Cost/Demand Paper: Sony Playstation

Essay by nelsoncar8University, Bachelor'sA, February 2007

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On the night of November 17, 2006, thousands of individuals were camping out in front of department and electronic stores hoping to be one of the few who would be able to purchase the new Sony Playstation. A limited 400,000 units were going to be sold in all the United States and the amount of potential buyers was far higher than that. Errors in the shipment lowered the actual amount of units shipped to about half, which has created a greater demand for the game console

The demand or the Play Station far exceeded the supply Sony was releasing. The price charge for the game system had little effect on the demand. A large amount of the actual buyers bought the system to turn a profit by reselling the unit, in many cases far more than double the price. According to "a Sony Playstation 3 game console is sold every 6 seconds".

The units are sold at an average of $1,275.00; the demand for the product has driven the price up to double the price.

Sony has reported they the company did not meet sales expectations with the release of its much awaited gaming console. This lack of sales was not due to a lack of demand for the product or the price being to high for the system, the lack in sales was because Sony failed to meet the supply forecast of 400,000 units. They were only able to ship about 200,000 to US merchants. The lack of supply drastically increases the demand for the product and has shot up the price to over double retail.

Individuals interested in purchasing the Playstation 3 must go to online auctions and compete with other buyers in bidding wars to try to purchase the gaming console.

In competition with the...