ELi5: With the news of the new xbox and ps5 coming out soon, preorders have sold out everywhere. This happens every time a new console is released but with other electronics like new cell phones this doesn’t seem to be a problem. How come?
In: Technology
Supply and demand. By keeping supply low relative to demand, you create a sense of scarcity and can increase demand in your product, so limited production runs can be beneficial initially.
Additionally, it makes sense to get to market earlier with a limited supply, since you can always make more later. Then you can limit your losses from overestimating demand and making too many consoles on your first production run.
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