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["Andrew C. Oliver" <acoliver AT nc.rr.com>]

> 
> Subject: RE: For Musicians, Microsoft's Xbox Is No Jackpot
> From: Thomas Beckett <thomas AT tbeckett.com>
> Date: Sat, 17 Nov 2001 10:17:36 -0500
> X-Message-Number: 2
> 
> Joe Reid wrote:
> > Buy an X-Box, Microsoft is selling them at a loss.
> 
>       That's called "penetration pricing".  They figure that (almost) every
> Xbox unit they sell is one sale that Sony or Nintendo don't get.  And
> every Xbox sold is a customer captured for the games/software that work
> only on Xbox, and for which MS gets a licensing fee for every unit
> sold.  And every Xbox sold contributes to the network externalities
> among consumers that increase the value of the next Xbox waiting to be
> sold.  MS is built on network externalities ("the value of a network
> increases geometrically with the number of members in the network" more
> or less).  
> 
>       So buying an Xbox because you're against Microsoft and you want to
> subtract a few pennies from Microsoft's bottom line is counterproductive
> in the long run, because MS stands to gain much more if you buy it.  
> 
> TaB
> 

Funny... I like to call it "illegal dumping"..  Penetration pricing
means lower than you would, not lower than you can (at a loss would be
can) to put the competition out of the market.

-Andy
-- 
www.superlinksoftware.com
www.sourceforge.net/projects/poi - port of Excel format to java
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