 3 months of this year Apple is expected to sell 1 million iPods PER month. I don't think even the PS2 ever sold that many in a month ( I could be wrong though).

I guess Nintendo wants to implant in the minds of consumer that the DS is hotter than the iPod. Nothing against the DS, but the iPod comparison is just pure market speak.