Anti-competitive biz practice?

[shadow]

Dragos Neagu wrote:
> On 11/23/05, Lyndon Tiu <ltiu at alumni.sfu.ca> wrote:
> 
>> I remember reading somewhere you are not allowed to sell something
>>  below cost or you can be sued bu gov't

 From what I can gather, the Anti-Dumping laws only apply when there is
a market discrimination (such as selling the a console in the US for
$400 but only $200 in Japan), or when the price is lowered specifically
lock another company out of a market (such as Samsung selling Flash RAM
below cost to mp3 player manufacturers). Dumping is extremely difficult
to prove, so the DoJ usually only goes after the blatant offenses or
when there is a political stake in the outcome.

> Game console makers have always sold the console at a loss.  The mass
>  production will usually bring the price/console down, and they make 
> money from peripherals and games.

That's not entirely true. Nintendo sells there consoles at cost rather
than below. They tend to use 2nd generation technology in their
consoles to keep their costs down and put most of their effort into
making their games fun to play. Sony and Microsoft both sell their
consoles at a loss.

Sony has a huge selection of games and accessories to make up for their
modest loss. They also realize that the losses have to be limited or no
amount of extra sales will make up for the losses.

Microsoft on the other hand takes this to the extreme. Their per
console loss is the largest in the industry and they have the smallest
accessory and game selection. For the original XBox, the division lost
$2 Billion dollars and only gained a 17% market share in the US, and
less than 5% in Japan. If the XBox360 doesn't turn this around,
Microsoft may have to change their tactics with the next generation console.


-- 
Chris Lewis
shadow at digitalnirvana.com

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