PlayStation 3 has it all: a Cell Broadband Engine chip, a built-in Blu-ray disc player, a 60-gig hard drive and full online capabilities. For Derek O'Brien, it was a no-brainer.
On Nov. 16, a day before the system's launch, Mr. O'Brien left his construction job and began driving on Highway 401 toward Toronto. His plan was simple: pick up one or two PlayStation 3 systems, advertise them online and sit back as the sure-to-be hot -- and scarce -- commodity gathered steam in the chug toward Christmas.
Instead, the first-time scalper learned an expensive lesson about consumer demand and when to take a profit. Now that the dust has temporarily settled in the busy gaming marketplace, another lesson is coming into focus: Mr. O'Brien might have backed the wrong box.
But none of that was clear as lines formed at video game stores across North America on the eve of the launch. Mr. O'Brien called every Wal-Mart, Future Shop and Best Buy along Highway 401 from his car to gauge the length of the lineups of hardcore gamers and profiteers awaiting the powerful new PlayStation 3's release. He shied away from imposing queues in and around the Toronto area at Scarborough, Concord and Markham before settling on the Wal-Mart in Peterborough, an hour's drive northeast of the city. He arrived at 2 p.m., good enough to snag the fourth spot in line, "looking like a bum" in his work clothes until his girlfriend brought him a fresh outfit and some food.
The 23-year-old stood in line all night and at 7 a.m. the next morning, it paid off. He got his hands on two of the coveted machines, both 60-gig models, one bought legitimately at the store for $659 plus tax, the other acquired on the spot from a scalper, for a steep $1,800.
The hard part done, Mr. O'Brien thought he could sit back. He would flip the PlayStation 3s just before Christmas when demand was at its peak and use the profit to buy an engagement ring for his girlfriend -- the one who brought him the clothes and the food, whom he has been dating for seven years and whom he has known since Grade 2.
But two months later, the sleek PlayStation 3 units are collecting dust in Mr. O'Brien's closet in Bowmanville, Ont., while his girlfriend is still without a ring, although Mr. O'Brien repeatedly refers to her as his wife before correcting himself each time. He is looking at unloading the systems for as little as $600 each to buyers on the on-line classified service, craigslist.org, which would roughly amount to a $1,360 loss.
And the part that's haunting Mr. O'Brien. It didn't have to be this way.
Mr. O'Brien saw the market for PlayStation 3 systems soar initially after their launch, with the units fetching anywhere from $2,500 to $5,000 in eBay auctions. Still, with a month until Christmas, he waited. And waited.
"I just kept thinking, 'keep it until Christmas,' " he said. "And that was a mistake. A huge mistake."
Even before Christmas arrived, demand for the system started to decline. Sony managed to keep up semi-regular shipments through the holiday shopping season, which kept customer demand from ranging into the hysterical.
"I think a lot of people expected us just to ship on Nov. 17, so that no one would be able to buy them through Christmas and you'd see the insane eBay auction prices building up," said Matt Levitan, marketing and public relations manager for Sony Canada, who also said the company had shipped 1.1 million units to North America by the end of December. "We spoiled a few plans for people looking to make a big profit on the PS3."
