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Penny Arcade responds to our "hideous editorial," misses the point [update 1]

Vladimir Cole

PA's Tycho has responded to my rational gamers editorial calling it "hideous" and remarks, "It's fun to think about the author tippity-tappin' this one in while he eats light bulbs in the last car of the circus train."

[Mmmm, light bulbs. BRB.]

It seems the point was missed because I mixed too many different issues into one post. If I had instead posed the hypothetical as follows, I doubt many would have objected:

Assume Nintendo is selling a white-colored Wii at a profit of X and the tangerine-colored Wii at a profit of X+Y. That is, the price (and hence, Nintendo's profit) on the tangerine Wii is greater than the price (and profit) on the white Wii. Which of the two devices would a rational consumer choose, all else equal?

He'd choose the one with lower factored-in profit margin. That is, the lower-priced console.

In the comments below, JB Cougar (and others) wrote: "I believe the black MacBook outsells the white one, and yet Apple charges a $200 (might even be $300) premium for it. They are the same system, save for the color."

For that to be true, you're assuming inequal demand for the colors. "All else equal" means equal demand for different colors of the console.

Hopefully, the elimination of mention of "Sony" or "Microsoft" from the thought experiment makes the point amply clear. So why make such an obvious statement? Isn't this like saying that consumers will buy the larger candy bar if the price and taste of all candy bars on the shelf are the same? Yes, but this question is a required first step before digging into the following question: if gamers are showing a preference for undiscounted hardware, then what else is at play here? What are people paying for, if not for hardware?

That allows us to get into discussions on Nintendo's strategy (with mention of Reggie's favorite Blue Ocean Strategy book), the value of fun, the value of software exclusives, and the value of the "unique" control scheme. This was to have been a multi-part series of editorials dissecting the value attributed to the Wii versus its rivals. With hardware power out of the way entirely, the discussion would narrow to more meaningful topics.

[Update 1: added quote from reader JB Cougar.]

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