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Microsoft Plans Deliberate Xbox 360 Shortage
An anonymous reader writes "To ensure an immediate "sellout" of the Xbox 360 on launch day (therefore getting lots of media buzz about their new console), Microsoft will simply restrict the supply down to a trickle. My favorite part of the article: "In addition to limiting the per-store stock of consoles and having the retailers prepare to prominently note the unit's "sold out" status, Microsoft has allegedly asked Norwegian retailers to sign an agreement that they'll sell out of the consoles on the launch date."
Looks like it's not a rumour.
The force that blew the Big Bang continues to accelerate.
It's not exactly original or unheard of. Plenty of other companies have done this, including Slashdot's favorite company, Apple.
I know slashdot and the nutjobs will make this out to be some part of evil conspiracy, but it's really just simple economics.
If anybody rails on MS over this, you'd have to scream about every oother company that does this too. But they won't because Microsoft is the devil.
> This sort of dishonesty is becoming more and more rampant in corporate culture ...
Becomming?
This is Microsoft...its the way they have always been.
It's the media/customers that are kinda stupid for falling for these schemes...
You can't blame the customer in situations like this. All they are are consumers who want a product. One metric of a good product is how well it initially sells, and all that's happening here is Microsoft falsifying that metric. It's just your every day corprate dishonesty. You could blame the media for not reporting on anything but the sellout, but it wouldn't suprise me if they just didn't bother digging any deeper to find that side of the story.
I'm against picketing, but I don't know how to show it.
So, the slashdot summary seems to imply that this is simply an evil marketing ploy by Microsoft. Instead, I see it as a way of keeping the new Xbox in a position where consumers don't forget about it.
If the new Xbox sold out the first day (or two) & there weren't any more units for another month (like the PS2), how many consumers are going to forget about it? How much marketing momentum do you lose when everyone has to wait a month before they can hope to get the "next big thing"?
If, on the other hand, it sells out on the first day, but customers are told that there will be another shipment in 3-4 days, they'll be a lot less likely to forget about it. Not only that, but when when they do get one, they will still have the excitement of being an early adopter - and I'm sure that will translate to more accessories being sold.
If I were a Microsoft shareholder, I'd be happy with this rollout...
I spent 3 seconds on the arstechnica article posted and see that Microsoft has two options
1) Ship a boatload at once, then have a period where none are available
2) Stream out the shipments so that a constant, but limited supply are available
They saw from the PS2 launch, that the public reaction to option 1 wasn't very good.
So....they choose option 2.
It's a business choice made when weighing manufacturing constraints vs customer reactions.
Of course Slashdot wants to hype this up as yet another reason why Microsoft is evil, and people are biting.
Tell me, which organization here is the one playing psych games with their customers?
Help me take back Slashdot. When did 'News for Nerds' become 'FUD and Conspiracy Theories for Extremist Nutjobs'?
This is actually quite a good idea from Microsoft.
Hold on, let me explain, put the pitchfork down.
Most consoles have huge date one allocations and sell out. There is then a huge gap while the manufacturer re-supplies, eventually things settle down to normal sales figures and supply can match demand.
If MS limit the number of sales on day one, they can keep units flowing into stores instead of having a slump. You'll keep people coming back and retailers won't have dry periods when they've sold out and are waiting for more stock.
It's a crazy plan, but it might just work.
-- I like the cut of your thinking, young man. - me.
Congratulations! Between you and the parent poster you've just posted the two most predictable comments in the history of slashdot.
Feel free to mod me "-1 - Angry Jerk".
Don't forget Disney. Why do you think they only sell movies for a limited time, then shelve them for years at a time with out releasing any more copys to the public?
Because they understand that by creating shortage they can dictate the pace and to some extent increase demand for the product.
This is all Mgt 101 people, not some grand plot to take over the world.
"(I) have this unfortunate condition that causes me not to believe a single thing any politician says when a mic's on.
The same was true of the Tickle-me-Elmo. Pet Rocks. Beenie-Babies. It's well known in marketing that the appearance of scarcity increases demand.
Yes, convincing the public that there was a shortage of rocks was quite a feat.
This is not a dream, not a dream...we are transmitting from the year 1-9-9-9.
There's no conspiracy here. Microsoft expects lower sales, and the PR machine is trying to explain why. Are they trying to spin the lower sales in the best way possible? Absolutely. Are the overzealous microsoft markedroids trying to turn the limited availability into positive thing? Of course. Are they deliberately driving down supply? No. The only news is that analysts and microsoft are restating sales estimates. Microsoft says that it's due to a late start in production (believable, given how late the new dev kits were). That might be the reason, or perhaps it's because the 1st gen content is lacking. However, it would be moronic to purposefully drive down supply in order to create "buzz".
I know I'm required to hate Microsoft, but come on. As long as we're throwing out logic, why stop at "Microsoft Plans Deliberate Shortage" when you can have "J Allard Responsible for Lingbergh Baby Kidnapping"?
I think you misunderstood what he is saying- The idea is that they try and build the system out of as many interchangeable off-the-shelf components as possible so that they can benefit from competition and economies of scale, and that they try to own the IP/means of production on whatever parts can't be interchangeable so that they aren't beholden to any one supplier.
:)
This is sorta the opposite case of Apple's move to x86- having only one major producer of PowerPC chips made Apple dependent upon IBM's capacity to produce the chips in the quantities they need at a good price. Moving to x86 allows them to not only benefit from the Intel's massive production capabilities, but also the fact that there is competition in the market for chips that can handle the x86 instruction set, which drives down prices, and having the possibility of switching to AMD or another producer keeps their options open should Intel try to mess with them.
It's just good business. Funny how when MS does it, they get bashed... Yo, don't hate the playa, hate the game, dawg
It's perfectly fine for a company to offer for sale as many units of a product as it wants.
WRT oversupply, I believe you're thinking about dumping, which is a situation in which a company will flood the market with product at a price below production cost in order to drive competitors from the market. There are laws and international treaties against this behavior because if the strategy is successful, it leads to a monopolized market, which is bad for everybody except the monopoly supplier.
It is not illegal in most cases to place arbitrary restrictions on supply (exceptions being public services, utilities and such). This is not an anticompetitive practice, as it has no effect on the ability of competitors to set their own supply levels and price points, and in an efficient market the excess demand will either shift to the competition or drive up the price. While you, as a consumer, might not like the higher price, it is really no different (from a market perspective) than if Microsoft had set the "suggested retail price" at the market-driven price point. In other words, Microsoft is free to charge $20,000 per X-Box if they want, and whether they get to that price point by setting it at the outset or by restricting supply is irrelevant.
While you might not like the tactics designed to generate hype over the product, keep in mind that it's not a guaranteed win for them; they are running the risk of pissing off their customers and driving them to wait for a PS3 instead of buying an XBox.