Darren New <dne### [at] sanrrcom> wrote:
> Mueen Nawaz wrote:
> >  Now you could just add $40 to the cost because of the coupons. But then
> > some competitor will offer it for only $60 - and ultimately you'll be
> > back to $45.
>
> The potential flaw in this analysis is that there won't necessarily be that
> many of these boxes sold. Three years from now, people won't be buying
> converter boxes, so the back-and-forth on the pricing might not have time to
> settle as much as pure market forces might imply.

Still much better than my poor analysis.  There really are quite a few
manufacturers though, as well as a large enough demand to drive competition.
As of a year ago, sixteen million coupons had been redeemed, with an estimated
thirty-five million needed, in total.  Even with a variety in manufacturing
quality, I'm sure many people, who already don't care enough to have a
compatible TV, would just get the cheapest.  Perhaps it does just serve as a
lower bound on price so no one really undercuts the competition just hoping for
large enough volume as a result.  If the cost were $20, profit margins would
perhaps be narrow enough that only the largest companies could afford to enter
the ring, relying on huge volume.

 - Ricky

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