There is a very good article over at kotaku that chronicles the rise and fall of PS3 prices on Ebay. The author tracked the price of PS3 prior to release of PS3 and all the way up to Christmas Eve. Before the launch of the system, the average price of PS3 for preorder on Ebay was $2,367. Two days after the launch, the price plummeted to around $1,200. Expecting the demand to go up during Christmas time, a lot of people held on to their PS3. This turned out to be wrong move since the average price of PS3 plummeted yet again to $724. At $724 for 60 GB PS3, the seller makes less than $100 profit after taxes and shipping cost. This has prompted massive returns of PS3 at the retailers.

The author called 4 stores to see how many non defective PS3 were returned so far. He picked Fry?s Electronics, Wal-Mart, Target, and Best Buy. Fry?s Electronics had average of 2 returns per store and had PS3 bundles available for sale. The bundles at Fry?s were listed at $1,100. Target had average of 2 returns per store and did not have PS3 available for sale at the time of the calls. Wal-Mart?s numbers were inconclusive on both the average returns and availability. Best Buy, by far the biggest PS3 retailer, had average of 4 returns per store and did not have any PS3 available. However, there is rumor that Best Buy is shoring up PS3 supplies for the New Year?s Eve sale.

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PS2?s price held steady for far longer than PS3?s price on Ebay. So what changed between the two launches? I believe there are several factors had influence on the price points. First, there is stiffer competition from Microsoft and Nintendo. Xbox arrived after PS2 and Nintendo released weak GameCube. Now, Xbox 360 was released full one year before the launch of PS3 and now boasts very large and diverse game library. It also boasts marquee titles such as Gears of War and Lost Planet.

Moreover, Nintendo introduced Wii to great anticipation for its unique and original hardware concepts. There?s simply more option available to consumer during PS3 launch than there was for PS2 launch. Second, there is no marquee game for PS3 at this time. Other than Resistance and Madden, there are no must have games to drive up the demand. Had there been few more great games, the demand would have been lot higher for the PS3. Lastly, everyone saw incredible profit windfall on reselling PS3 on Ebay. This caused majority of the buyers who stood in line to be reseller and not a true gamers. With so many systems on Ebay, the price was bound to go down. With the prices hovering around retail price for PS3, now is great time to pick one up if you haven?t done so already. PS3 owners shouldn?t worry, there will be great games coming out for PS3 in near future.

In the days leading up to the PlayStation 3 launch in mid-November, people all over the country lined up with dollar signs in their eyes, hoping to cash in on what was sure to be the most sought after gift this holiday season. I talked to many people planning on financing college, cars, vacations, and countless other dream items with the fruits of their labor. A week later those hopes and dreams were crushed, as reports of plummeting eBay prices poured in. Just how fast did the PS3 grey market crash? Take a look for yourself, and feel free to click the graph for a larger version.

Within two days of the system’s launch the going price dropped by over $1000. eBay prospectors across the country were stunned at the rapid depreciation of their investment. While they were still looking at $600 profit on average, it was a far cry from the windfall everyone had been expecting.

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