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Why You Can't Buy A 360

Posted by Zonk on from the i-vote-for-a-space-conspiracy dept.

Slate Magazine is running a story about the difficulties of finding an Xbox 360 this holiday season. They explore the reasons behind the console shortage, and have some ruminations on Microsoft's motives. From the article: "So, supply shortages are a fact of life. The puzzle is somewhere else: Why don't companies raise prices when supply is short and demand is frenzied? Leaving aside oxygen and a few other essentials, there is no such thing as an absolute shortage of anything: There is only a shortage if the price is too low. At the moment, Microsoft is easily selling out the half-million or so Xbox 360 units (there's no official number) for prices starting at $300 for the basic package. Why doesn't Microsoft price them at $700 instead?"

3 of 168 comments (clear)

  1. ebay! by dismorphic · · Score: 5, Insightful

    no need for microsoft to raise prices, as people on ebay will surely sell you one for a mere $1200!

    1. Re:ebay! by Dachannien · · Score: 5, Insightful

      Your comment may have gotten modded funny, but I'd have given it an insightful, instead. This phenomenon is called arbitrage, and is quite common with heavily-traded commodities. It's not surprising that the same concept would be leveraged for profit here. In this case, Microsoft doesn't raise the price in the retail market because of the PR fiasco related to jacking up the price, while actual supply and demand concerns allow the price in the resale market to be much higher.

  2. Uhmm.. PR? by Propagandhi · · Score: 3, Insightful

    At the end of the article this guy suggests that Microsoft should have sold all of their initial stock via auction. Ignoring the catastrophic potential for fraud, he claims that such a move "wouldn't have damaged their public image because the buyer is setting the price, not Microsoft" (paraphrased). That's the most laughable conclusion I've ever read in a Slate article, which is saying something...

    Not only would everyone have been pissed that they weren't getting a fair shake at a 360 (especially real gamers, who aren't known for their endless funds), but the profits garnered from a few thousand 360's sold for ~$600 would have been miniscule (on the Microsoft scale of profits, of course). Furthermore, the ill will which certainly would have been created (contrary to author's opin, gamers would have been PISSED) could undermine the "real" launch of the console, when the normal demand could have been met.

    All in all, this guy's an idiot for thinking that because some people were willing to pay a ridiculous amount for a 360 all of the consoles should have been sold at a ridiculous price.