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Subject: A Market Already Collapsed

Author: Fernando Villegas

Date: 14:31:11 11/01/98


The very first colaboration I ever wrote about chess computer in the net was
about what I thought it was a dangerous saturation of the market. Two years
after that "historical" post -in CCR- I see more and more post where the same or
similar thoughts appears. To think in the future of this market, his producer,
products, etc has became one of the issues of the field in itself, sometimes
even more than the usual discusions about the products. The price slash of Ed
has been just another episode to trigger this worry of all us and a new crop of
"what-is-being-to-happen -to-this-thing" posts.
Well, as probably -as far as I know- the first Casandra to forecast Doomsday was
me, let me now make a second, more dramatic statement: collapse is already here.
Once I wrote a very elaborated post about the factors and reasons, both
economiccal and sychological behind that, but all that can be reduced to this
interaction of variables:

Being M the size of the market for pro. chess soft.. his change of size is based
in:
A) increase trought the arrival of new interested people with money to purchase
B) decrease thorought the saturation of those that have already bought too much
programs already a lot beyond his strenght.

being D the size of the distribution chain, his change in size -number of
outlets, etc- is based in:
A) the operation of the precedent factors translated, finally, as the amount of
money each year available to purchase chess programs
B) the margin of utility produced by each purchase, in average. This factor
depends of the next one, the offer.


Respect to offer, being O the size of the offer of chess products, his size
change is based in:
A) the number of upgrades of differents versions eaxch company produces each
year
B) The number of companies -or individuals- that stay in business each year


If you observe the facts asociated to each of these factor and make a very
simple math analysis, you will find that the market growth is a lot slower than
the growth of the offer, that is, of price reduction and margin of utility
decrease, with the consequence that the economical fundation of the industry is
foundering.



In simple words:
15 years ago three companies shared a market not too much different at the
actual one - but a lot slower in his operations due to Internet unexistence-
selling few products with very high margin of utility to a market that was very
far of getting a product capable of giving real satisfaction in terms of playing
strenght. This was a situation good for producers, interesting for the public
and profitable for distributors. Compare with actual situation, where you have
at least 20 strong programs in any moment, some of them for free,  with a rate
of production of about 6 new each year at very low prices or non and to almost
the same market. Surely this is a non sustainable situation. That's the reason
one magazine after another has closed, one company after another has been
ruined, one programmer after another must go or get another job to keep alive,
on new crop of programs after another is selling for less and so one store after
another dedicated only to this must change his bussines or run risks.

fernando



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