Why Are Systems Sparse at Launch?

[Herd90XB]

How come every time a console is launched they are in such short supply? Why don't these companies wait until they have more product before they launch?

[TJdaSportsGuy]

Re: Why Are Systems Sparse at Launch?

How come every time a console is launched they are in such short supply? Why don't these companies wait until they have more product before they launch?

I think every company is guilty of not being overly concerned with a short supply because it builds buzz for the product. I don't think they're intentionally short changing the stores to artificially create the buzz or anything like that, but I do think they turn a blind eye when they learn of manufacturing problems that will prevent stores from having an ample supply.

[Skyboxer]

Re: Why Are Systems Sparse at Launch?

I don't know man. I think the shortage is intentional. Whether to create a buzz or because they "have to" get the system out before another company....
How hard is it to wait until ample systems are available? They know when they release they are short of what they expect they would sell on release days, so that in itself means it's intentional. IMO.

[nyisles16]

Re: Why Are Systems Sparse at Launch?

I don't know man. I think the shortage is intentional. Whether to create a buzz or because they "have to" get the system out before another company....
How hard is it to wait until ample systems are available? They know when they release they are short of what they expect they would sell on release days, so that in itself means it's intentional. IMO.

agreed.. the companies "love" when a release of a console is near.. simple "supply" & "demand" ecomonics...

[CaptainZombie]

Re: Why Are Systems Sparse at Launch?

I think every company is guilty of not being overly concerned with a short supply because it builds buzz for the product. I don't think they're intentionally short changing the stores to artificially create the buzz or anything like that, but I do think they turn a blind eye when they learn of manufacturing problems that will prevent stores from having an ample supply.

I don't know man. I think the shortage is intentional. Whether to create a buzz or because they "have to" get the system out before another company....How hard is it to wait until ample systems are available? They know when they release they are short of what they expect they would sell on release days, so that in itself means it's intentional. IMO.

I fully agree with you guys.

[aukevin]

Re: Why Are Systems Sparse at Launch?

I figured part of the reason is protection against a serious flaw in the system. If they release enough systems for everybody to have and then a serious problem comes up, that is a lot of systems to have a recall on.

[bkfount]

Re: Why Are Systems Sparse at Launch?

I figured part of the reason is protection against a serious flaw in the system. If they release enough systems for everybody to have and then a serious problem comes up, that is a lot of systems to have a recall on.

no, they just rush the system out and reap the rewards from the hype. People selling them on ebay and getting in the news is free press. Sony stockpiled consoles for their european launch and it sold great, the 360 and wii could have had comparable number had they done the same.

Look at the negative hype sony is getting for actually having lots of consoles at or right after the launches. People slam the ps3 for sitting on shelves, while the 360 and wii are still moving off them. That's because sony has more than enough consoles to meet the demand, so it looks bad when it's really not.

[Pete1210]

Re: Why Are Systems Sparse at Launch?

During a recent class in Operations and Information Management (taught in first year of the Wharton MBA program), professor Senthil Veeraraghavan dove into a mini case study on Sony's PlayStation and PSP products in order to demonstrate best practices in production capacity management around the launch of new products
The fundamental dilemma for companies launching new products is that initial demand for hot new products often exceeds initial capacity to produce that product. Sure, companies could invest heavily in production capacity, but if they overinvest, they'll never make any money with the venture once the spike of launch demand is fulfilled and demand levels off to a more predictable rate. But such heavy investment would saddle companies with high-cost factories that do nothing but sit idle and cost money.
Stockpiling products in preparation for a big launch is also impractical, as this (a) delays launch (and therefore recoupment of development costs), and (b) greatly increases investment in inventory. Storing money in the form of inventory is a very bad idea.

http://www.joystiq.com/2006/04/29/console-launch-shortages-explained

[Herd90XB]

Re: Why Are Systems Sparse at Launch?

http://www.joystiq.com/2006/04/29/co...ages-explained

That's good info. Thanks for passing it on.

[Chief Illinimac]

Re: Why Are Systems Sparse at Launch?

If anyone is familiar with economics theory, this is a pretty good example of price discrimination. The companies are able to get those willing to pay top price (at the top of the demand curve) at the beginning of the cycle, then when the supply increases and price drops a bit, those willing to buy at a lower price are able to. It basically takes the surplus of value away from the consumer. Good business, but sucks for us.