Business Approach Comparison Sony PS4 and Microsoft Xbox

[Rangers]

I was able to check wholesale prices through a major distributor recently, something I like to do from time to time, and discovered something odd. The Kinectless XBone wholesales for 369.90, the PS4 for 388.00. Both of course retail for $399.

Definitely in past wholesale pricing is typically more like the PS4 there. Usually $12-$18 retailer margin per console.

For whatever oddball reason, MS is making ~$18 less per $399 console than Sony for no obvious reason. And it's also the biggest retailer profit margin on a console I've ever noticed.

Seems like it would put X1 that much closer to $349 I guess. It also means I wouldn't be surprised to see $349 sales on XOne in the future, because the retailers wont lose too much on that.

It could also be some temporary thing I suppose, although I would have no idea why.

 

[Shifty Geezer]

Larger profit margins will encourage retailers to promote the console, I presume. If they can direct potential PS4 buyers to getting the similarly priced XB1, the retailer gets $30 profit instead of $12. Everything else being equal (margins on games), that's better business.

 

[Rangers]

That's what I was thinking. Perhaps since PS4 is more popular this is their way to try to entice retailers to push X1, whereas Sony has no need?

Or perhaps they dont even know what Sony is charging for a PS4, and just set the price blindly at what they think is about right.

Could be some kind of temporary thing for whatever reason, too. Or maybe even somehow related to clearing out non-madden bundles.

 

[Squilliam]

Larger profit margins will encourage retailers to promote the console, I presume. If they can direct potential PS4 buyers to getting the similarly priced XB1, the retailer gets $30 profit instead of $12. Everything else being equal (margins on games), that's better business.

I remember wayyy back when the Xbox and PS2 were duking it out. We had a higher margin on the Xbox by (failing memory here) err $10-20 IIRC. The end result of this is that we pushed the Xbox a heck of a lot harder than the PS2. We made sure to point out that the PS2 needed memory cards, the Xbox was more powerful/reliable etc. They also gave the retail staff incentives as well at times -- $5 I think per console sold.

I would say that Microsoft are doing this deliberately due to the need to keep retailers interested.