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Comment by spolsky | Hacker News Reader

The author doesn't mention the concept of anchoring.

A $40 HDMI cable sounds expensive.

But when you're buying a $400 bluray player, another $40 for the cable doesn't sound so expensive, because you're mentally comparing the price to $400.

Anchoring is a well-known concept in pricing. Since retail stores are almost always selling HDMI cables as add-ons, they can take advantage of a much greater willingness to pay by customers who are anchored by the high-price blu ray player they're buying. The online stores that sell cheap HDMI cables (monoprice FTW!) sell ONLY cables and can't anchor.

PS I always prefer component cables to HDMI cables. You get the same quality without the copy protection bullshit. There are too many reasons the HDCP DRM crap sucks, for example, it is impossible for AV receivers to display on-screen menus or even on-screen volume sliders so you have to adjust your volume without seeing what you're doing.

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"The author doesn't mention the concept of anchoring."

Maybe the article has changed since you read it, but:

"The second puzzle is, Why don't any stores stock cheap HDMI cable? I knew cables were a ripoff yet I could not find reasonably priced cables at Best Buy, Radio Shack, Target or even Wal-Mart. Ordinarily, we would expect competition to push prices down but in this case it seem as if the mere existence of Monster is anchoring high prices everywhere but online."

HDMI is digital and component (with "RCA" connectors) is analog. Why do you prefer analog to digital for video transmission? Unfortunately, yes, HDMI has HDCP. I try to use DVI or mini-DVI where possible.

DVI can carry HDCP just fine. In fact, if you have a recent desktop display with a DVI port, there's a good chance it has HDCP. And if you're running a recent version of Windows with a recent graphics card, there's a good chance you're actually using it without realizing it.

In practice I've found that the quality from component cables is just as good as HDMI, even if it is analog.

If everything's working fine with both cables, there is no appreciable quality different between digital and analog.

I try to use DVI or mini-DVI where possible.

Hear hear, in fact I refuse to buy anything that won't accept proper computer inputs. Which reminds me - any TVs have DisplayPort yet?

DVI is easily connected to HDMI using a DVI-HDMI cable. I've had no problems doing this with a computer and an HDTV at 1080p resolution.

If the stores sell literally nothing but the expensive cables, is this anchoring, or is it simply cartel pricing? You need the cable to use the player, and nobody wants to wait 3 days after they make an impulse purchase to actually use it.

From an economics standpoint, shouldn't they be selling everything they can at the maximum it will sell for?

If people stop buying cables because they are too expensive, then I would assume prices would drop.

Prices already have dropped. The retail stores simply won't stock the low-priced products.

If I were running a retail store, I wouldn't stock the low-priced ones either. I would imagine they've got a lower profit margin, and HDMI cables don't go bad frequently enough to count on someone purchasing cables on a regular basis. Might as well charge as much as they'll spend on the rare occasion that the cables get sold. There is a finite amount of space in a retail location, so there has to be an expected return on value for every inch of real estate.

It doesn't have to be either/or. It can be both anchoring and cartel pricing.

Anchoring doesn't seem to account for the effect here. Anchoring (another term is mental accounting) says that when the price range of an object is high, consumers don't mind a $1 change in price as much as when the prices are low. But this doesn't explain why stores wouldn't just charge $1 more for the base system, versus stuffing it into profits on the cable.

At least part of the effect seems to be from consumers merely not accounting for the cost of the cable when deciding when to buy the TV.

As mentioned in the article, its very similar to why printers are cheap but ink is expensive, and why credit cards advertise great features and profit on high hidden fees. When consumers pay a great deal of attention to a certain sticker price, that sticker price will fall and stores will stuff profits instead into areas when consumers don't think as much about.

I think the first comment on the article has a decent explanation:

"How about differences in price elasticity?

We know that demand for big ticket items are very price-elastic, so they price those items very competitively. But, given that you're already in the store buying something, you may have inelastic demand for the peripherals that you didn't know you needed to buy (or, you didn't know that it wasn't included)."

People will drive to another store to save money on a television; they spend their effort comparing these prices. Once they're buying a television from a store, they're (usually) not going to then drive to another store to compare cable prices; they're going to buy the cable at the same store they buy the tv at.

Yeah, but the "anchoring" argument falls apart when a Blu-ray player is $300 and Monster's top-end 16' cable is $225, both at Best Buy.

Who the hell buys a 16 foot HDMI cable?

I have a couple. They're good for hooking a laptop up to a TV from across the living room, or hooking up a game console to a monitor on your desk when you don't want the console anywhere near your desk.

Of course, I buy the $12 monoprice variant :)

Hrm, that's a good use I suppose. Never used one in that way though.

Excuse my mood, shouldn't be commenting today I suppose.

Anyone with an HD projector, such as myself. In fact, I use a 10m (33') cable - which cost me only €25, despite being heavily shielded. (it's over 1cm/~½" thick)

My most recent home cable box (a Moto from Cox) will only output 720p to our TV via HDMI - component cables force to 480p, FWIW.

That's an imposed limitation, not a limitation of the various cabling. Component cables readily support up to 1080i signals. Personally I use HDMI because I prefer the single plug and the all-digital signal path but I do agree that HDCP is a crock. I don't think that HDMI vs. DVI-D is a truly valid issue though - the formats are electrically compatible. If your TV has support for 0-255 RGB signals it doesn't matter which physical plug you are using.

It's also worth noting: component output is downsampled for DRM-sake. HDMI devices are actually authenticated before full resolution content is supplied to them. As far as I know, it is not possible to authenticate devices over component, hence 480p. Not exactly for technical reasons, more related to the whole licensing scheme around HDMI.

Good point. Still, my Xbox 360 is perfectly happy pumping out my video games in 1080i over component. Admittedly I don't watch very much studio-restricted content.

Interesting, thanks for the clarification.

The reason I use HDMI is that it's a single cable that handles video and audio. I can plug in my notebook with a fairly thin cable and use my LCD TV as a second display. I've never had any issues with the onscreen menus but I don't think I'm outputting HDCP from my notebook.

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