One of the most repeated lies in console brand propaganda is that the hardware is sold at a loss. This is false from the moment when if it were so, then the manufacturer would have to spend money on the entire chain of distribution and production, taxes included. Rather, the answer is that consoles are sold with little or no profit to the manufacturer in order to recoup the money from the sale of games, peripherals, and system-related services. Amid all of this, the myth has emerged that the rise in price of the PS5 is due to rising costs.
What no one is saying about the PS5 price increase
The big mistake that is usually made is relating the price of a product to its cost of production, so that many fall into the trap of thinking that if a product reduces its cost, it will become cheaper. We’ve often seen reissues that cut costs for the manufacturer in the form of a redesign with no associated price drop. Of course this is not the case of SONY with PS5 and here we have to throw a bucket of cold water that many of our readers may not like and with that we do not intend to exonerate SONY from its terrible decision due to the PS5 price increase.
Since the console’s launch, we’ve seen how many have taken advantage of the lack of stock to sell the console well above the RRP. Many PS5 users did not pay $500 for the console, but much more. Which means sending a signal to SONY that it can raise the price of its console, because there are people willing to pay more than its price to enjoy it.
The only way it looks like a bug? Not only will fewer consoles be sold, but SONY’s profits will drop enough for them to consider lowering the price. And we will see if over time and despite criticism on the internet, if the PS5 with its enormous popularity is affected.
Computer hardware is a red ocean
On PC, we have an ecosystem where we have multiple options competing for consumer attention. Many of them have an almost equal perception of value and what interests us in this or that product if they are identical according to the price they have. This is why graphics card prices are falling, because in such a fight it should not be seen as a waste of money, but as an opportunity to outperform your rivals or rather sell your products.
Also, keep in mind that the commercial life of a PC product is much shorter than that of a console. In the sense that a product with better specifications is upon us and the important thing for manufacturers is not just to sell, but to clear their stock as quickly as possible. Once a technically superior product exists at the same price, it becomes difficult to sell at the original price and may even be rejected by a large portion of your potential audience as they get less for more.
So, with the next generation of graphics cards from NVIDIA and AMD already in factory production and SSDs with PCIe Gen 5 support fast approaching, it’s only natural that manufacturers are lowering their prices. In the end, it’s the only thing they can do if they don’t want to keep inventory gathering dust in their warehouses.
In the modified PS5, it’s an ocean, blue?
Many of you may be wondering what these oceans and colors mean, since they come from a business strategy book called “The Blue Ocean Strategy” where a concept called value innovation is explained. It’s that if you can make your product stand out enough from the competition that it looks like a different product, then you’re eliminating the competition and with it the price war.
From SONY’s point of view, it’s not that Xbox doesn’t exist, but that they understand that people are looking for a unique product called PS5, with specific specs that the competition doesn’t offer. In other words, no one else can make the PS5 and therefore its manufacturer understands that it came out of a direct price war.
On the other hand, manufacturers of PC components cannot afford to maintain their prices independently of the competition because they do not offer a differentiated product. Of course, this is a consumer perception. From PlayStation, they are testing the market. What they want to do is see if potential new console customers are willing to pay for it. So they have to be very confident to play with fire like that.
