There is economic (not social) utility in allocating items to the people willing to pay the highest price. That’s how our whole economic system works. Some “entrepeneurs” figured out how to get in on the ground floor and then provide those units to people willing to pay such a high price. It rewards the scalpers for being industrious enough to acquire the units, and the buyers can then pay a premium, in effect buying someone else’s industriousness, to get something that might not have been available to them otherwise. And those buyers are under no duress whatsoever. This is not, after all, like charging people in hurricane-ravaged New Orleans $100 per gallon for clean water.
This is very similar, though not identical, to arbitrage in the financial markets, where you find that there is a price difference between two securities or commodities in two different markets, so you buy huge amounts in the cheaper market and sell it in the higher market at nearly the same time. Nobody raises any ethical issues about that practice.
That being said, I still think scalpers are scumbags.
I wonder what the people who paid $2,000 for a PS3 think now that they can go out and buy one for $650? The whole episode illustrates the fundamental truth of two cliched platitudes:
1 - Patience is a virtue;
2 - Fools and their money are soon parted.
I’m pretty sure that pretty much all retailers only did sell one to a customer. Where did you hear otherwise.
Not a chance? Yeah, right. It’s clear from this comment that you don’t have any experience with production start-up. I’m an engineer and most of my career has been with taking various products from development to production and I can assure you that it’s very difficult. The problems are different every time and you really don’t know what you’re going to encounter until you do.
I have read that in the case of the PS3, Sony had problems getting one key component from one of their suppliers. It’s not just Sony who has to get it right, it’s a multitude of suppliers too. If just one of then has a hiccup, the whole shibang is toast. Obviously, you can try to second source but that doesn’t work if the component is proprietary. I’ve been in that situation way too many times. Sony had the choice of pushing the whole release out or at least getting a few of them out before Xmas.
I am no marketing expert, but it seems to me that a way better strategy would be to have tons of them available to sell rather than not nearly enough. Not nearly enough is better than none though and that’s all that Sony had.
Do you really think that Sony has a million PS3’s sitting in a warehouse that could be sold in an instant but they are letting them gather dust? Do you think that they’re paying tens of thousands of dollars a day to let factories sit idle on puspose? Do you think that all of their hundreds of suppliers and sub-suppliers are in on the scheme? Give me a break.
Is this really where you want to go with this? An insult followed by anecdotal evidence balanced atop your own stated expertise? And since when does an engineer stand in for a product manager - someone with responsibility beyond only the technical aspects of the product? What company puts engineers in charge of business and marketing decisions?
I’ll compare resumes some other time, sparky. In the meantime, consider how much sense it makes that Sony is a) in commercial production, but only able to deliver a few units to each store, b) chooses to deliver those few units to each store rather than pick a region to scale up completely or wait, and c) finds themselves with adequate supply a few short weeks later? If it happened once, I’d say maybe it wasn’t by design. It now happens with each new major game system. The freaking units ship by sea. The pipeline had to be full behind the initial units in order for the supply to rebound so rapidly. In other words, the initial trickle is no fluke.
Yes, I have nothing to do with business and marketing for the most part. Their failures usually have to do with having us design a product that too few people want or, and this is the important one, giving us an unreasonable launch date because we’re not ready. This happens all the time. They sell shit that doesn’t exist yet and might not be able to be made.
I’m a gear head, thank you very much.
I don’t believe it. This is bordering on a conspiracy theory. Someone posted here that in the specific case of the PS3, it was a component issue. Something to do with Blu-Ray…OK, I just looked it up. Sony says that is was a diode that they needed for the Blu-Ray. Do you think that Sony is lying about this and everyone at Sony, Blu-Ray and Blu-Ray’s suppliers, all of the hundreds of people who would have to know, are keeping the secret.
Yes, they could have waited but then no units would have made it for Christmas. They could have chosen one region in the US but why does that make it any less of a clusterfuck than scattering them?
How does the pipeline being full behind the initial trickle indicate that the initial trickle was by design? The problem had to be fixed at some point and when it was they ramped like crazy. I am sure that they were shipping them as fast as they could make them.
Explain to a non-marketing dork how this supposed strategy will help sell more PS3’s in the long term? If they have ten times of units on the shelves, they would have sold them all, made ten times the revenue and there still would have been long lines.
If nobody ever paid more for something than what it’s worth on Ebay, the scalpers would be out of business. If somebody is tripping over themselves to pay several times what something is worth, that’s a market that needs to be filled
Scruples? I can buy one unit and take it home and play Guitar Hero, or I can buy one unit, sell it on Ebay, and make enough money to get another one free and put $500 in my pocket. I think I’m going with the free unit and $500, thank you very much.
I’m not vouching for viability of this marketing ploy long term; I just recognize it as a marketing ploy. I can only suppose (this is just an opinion) that someone with decision making responsibility feels that the hype surrounding a perceived shortage is more valuable than launching the product with the shelves fully stocked. They get free advertising. They get a sneak peak at the demand, and with this information avoid the potential embarrassment of supply outpacing demand while keeping the elevated price justified without premature pressure to lower it.
There doesn’t need to be a vast conspiracy for the blu-ray widget to be a red herring. Companies nowadays, particularly Japanese companies, don’t have all that many people involved in strategic decision making. The production itself is by contract manufacturers across a wide geographic area. Explanations for the blu-ray problem began with the memory module, then moved to the laser diode, with the final explanation being the DRM scheme. Sound convoluted? It is. With DRM, either it works, in which case there is no problem, or it doesn’t, in which case no game systems should be shipping. It’s possible that they weren’t sure, and another reason for the artificial shortage was to find out how many complaints they got. Is it still conspiracy theorizing when I’ve seen decisions like this made?
I guess you could say that the utility is that it gives people an idea of how much in demand this product is, and with this information, they can make more accurate decisions in the future.
See, Sony loses money on every Ps3 sold. So, they create an intentional scarcity on the ps3, so they sell less units and therefore lose less money. Brilliant!
Waverly, I think there’s a pretty good chance that Sony’s system shortages are legitimate. I agree that sometimes deliberate shortages are created for marketing purposes, but Sony is in an extremely bad position to do that right now, because they’re coming fairly late to the market and their main competitor has been out for a year already and has an established base of something like eight million. It’s in Sony’s interest right now to get lots of units into homes, because if they don’t, developers will start wondering why they’re making games for the PS3 when there’s nobody to buy those games, and they’ll jump ship or go cross-platform. And so far, Sony hasn’t, and developers are. Certainly the logic of “X is stupid, therefore Sony isn’t doing it” is (highly) spurious, but actual shortages right now are at least conceivable.
As Taber says, Sony loses money on each PS3 sold. I’m still not quite confident in Taber’s logic though. Unless Sony is in some kind of short-term cash crisis right now, which seems unlikely.
