[cyanbane]

Great read and I agree with the majority of it.

This stood out though:

>Amazon’s retail strategy of being allergic to profit does not translate well into hardware manufacturing.

Don't most gaming consoles sell at a loss? The pickup for the console maker is on the publishing rights & distribution channels and the fact they take a gamble that the hardware will get cheaper over the course of that hardware generation. I had always though that it what Amazon was trying to emulate with their hardware attempts.

[cthalupa]

>Don't most gaming consoles sell at a loss

Initially, yes. Nintendo has traditionally turned a profit on most of their consoles (I'm not sure about the new one), but for the last several generations Microsoft and Sony have been losing money on each console purchase - at least initially. Later during the lifespan of the console the component cost has usually dropped enough that they start to turn a profit

[philwelch]

Most console launches are supply-constrained and you can't buy one for months, so why do they charge the normal $400 price at launch when people can just buy them and resell them on Craigslist or eBay for hundreds more? If they launch at a higher price they can just ride the demand curve downhill over time by reducing the price and profit from the start.