Playstation3 launches in Canada Friday November 17: and it's not gonna be pretty

To the hardcore gamers who will be camping out in the cold this week for their shot at a PS3, you all have my best wishes.

Now, let's pan upwards from the ground level and take a higher, more global view:

Fact: Sony's global rollout is ~400,000 units, down from an initial target of 2 million.

Fact: ~100,000 have sold in Japan by now, leaving maybe <300,000 href="http://www.census.gov/industry/1/ma334m05.pdf">U.S. Census: Americans spent US$ $84.6 billion on Consumer Electronics alone in 2005

Statistics Canada: in 2005 Canadians spent CAN$33.35 billion on "furniture, home furnishings and electronics" as a lump category

Now that we've established the battleground, I'll let you in on a retail dirty trick: Strategic Purchasing.

Imagine that you are a buyer for a really big, strong U.S. retailer. Your company has deep pockets, and lots of clout in the marketplace. The name isn't important, so let's call you "Best Buy", or "Wal-mart". When the national account office for a manufacturer (let's call them "Sony") first asked you how many PS3s you would commit to, you ran the numbers, consulted with your management team, and came back to Sony with a commitment to buy half a million units.

You and Sony both know that there won't even be that many units available come launch time. However, you've thrown your weight around, and that number goes on the books. Every other retailer's initial order will be measured against that yardstick. Then the national account office for Sony goes into a mode known as "On Allocation:" the actual number of PS3s get divided up amongst the dealers based on the size of their orders. If your company's order is 26% of the total dealer commitment, your share of the stock that is available will be commensurate with the commitment you made to buy what they offer to ship you.

Okay, every retailer has placed their bets. The big national chains, the regional specialty dealers, and the small one-off shops that still struggle to play ball in the video game business (poor bastards). Sony has confirmed with you that of the 300,000 units that will ship, you're getting 84,000.

Then, at the last possible minute, you call your Sony rep and freak out on him. You tell him that you absolutely, positively need another 84,000 on opening day, or else. Then you slam the phone down.

So the Sony USA national accounts office sits down, and methodically decides whose orders they are going to short ship, or backorder indefinetely. Put simply, in order to keep their #1 customer happy, they have to decide who gets screwed. And who gets screwed are (in order of most to least):

Sony of Canada, and all their customers, including the Sony Store
small regional chains, and the independants
major dealers who placed more timid orders than you did

after a harried meeting, your rep calls you back, and offers you another 24,000 units, which you weasel him up to 36,000 or so.

Congratulations: you have just frozen out the competition. The really unlucky competitors took prepaid backorders from customers based on the quantity of units they thought were confirmed to ship, and each pre-order they took is one more unhappy customer for them, and one less for you. Ka-ching!

The moral of this story? If you're going to stand in line this week for a PS3, I hope you picked the right retailer.

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