Slouching Towards Bethlehem

Smart Math

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This is the kind of thing that makes capitalism better than communism.

From the Slashdot story:

The early adopter premium is the difference between the
cost of buying the latest greatest techno-toy today and the cost of
buying an equal or better unit a couple of years later for much less.
That Blu-ray unit you buy today for $300 will cost $80 two years from
now. The premium is the $220 you pay to get the starter Blu-ray unit now
as opposed to waiting. The same applied for HD-DVD until the axe finally
fell and this is where it gets interesting. MP3 Newswire has been
tracking post-mortem HD-DVD sales on eBay and surprisingly found that
there are many takers. And why are people flocking to buy this
decade’s Betamax? Simple, they did the math. The demise of HD-DVD format
creates “an option where the consumer can get his high-def player NOW
without paying the $220 early adopter premium. That savings pays for the
player and more. New sealed boxes of the Toshiba HD-A3, which shipped
last fall for $300, are now drawing on average about $75 on eBay, where
plummeting HD-DVD movie prices are averaging between $6 and $10. “Take a
consumer with a 42″ plasma set who needs to replace a broken standard
definition DVD player. He can a) replace it with another standard
definition DVD for about $60. b) He can buy a Blu-Ray player for between
$300-$1000. c) He can buy an HD-DVD unit for under $80 and then buy ten
$10 or sixteen $6 HD-DVD videos for a total of $180”. What really drives
this is Blu-ray’s skimpy catalog, which will take a couple of years to
pump up. Rather than blow the $220 on the early adopter premium just to
have access to a limited number of movies the post mortem HD-DVD buyers
can enjoy cheap Hi-Def players, cheap Hi-Def videos, and pay less. These
users can shift to Blu-ray when players are less expensive and the
catalog is robust. Actually, the early adopter premium is more like $320.
With the win, Blu-ray manufacturers have raised prices.


Written by Homo Œconomicus

March 9, 2008 at 2:38 pm

Posted in Economics, Technology

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