Xbox 360 'Must Sell Out' on Release Day

tlhIngan writes "According to a Norwegian retailer (as reported by Gizmodo), Microsoft's making some peculiar demands during the XBox 360 launch. In particular, each retailer is to get 20 XBox 360 consoles (6 core editions, and 14 premium editions). However, to get the full allocation, they have to ensure they will sell out on the day of release (December 2nd over there)! Plus, each console must leave the store with at *least* two games each. Is Microsoft marketing like the beanie babies again - using 'Sold Out!' as a way to hype the popularity of their machine? It may appear to be, since Microsoft recently slowed down production of the XBox 360 as well."

Comments

Re:Then lower the prices

[Red Flayer]

"This sounds silly, but the traditional way to "sell out" of an item is to lower it's price.

That's the traditional way to sell out an overstock. The 360 won't be overstocked, it will be intentionally understocked.

"Keeping the price high by artificial fixed prices means that it's hard to 'sell out'."

They aren't keeping the price high by artificially fixed prices. They are keeping the ideal pricing point high by limiting supply.

MS needs to justify the high MSRP for the 360... and the high wholesale price. MS doesn't want to reduce the price until late next year. The best way to do that is by showing that there is enough demand that you still sell out at the current price.

Producers of a unique commodity often limit supply to keep demand and price (by extension) high. My understanding is that MS will be taking a loss on each unit anyway... so if they have to drop the price in the short-term, they'll be hemorrhaging instead of slowly leaking.

This isn't artificial price-fixing. This is manipulation of the market by restricting supply. It's done all the time with unique goods, and preserves the profit incentive to continue producing innovative goods.