Are console shortages by design?

[Lord Mushroom]

9 minutes ago, Keatah said:

IOS customers are smarter.

Android products provide more bang for your buck. That is why Apple, unlike the others, is making a ton of money. There are only two reasons to buy Apple products:

1) You are used to Apple products.

2) You are stupid.

[MrMaddog]

1 hour ago, Keatah said:

IOS customers are smarter.

So Apple TV's are a serious alternative to Xbox Series & PS5's?

 

[Keatah]

Couldn't say. The statement that IOS customers are smarter is completely different from whether Apple TV is a serious alternative to Xbox and PS5 devices.

[zzip]

17 hours ago, Lord Mushroom said:

If the companies can´t produce the consoles fast enough at launch, why don´t they set the price higher? They would sell just as many consoles (in the short run), and make more money.

I suppose the memories of PS3 launch are fresh in these companies minds.   The PS3 was pricey,  MS got an early lead with XB360 and it took Sony years to catch up.   So now it always looks like MS and Sony are playing a game of chicken to see who will announce their new console price first.

 

And PR,  gamers will start an online controversy at the drop of a hat.  They are kind of already bitter that new games will cost $10 more for this new generation.  If the companies were perceived to be profiting off shortages, that would probably create outrage.

 

18 hours ago, Lord Mushroom said:

I understand that setting a high price could scare off future buyers ("this is too expnsive, I will buy the other one"), but if they just inform consumers that the prices are just temporarily high due to limited production capabilities, then that problem should be solved.

Well COVID surcharges have become common in other industries.   It's weird to have a "special introductory price" that's higher than regular price though.   I don't honest know what would happen if these companies said that price and supply would be better in 6 mos.  Obviously lots of people would wait.   There's also a number of people who want it now no matter the price, or scalpers wouldn't exist.   Maybe it could work in these weird times.

 

18 hours ago, Lord Mushroom said:

Samsung sells about the same amount of smartphones as Apple, but you rarely see long lines of people camping out for Galaxy phones. Apple creates the lines by releasing them in limited supply in the beginning, and many people confuse these long lines with the products being good quality for money.

 

Samsung probably doesn´t do the same because their customers are smarter, and would probably react negatively to an artificially limited supply.

And Apple has long marketed their stuff as fashion accessories/lifestyle choice.   That tugs on peoples emotions and gets them excited.

 

With Samsung you know you are getting a good phone that will be well supported by Android apps,   but they aren't that exciting anymore.  It will be like your last Android phone only slightly better.   Plus there's competition.  If they can't get a Samsung, many people will go for a Google Pixel or something.

[zzip]

18 hours ago, Keatah said:

IOS customers are smarter.

instead of smarter, I think "tech-savvy" is the word we want.   iOS users tend to be less tech-savvy.   There are a lot things you can do with an Android that you simply can't do with an iOS device, and a number of things more difficult on iOS.    But a lot of these things are things that appeal to techie people and not the average user.    It's similar to PC vs Mac.   PC has open architecture with lots of flexibility.  Mac has had (mostly) closed architecture and limits what users can do.

[Agamon]

23 minutes ago, zzip said:

instead of smarter, I think "tech-savvy" is the word we want.   iOS users tend to be less tech-savvy.   There are a lot things you can do with an Android that you simply can't do with an iOS device, and a number of things more difficult on iOS.    But a lot of these things are things that appeal to techie people and not the average user.    It's similar to PC vs Mac.   PC has open architecture with lots of flexibility.  Mac has had (mostly) closed architecture and limits what users can do.

Right. Apple products are for people that want to turn on a thing and use it. The alternatives are for those that like to mess with both hardware and software, make changes, build units themselves, etc. I won't make a sweeping statement about who's "smarter", but Apple products are for the masses (well, the masses with extra disposable income, anyway).

[jhd]

Does anyone else consider waiting until the hardware has devolved its way down to clearance sales and second-hand/pawn/thrift shops before making a purchase? 

 

I bought what was very probably the last new PS One console in my city when the Sony store was finally clearing them out; everywhere else was long sold-out. I subsequently purchased the very last new-in-open-box PS 2 console from a local Best Buy when they were being cleared out. I once waited 10+ years to find an Atari Flashback 2 console at a thrift shop. 

 

[pacman000]

Remember when Atari had a Top-10 best-selling game which they lost money on because they over produced it?

 

Remember when farmers had trouble making money selling wheat, so they decided to produce more wheat the next year, resulting in even lower margins, which made it even harder to cover the cost of producing said wheat?

 

Where inventory is involved, it's often better to have too few than too much.

[Lord Mushroom]

2 hours ago, zzip said:

If the companies were perceived to be profiting off shortages, that would probably create outrage.

That is true. Also, if one console had a high initial price and the other a normal one, then some of those who would otherwise go for the highly priced one would go for the other one because they don´t want to wait. The normally priced one would then have a higher demand waiting for its supply to catch up.

 

2 hours ago, zzip said:

And Apple has long marketed their stuff as fashion accessories/lifestyle choice.   That tugs on peoples emotions and gets them excited.

In other words, they have been tricking the stupid into buying overpriced stuff. I don´t blame people for buying the iPod back in the day, because it was beautiful, easy to use and had unique access to music. I also don´t blame people for buying early iPhones/iPads as they were cutting edge at the time. But now, iPhones/iPads look and function virtually no different from Android devices, which are cheaper.

 

2 hours ago, zzip said:

With Samsung you know you are getting a good phone that will be well supported by Android apps,   but they aren't that exciting anymore.  It will be like your last Android phone only slightly better.

The same goes for iPhones. There hasn´t been an exciting iPhone since the iPhone 3. Apple stopped innovating when Steve Jobs died, and have just been turning their goodwill into profit ever since. I am surprised how much goodwill there is still left.

 

It is one thing that people who are used to Apple stuff, don´t want to change ecosystem. But that so many first time buyers choose an Apple product, despite lower value for money, is a testament to the endurance of the Apple brand.  

 

But the point I wanted to make wasn´t that Apple buyers are stupid (unless they are used to Apple stuff and have sufficient amount of money), it was that long lines are not necessarily caused by low production, as Samsung produce the same amount without causing lines.

 

Sony and Microsoft could have avoided this shortage if they wanted to too by releasing them later. But that would have been a bad idea as you pointed out with the PS3 vs. Xbox 360.

 

But if selling more consoles initially gives you and advantage over the competitor (and it does), why don´t they make sure they produce more than enough consoles to meet demand at release? I get that increasing production capabilities cost money, but I doubt that it is super expensive. When you think about all the money they spend on trying to get an edge over the competitor (exclusive games and ads), I just can´t help but feeling investing in a sufficient supply would be a cost-effective investment.

 

Even if some of the parts they require to make their consoles are in limited supply, the production of those can be increased too.

 

There is of course the danger of producing more consoles than you can sell. But the chance of that happening is small as they can just cut/stop production if sales are underwhelming, and just sell from inventory.

 

I do understand that production this year was affected by Covid, but from what I hear, supply was short for earlier releases as well. Although probably not as bad as this year.

[Lord Mushroom]

27 minutes ago, pacman000 said:

Where inventory is involved, it's often better to have too few than too much.

While there of course is a risk of over-producing, there is also a risk of under-producing. I think it is better to deliberately produce more than you think you need as you can cut/stop production and sell the merchandise from inventory. Whereas if you under-produce, and there are competitors, you lose sales. 

 

And in the case of consoles, with lost sales you are at a competitive disadvantage (more expensive to make games exclusive).

 

Of course, if you produce way too many of something, you will never sell them all, and have to bury them in the desert. But you can´t choose a production strategy based on failing. If you prepare for failure, you will probably fail. 

[Lord Mushroom]

1 hour ago, jhd said:

Does anyone else consider waiting until the hardware has devolved its way down to clearance sales and second-hand/pawn/thrift shops before making a purchase?

 

I took a break from consoles, and played on PC instead for twenty something years, so I am still in the 16-bit era. And frankly, from what I see of later consoles, I am in no rush to move to the next generations.

 

My brother buys and sells stuff online, and there has been a PS3 with lots of games four feet from where I am sitting now for a year or two. And I have no interest what so ever in playing it. He wanted me to turn it on to see if it worked, and when I did, it turned me off. 

 

The game I tried was one of the major racing games. First I had to go through a maze of menus and shit, just to start playing. And while the game had great graphics, it seemed boring as hell. With a Super Nintendo you put the game in, you turn it on, and then you have fun.

 

My sister´s PS1 is also in the house, and I have tried many of the games. The best games where remakes of Final Fantasy 1 and 2 (very old games) and Metal Slug X (a game similar in style to 16-bit games. Hell, it might even be 16-bit). Also 3D Platformers are  abominations.

[zzip]

31 minutes ago, Lord Mushroom said:

Sony and Microsoft could have avoided this shortage if they wanted to too by releasing them later. But that would have been a bad idea as you pointed out with the PS3 vs. Xbox 360.

They are always going to release them in the Christmas season because that's where the most sales potential is.  If they hold them until next Christmas, then the tech is already starting to age.

 

33 minutes ago, Lord Mushroom said:

But if selling more consoles initially gives you and advantage over the competitor (and it does), why don´t they make sure they produce more than enough consoles to meet demand at release? I get that increasing production capabilities cost money, but I doubt that it is super expensive. When you think about all the money they spend on trying to get an edge over the competitor (exclusive games and ads), I just can´t help but feeling investing in a sufficient supply would be a cost-effective investment.

Since consoles have a multi-year shelf life, any sales they lose now will be made up later.   The consoles will continue to sell well in Q1 and Q2,  and then spike again next Christmas after the new batch of games comes out.   PS4 had shortages at launch and still went on to become the third best selling console of all time.    So I don't think shortages now are a huge risk for them.

 

 

[Lord Mushroom]

On 11/30/2020 at 6:20 PM, youxia said:

I don't believe the shortages are artificial, as in caused by manufacturers. It just seems like a huge, risky gamble. Imagine the fallout if they got caught, the reputation damage would be massive. Also, there is zero proof that it is actually beneficial to sales. If anything, I'd have though that getting out as many machines as possible and building a bigger, "winning" user base is a better argument in the psychological side of marketing.

If they do what they can to produce large quantities fast, but release the console before they have enough to meet initial demand, they get both the advantage of being early and the buzz from shortage.

[Lord Mushroom]

8 minutes ago, zzip said:

Since consoles have a multi-year shelf life, any sales they lose now will be made up later.

Not if there is competition. The Jaguar would probably have been a success if it hadn´t been delayed for so long. If they could wave a magic wand and have sufficient supply, I am sure they would so. Thus lost short term sales is a bad thing.

[Lord Mushroom]

3 hours ago, zzip said:

I suppose the memories of PS3 launch are fresh in these companies minds.   The PS3 was pricey,  MS got an early lead with XB360 and it took Sony years to catch up.   So now it always looks like MS and Sony are playing a game of chicken to see who will announce their new console price first.

I guess this is the case of the shortage, in addition to Covid. They do what they can to produce consoles in sufficient quantities, but release before they are ready to meet the demand in order to be early.

[Lord Mushroom]

On 11/27/2020 at 3:55 PM, zzip said:

Nintendo Switches where hard to get even last Christmas,

That was probably because it sold better than Nintendo expected. I am leaning more and more towards shortages generally not being intentional (except for Apple, I hate those guys ?). When you think about it, it is usually popular things, which sell out. And it makes sense that they sell out because they were more popular than expected. So to sum up. Products sell out because:

 

1) They sell better than expected.

2) Something happens to reduce production/shipping.

3) They were released before they can meet demand to gain an advantage of being early.

4) Apple is evil.

Edited December 4, 2020 by Lord Mushroom

[zzip]

21 minutes ago, Lord Mushroom said:

Not if there is competition. The Jaguar would probably have been a success if it hadn´t been delayed for so long. If they could wave a magic wand and have sufficient supply, I am sure they would so. Thus lost short term sales is a bad thing.

The Jaguar's bigger problem is Atari squandered their mindshare in the console space.   The new Atari developed no new console hardware between the 7800 in 1984 and the Jaguar almost 10 years later.  Instead they spent the second half of the 80s selling regurgitated games on regurgitated hardware.   And they screwed over 5200 buyers by cancelling the system after just over a year.  Serious gamers left for the greener pastures of Nintendo and Sega.

 

By the time Jaguar came,  Atari simply did not have the marketing resources to win those gamers back, they didn't have a strong line-up of modern exclusives other than maybe AvP.  And soon after, Sony entered the market and it was game over.

 

Today, gamers trust Sony, MS and Nintendo to bring the goods because they've reliably done so in the past.   So they'll rush out and buy the new consoles even though the initial library is weak.   And if stock runs out, they'll keep trying until they get one.

[Lord Mushroom]

47 minutes ago, zzip said:

The Jaguar's bigger problem is Atari squandered their mindshare in the console space.

I may have confused the Jaguar with the 7800. One of them had preorders of 2 million, but due to delays, the preorders went down to 40.000.

 

I agree that the 3 major console makers are more reliable than Atari was/is, and so people are not as worried that they are not waiting in vain. But it is an exaggeration to say that they would wait no matter what the circumstances. Especially Xbox fans would be ready to switch (pun intended) to PS5 if Xboxes continued to be unavailable for months and PS5s were available in stores.

Edited December 4, 2020 by Lord Mushroom

[zzip]

41 minutes ago, Lord Mushroom said:

I may have confused the Jaguar with the 7800. One of them had preorders of 2 million, but due to delays, the preorders went down to 40.000.

 

I agree that the 3 major console makers are more reliable than Atari was/is, and so people are not as worried that they are not waiting in vain. But it is an exaggeration to say that they would wait no matter what the circumstances. Especially Xbox fans would be ready to switch (pun intended) to PS5 if Xboxes continued to be unavailable for months and PS5s were available in stores.

They've done a lot to lock you into their ecosystems.   Like you pay for online services which also give free games.  If you leave, you lose all those games, you might not be able to play online with your friends (though cross-platform play is becoming more common)   And each specialize in certain types of exclusive games, so switching to another means giving up your Mario, Halo or God of War or whatever.

 

That's not saying people don't get fed up and switch..   But I think they have to put up with a lot of crap first.

[Lord Mushroom]

12 minutes ago, zzip said:

They've done a lot to lock you into their ecosystems.   Like you pay for online services which also give free games.  If you leave, you lose all those games, you might not be able to play online with your friends

I always assumed they were yours forever. Those cunning bastards.

 

Also, I didn´t consider that you would have to keep paying for online services to play the games you already have online (unless cross-platform). 

 

I see now that it takes quite a bit to make the switch. Still, there are people who don´t already have a relevant console in this regard. Also, everybody has their limit before they decide to switch. Microsoft lost a lot of market share going from Xbox 360 to Xbox One, so big shifts are still possible. Although the ecosystem walls may have been weaker then.

[zzip]

On 12/4/2020 at 4:53 PM, Lord Mushroom said:

I always assumed they were yours forever. Those cunning bastards.

At least on PS+, you have to remain a member to have access to the free games.   It's possible MS does things differently.

 

On 12/4/2020 at 4:53 PM, Lord Mushroom said:

Microsoft lost a lot of market share going from Xbox 360 to Xbox One, so big shifts are still possible. Although the ecosystem walls may have been weaker then.

My understanding is momentum had already started to shift sometime during the PS3/XB360 generation.  Sony came from behind early in the generation to finish slightly ahead of Xbox360 in sales.   Then MS botched the XB1 launch with higher prices for a weaker system and weird messaging.  Then MS decided to put almost all of their exclusives on PC as well as Xbox, leading a lot of people to question why they needed an Xbox at all.   Their strategy now seems to be more about selling services like gamepass that gives you access to games on several platforms,  and Xbox consoles are just one device in that ecosystem

[cimerians]

It's called the scarcity principle and it's deliberate, it's basic marketing and if you’ve taken Psych courses like I have you’ll know why they do it, businesses have been using it for decades don't believe dumb asses on the internet who say 'it’s a myth'. My opinion believe what you wanna believe just never get duped into paying more than you should for anything.

[Lord Mushroom]

On 11/27/2020 at 3:55 PM, zzip said:

New consoles always seem to be in short supply for the first holiday, and often even the second.   You mean to tell me they can't supply enough by year 2 on the market?

It does seem weird that they can´t supply enough for the second holiday. Unless you by "in short supply" mean that stores run out of it close to Christmas Eve. Stores run out of lots of stuff close to Christmas Eve. Probably because they plan to restock after Christmas, and have limited storage capacity.

 

On 11/27/2020 at 3:55 PM, zzip said:

Nintendo Switches where hard to get even last Christmas, 

I misread this the first time. I thought you were talking about the first Christmas Switch was available. They should definately have been able to supply enough Switches last year.

[DJ Clae]

My launch day PS5 from Gamestop got lost in the mail sending it to my brother in Japan. I got to play it for one day.

 

Against all odds I managed to get another PS5 from Walmart this morning to replace the one still lost in the mail. I happened to refresh brickseek right when a new store was listed a bit off the beaten path. Managed to get there on time to be number 10 out of 12. Pure luck. I never again want to be part of a brick and mortar new console rush! Especially not during a pandemic. I preorder online for a reason. This time I'm sending it by Global Express Guaranteed.

 

The old one is still last updated 11/23. Last known location was New Jersey. I've never seen packages sent to Asia go anywhere but Chicago from here. I have no idea what it's doing in New Jersey.

[Lord Mushroom]

21 hours ago, cimerians said:

It's called the scarcity principle and it's deliberate, it's basic marketing

If consoles are still short in supply a year or two after release, without some sort of production/shipping problems, then that is the case. They are probably trying to find a balance between selling a lot of consoles, and at the same time running out of them to increase later sales.