Posts Tagged ‘consoles’

But I’ve already paid!! Sony innovates around willingness to pay

March 31, 2010

In teaching business strategy I spend a bit of time discussing the thorny issue (for firms and scholars) of willingness to pay.  A huge challenge for firms is successfully offering a product or service that customers are willing to pay for, and at a price that allows the firm to make a profit.  There are numerous dimensions in terms of product attributes that customers might consider, and all within a context of competing products and services, and inevitable spending constraints.

One possibility I hadn’t thought about much until today is the issue of a firm’s capacity to alter the product itself post-transaction.  I do live in the vain hope of added benefits (flight upgrades, additions of secret superstar acts to concert line-ups, or a hidden track on a CD), but I wouldn’t expect a firm to actively remove a feature I had already paid for.

Sony have done just that. This week they dropped a bombshell, announcing that they were removing a feature of their Playstation 3 gaming console, namely the scope to run other operating systems through the console. Their rationale is that this will prevent game hacking, but this is not like a patch fixing a software shortcoming, but rather the wholesale removal of functionality.

I am curious as to the legality of altering a product offering ex post, and also to the likely damage to the firm’s reputation in terms of the customer perception of their product offerings.

If I can’t be sure I can keep what I paid for, surely what I’m willing to pay for this gamble will fall?

Thanks to Rui for bringing the announcement to my attention.