Truck and Barter

Every so often, journalists discuss the real nature of competition--a mostly-punctuated flux of price cuts, quality enhancements, and total experience improvements--without even realizing it:

The double dose of hotly anticipated games [Doom 3 and Half-Life 2] comes at a time when computer gaming has been in a lull, eclipsed by games designed for play on specialized machines such as Sony Corp.'s PlayStation 2 or Microsoft Corp.'s Xbox. PC games make up about one-fifth of the $6 billion video-game industry, a percentage that analysts say has been slipping in recent years.

But the PlayStation 2, the most popular console, is approaching the fourth anniversary of its U.S. release, and Sony has indicated that it doesn't plan to rush its follow-up to the market. Analysts such as Vince Broady, co-founder of gamer Web site GameSpot, say that pause creates an opportunity for computer game companies to win back players looking for a new thrill....

Even for computer gamers who don't care about Half-Life 2 or Doom 3, the releases are significant because the core software, the "engine" that helps create the games' environment, will probably be licensed by other game developers for years to come. Already, the upcoming sequel to a massively popular online game called CounterStrike is to be based on the Half-Life 2 engine.

You see, common costs--fixed costs spread across multiple products--can be a generator instead of a killer of competition. Also note how AMD focuses some of its precious and scarce marketing dollars--hit the high-end gamer and let him spread his positive experience to others:

The company is a regular co-sponsor of tournaments where the most dedicated gamers come to face off in weekend-long game sessions. Linda Kohout, a marketing manager who focuses on games, estimates that a typical hard-core gamer influences as many as eight other computer purchases a year.