Marketing Strategies: PS4 is a Loss Leader in the new Console War
The launch of Sony's PS4 alongside Microsoft's XBox One signals the beginning of a highly intense competitive battle in the games console market. With both the new consoles being launched in time for the crucial Christmas sales period, pricing strategy is crucial in order to gain maximum market share.
In the US, Sony has priced the PS4 at $399 (retail). Of course that is the retail price. Distributors will be wanting to make their margin on each unit sold. So how much does it cost Sony to make a new PS4?
This video take a look at the individual component and assembly costs of a PS4. The experts involved estimate that the unit cost of a PS4 is $332 which comprises:
- Processor: $121
- Memory: $64
- Hard drive: $23
- Blu-ray drive $20
- Power management & audio controls: $16
- WiFi chip: $8
- Other components & assembly: $80
The unit cost of $332 does not include packaging or the dual-shock controller which ships with the console. Allowing for a retailer's margin or mark-up, that suggests that Sony is pricing the PS4 at substantially below the variable cost of the console. This is a classic example of a loss-leader. Sony is aiming to grab maximum market share in terms of console units sold, making its main revenues from games licensing and other add-ons.
Join Graham Prior and Jim Riley for a resource-packed CPD day which will help you accelerate your planning and lesson preparation for the new AQA A Level Business. We've packed this day with resources to help teach the new spec content. We also consider how best to approach the challenges of a linear Business course.
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This resource comprises two practice exam papers (with supporting mark schemes) for each of the two Year 1 (AS) papers. The format of each practice exam paper follows precisely the format of the specimen assessment materials issued by the board that have been accredited by Ofqual.