Pricing in information technology markets is unique. For example, for the last few years, the functionality and speed of personal computers increased while prices remained constant or fell. This unique pricing structure stems from the industry cost structure; which is characterized by high fixed production costs, but relatively low variable production costs. PC manufacturers must recover their research and development costs, as well as the costs to build the PC fabrication plants.
When a revolutionary new product such as an optical notebook computer is introduced, manufacturers are able to charge a high price during the
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