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3 Million 360s In 3 Months?

Posted by Zonk on from the that's-a-lot-of-neon-green dept.

Microsoft is apparently hoping to sell 3 million of its next-gen console in its first three months of life, reports ZDNet. From the article: "'We think through the first 90 days of launch...we expect to have sold 2.75 (million) to 3 million consoles worldwide,' said Bryan Lee, chief financial officer of Microsoft's Home and Entertainment unit. Lee's comments came as part of a speech at the Harris Nesbitt Media & Entertainment Conference in New York. Lee said the prediction should translate to about $1.5 billion in sales of Xbox devices, games and accessories during that period."

52 comments

  1. Magical production process by Datamonstar · · Score: 2, Interesting

    IANAB(businessman) But...
    If they can magically produce 3 million in three months, then why not go ahead and delay the release a week or two and not have a shortage, since they're so guaranteed to sell so many?

    --
    The eternal struggle of good vs. evil begins within one's self.
    1. Re:Magical production process by Anonymous Coward · · Score: 1, Informative


      Because the preception of scaricty on the part of a consumer can induce irrational purchasing behaviour.

      See, they don't know shit about whether they're going to sell out of X-boxes. But they know that if they SAY they're going to sell out of X-boxes, then people on the fence will buy it thinking that they'll never see another one for 3 months.

    2. Re:Magical production process by ivan256 · · Score: 2, Insightful

      Because business analysts pull this stuff out of their asses. That and in any company, marketing, business development, engineering, and manufacturing are locked in an eternal struggle in which there always has to be at least one loser.

    3. Re:Magical production process by interiot · · Score: 2, Interesting

      The shortage thing is still potentially rumor. And this particular piece could be evidence against that rumor, and not necessarily facts that exist alongside it.

    4. Re:Magical production process by KDR_11k · · Score: 1

      Sony thinks the same way yet the first shipment of PSPs to the US was one million. They even had to take back their "We sold out!" announcement.

      --
      Justice is the sheep getting arrested while an impartial judge declares the vote void.
    5. Re:Magical production process by Yocto+Yotta · · Score: 1

      It appears you have not been reading all of the speculation.

      --
      A B A C A B B
    6. Re:Magical production process by richie2000 · · Score: 4, Funny
      Because they say they will SELL 3 million consoles, they have not said anything about DELIVERING them. Like the poor Windows Defender guy, you assume that you are dealing with an honest vendor of good repute and fail to realize you're talking about Microsoft. They will happily take your money and only if you're really, really lucky, they'll spare the time to bend you over for a quickie.

      In fact, that's the main difference between Microsoft and a pick-pocket; the pick-pocket will bump into you when he steals your wallet, giving you a bit of human touch.

      --
      Money for nothing, pix for free
    7. Re:Magical production process by njfuzzy · · Score: 1

      We all know why. They are trying to engineer a "shortage" to pump up demand for the product. It's a marketing manoevre.

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    8. Re:Magical production process by ivan256 · · Score: 1

      "Potentially"?

      Remember how every EB was "sold out" of 360 pre-orders a month ago? They all magically have a seemingly unlimited number available now. The star shaped "Sold Out" post-it notes have come off of the boxes (who picked the box colors for this thing anyway? They're ugly) and have been replaced with "Pre-Order Now!" stickers.

      If you pre-ordered more than one in hopes of selling it on eBay for a profit, I'd suggest getting your deposits back now.

    9. Re:Magical production process by Rolgar · · Score: 1

      They can call it a shortage if it's not on the shelf when the customer wants to pay for it on the first day. If the extra units are in a warehouse in California, they can have them on the shelf in stores in a couple of days (a week tops), in time for Christmas, and hope to be the must have item of the season that everybody's clammering for because a thousand people couldn't get them. Unfortunately, there are millions of families that can easily burn a grand on Christmas, that might make this strategy a success, although you usually see it work better on items priced under $50.

    10. Re:Magical production process by gabebear · · Score: 1

      "If they can magically produce 3 million in three months, then why not go ahead and delay the release a week or two and not have a shortage, since they're so guaranteed to sell so many?"

      M$ has been building up a supply of 360s for several months for the launch, and I'm not covinced there will be a shortage. A $299 console with only 10 mediocre games avaliable for it isn't going to appeal to that many people no matter how much hype there is behind it. The $399 version seems even sillier... just $100 for a big memmory card!!!

    11. Re:Magical production process by nelsonal · · Score: 1

      As I understand it, MS guaranteed certain allocations to retailers that were probably a small proportion of what they hoped to ship but a number that they knew they could hit easily. They did this so that even if production issues arose they could meet those sales numbers. Perhaps they told retailers that we can only ensure that we will have 100,000-250,000 units on launch day. Retailers sold those rather quickly as earlier bidding and deposits were used to reduce the quantity demanded. Now as MS gets closer to launch day and production issues were smaller than they potentially could have been MS is able to promise to retailers that they will have 1-3 million in stores at launch.

      --
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    12. Re:Magical production process by -kertrats- · · Score: 1

      Since you'll be spending $40 anyways for a memory card for the base version (if you want to save your games, ever, which I assume you will), you might want the $100 20GB memory card instead of the $40 64MB memory card.

      --
      The Braying and Neighing of Barnyard Animals Follows.
    13. Re:Magical production process by gabebear · · Score: 2

      "you might want the $100 20GB memory card instead of the $40 64MB memory card."

      True, true... although both are ridiculously expensive, which was the point I was tryng to make.
      But, again, I think the Revolution is going to be the best in this area with 512MB of flash standard and SD slots.

    14. Re:Magical production process by Anonymous Coward · · Score: 0

      Creating an artificial shortage doesn't increase profits when you're dealing with a fixed pricepoint. The Xbox360 is going to retail for the same price whether there is 1 or 1 million, so limiting quantity doesn't increase profits like it does with a floating-price commodity like lumber or oil.

      Thanks for talking out of your ass though.

  2. marketing hijinks by Red+Flayer · · Score: 1

    FTA: "According to enthusiast site ActiveWin, Microsoft plans to launch the console in the California desert during an event billed as "Burning Man meets E3"--references to a popular Nevada desert arts festival and the computer game industry's annual trade show."

    Say what? Admittedly, Burning Man has gotten a little commercial in the past couple years, but how is a MS product release anything like Burning Man, other than possibly being in the desert? And how can it be compared to E3, where multiple suppliers/vendors are marketing their product? Are Nintendo and Sony invited to put up major displays?

    [sarcasm]Tell you what, come down to my neighborhood pub for my record release party, it'll be like a cross between Woodstock I and GenCon. I promise.[/sarcasm]

    --
    "Trolls they were, but filled with the evil will of their master: a fell race..." -- J.R.R. Tolkien on Olog-hai
    1. Re:marketing hijinks by snuf23 · · Score: 1

      "but how is a MS product release anything like Burning Man, other than possibly being in the desert?"

      Simple. As long as you take a lot of drugs you'll have a good time at either event.

      --
      Sometimes my arms bend back.
  3. $1.5 billion? Wishful thinking... by ivan256 · · Score: 3, Insightful

    So let's say that they sell their 2.75 million Xboxes. For that to be $1.5billion in revenue, they all have to be the $399 version and also have to sell $146 in games and accessories per buyer. Alternatively, the people buying the $299 version have to spend $246 on extras and games on average. They're really counting on an unnaturally high attach rate to get these numbers. Either they're doing something shady to guarantee the numbers come out like that (like counting units shipped to retailers as "sold"), or they're not going to hit $1.5billion on that few consoles.

    1. Re:$1.5 billion? Wishful thinking... by MBraynard · · Score: 1
      Attachment rate of 3 isn't hard to figure. Most packages have a selection of four games or so. Attach rate for Xbox was higher than for any other console.

      Then again, MS vastly overstated expectations for sales of the first console.

    2. Re:$1.5 billion? Wishful thinking... by thebdj · · Score: 2, Interesting

      Hmmm...$50-$60 a game + $25-$40 for an extra controller + $25-$35 for memory card if you don't get the HDD = $100 - $135. Of course you can multiply that game number by two or three at least since it is coming out in time for X-Mas (oh dear me, I can see the bad X related promos now) so many people will be getting games at launch and for the holidays. Seriously, if you plan on playing this thing pretty hard you are going to want more then one game at launch anyway.

      I think you underestimate what people are going to be willing to spend. I would imagine many people will pick up the cheaper one thinking they will buy an extra game instead. This is especially true of people who do not mind extra consoles and can keep around their X-Box for their old games and saves and whatever else...

      --
      "Some days you just can't get rid of a bomb."
    3. Re:$1.5 billion? Wishful thinking... by ivan256 · · Score: 1

      You aren't forced to buy a package though...

      This is also the first console that has online multi-player on release day in any meaningful way, so I suspect that accessory controller sales are going to be less common than usual too. Additional players will probably have gotten their controller "free" with their Xbox.

    4. Re:$1.5 billion? Wishful thinking... by ivan256 · · Score: 1

      You won't be getting a memory card if you got the hard drive.

      Also, expect extra controller sales to be lower this time around, since this is the first console to ever ship with online multi-player in a meaningful fashion. Instead of a friend pulling up an extra controller, they're going to be playing you online with the controller that came with their Xbox.

      The first Xbox had an attach rate of 2.4 games/accessories per unit, and it was the highest ever. There is no reason to expect that they're going to magically beat that by 25% for premium systems and 50% for the low end budget minded systems this time around. In fact, you can probably safely bet that the low end system will have a corresponding lower attach rate due to the budget consious customers it will attract.

    5. Re:$1.5 billion? Wishful thinking... by ivan256 · · Score: 1

      Also, the attach rate for Xbox (which had the highes in the history of system launches) was only 2.4.

      The weak launch title lineup seems to indicate (to me at least) that it will be *lower* this time, not higher. Unless, like I said, they play with the numbers by re-definine what counts as a sale.

    6. Re:$1.5 billion? Wishful thinking... by jfisherwa · · Score: 1

      Are they including any term of free XBox Live with the $399 version? That could be another cost.. .. Will there be advertising on XBox Live?

    7. Re:$1.5 billion? Wishful thinking... by Andy_R · · Score: 2, Insightful

      It looks more realistic if you are factoring in the higher prices in other countries. Including tax, British gamers are being asked to pay $366.14 for the cheap and $488.12 for the expensive version and games are $87.15 each (at today's exchange rates).

      --
      A pizza of radius z and thickness a has a volume of pi z z a
    8. Re:$1.5 billion? Wishful thinking... by ivan256 · · Score: 1

      That does make sense... How much of that is tax though? Because the taxes don't count as Microsoft revenue.

    9. Re:$1.5 billion? Wishful thinking... by Anonymous Coward · · Score: 0

      I don't think the problem with the sales estimates is the attachment rate, after all most early adopters are going to buy at least 2 games and an extra controller. The problem is going to be actually selling 2-3 Million consoles in 3 months.

      Everyone knows that it is the games that really sell the system, not the system that sells the games, and what has really been announced for the 360? Certainly there are games that would be nice to have, but there isn't any real must-have games (and many of the nice to have games are also available for the PC). On top of that the cost of entry on a brand new system (as well as the extra cost of controllers and games) is going to make many early adopters wait until a particular game to be released, whether it be Halo 3 or some other game that won't be released for several months.

      The final thing that is going to hurt them is that the majority of people buy a system after it drops below $200; this means that the majority of XBox owners have owned it for less that 2-3 years (a reasonably short time). I may be wrong but I doubt that 15% of the XBox user base is excited to spend $300+ to upgrade their system after having it for less than 3-4 years

    10. Re:$1.5 billion? Wishful thinking... by Andy_R · · Score: 1

      Here, 17.5% is tax. The article can't be talking about revenue, since even the most optimistic estimates assume Microsoft is making next to no profit on the first few million consoles, it's far more likely to be turnover that is being discussed.

      --
      A pizza of radius z and thickness a has a volume of pi z z a
    11. Re:$1.5 billion? Wishful thinking... by mink · · Score: 1

      Wasn't that attach rate due to most Xboxes available (Amazon, Gamestop, EB, Best Buy) during/after launch being bundles with 2 games? Thats what I remember seeing at the time.

      --
      Well I've wrestled with reality for thirty five years doctor, and I'm happy to say I finally won out over it.
    12. Re:$1.5 billion? Wishful thinking... by Anonymous Coward · · Score: 0

      Yes, this is what people keep forgetting.

      When Microsoft spoke of attachment rates being high for Xbox 1.0, they were inflating the numbers by counting games that were included in retail bundles during launch. When it launched, it was typically bundled with at least two games from all the online resellers. Shortly thereafter, when retailers had already stopped the practice, MS continued the farce themselves with their in-package bundle of Jet Set Radio Future and Sega GT 2002. During both periods, Microsoft tallied each bundled game as an individual and additional software unit sale. So if someone bought an Xbox with the packed-in games and also a copy of Toejam & Earl III, Microsoft reported the attach tally for that sale as 3.

    13. Re:$1.5 billion? Wishful thinking... by rohlfinator · · Score: 1

      They also ran a bundle with Tetris Worlds/Star Wars: Clone Wars on the same disc. I'm sure Microsoft jumped at that chance to count two more game sales, even though many buyers never even touched the game disc. My roommate last year was unfortunate enough to pick up that one, which had quite possibly the worst software selection for a bundle in recent years.

    14. Re:$1.5 billion? Wishful thinking... by king-manic · · Score: 1

      Also, expect extra controller sales to be lower this time around, since this is the first console to ever ship with online multi-player in a meaningful fashion. Instead of a friend pulling up an extra controller, they're going to be playing you online with the controller that came with their Xbox.

      Live is a niche service, don't expect it to play a major role in the branding or sale of the 360. It only reached 10% of the consumer base. Most people actually prefer toplay ofline, this is true for everythign from PC games to Console games.

      --
      "There are more things in heaven and earth, Horatio, than are dreamt of in your philosophy."
  4. PR spin by Lord_Pain · · Score: 1

    Seems like the MS Game division's PR/Marketing department is spinning in every direction possible.

    First: Limit amount of inventory to create the illusion of demand.
    Second: Pull numbers from MS brand booty to create illusion of demand.
    Third:???
    Fourth: Profit.

    Did I miss anything?

    --
    -- What's this '-r *' file doing here? -- Oh well, a simple 'rm' should do the trick.
    1. Re:PR spin by jo42 · · Score: 1

      1) Stuff distribution channel.
      2) Take no returns.
      3) Profit!!!

  5. Wait.... by Chrismith · · Score: 0

    I'm confused. Is there going to be a shortage (http://games.slashdot.org/article.pl?sid=05/11/07 /2036259&tid=211) of 360s, or are they going to sell three million of them? Does three million systems constitute a "shortage"?

  6. Sales ploy by FromWithin · · Score: 1

    Obviously they're trying to drum up sales by saying that everyone will have one, so you must too.

    To be honest, I was very cynical until I saw the first batch of games. They are impressive; and gameplay-wise, not just graphically. If these lot are all single processor efforts, then give it a year or so, there will be some very impressive work appearing.

    I won't be buying one (The only console I've ever bought are the Atari Lynx and GBA), but I don't think that those who do fork out for one will be disappointed.

    1. Re:Sales ploy by macshit · · Score: 1

      To be honest, I was very cynical until I saw the first batch of games. They are impressive; and gameplay-wise, not just graphically.

      Which ones? The Xbox 360 games I've tried/seen have all been extremely blah, very unimpressive. I'm particularly dissapointed in Kameo, which had been rumored to be something special, but in fact seems to be kinda lame (with slightly prettier graphics than the last gen).

      As far as I can tell, the 360 looks slated to continue the recent tradition of launching with a bunch of very weak games.

      Granted, I've just played around on the demo units, not done an in-depth analysis, but it makes the point that there's no glaringly obvious difference between the next gen and this one.

      --
      We live, as we dream -- alone....
  7. what if... by C0vardeAn0nim0 · · Score: 1

    they only sell 2,749,999 consoles ?

    wil it be considered a failure ?

    --
    What ? Me, worry ?
    1. Re:what if... by EulerX07 · · Score: 1

      If they don't significantly outsell the PS2 and Gamecube this holiday season it will be a horrible failure.

    2. Re:what if... by ivan256 · · Score: 1

      It depends on which gaming website you're reading.

    3. Re:what if... by gabebear · · Score: 1

      Sony sold 7.8 million in Q4 2002 and 8.5 million in Q4 2003. I don't know what 2004 was like but I'd bet those numbers were higher with the new slim PS2.

      I'd be quite suprised if the 360 outsells the PS2 until after the PS3 comes out.

    4. Re:what if... by mink · · Score: 1

      I'm guessing soon all SONY hardware will have a remote activated self destruct, keyed to the release of a updated version of the same product.

      --
      Well I've wrestled with reality for thirty five years doctor, and I'm happy to say I finally won out over it.
  8. buried alive? by Colourspace · · Score: 5, Funny

    "Microsoft plans to launch the console in the California desert" And if it goes anything like Atari's E.T. launch they'll also be burying it there later..

  9. CFO sales projection a bit off by NelsonM · · Score: 1

    I think they'll make the units sold projection, but miss on the sales projection. There's nothing out there that's competing with the Xbox 360, so they shouldn't have too much of a problem moving all those units. However, unless my math is fuzzy, Microsoft would have to sell around 4 software titles for each 360 sold, and that's counting every Xbox as the $399 version. That normally wouldn't be a problem, but the software side has seen a lot of delays by some big name launch titles, like the new Elder Scrolls game.

  10. What a shame... by St.+Arbirix · · Score: 2, Funny

    If that many people bought $500 worth of Mac instead... imagine the net gain in world peace? /zealot

    --
    Direct away from face when opening.
    1. Re:What a shame... by Anonymous Coward · · Score: 0

      Ignorance is bliss?

  11. Not switch cause of XBOX 1 by Anonymous Coward · · Score: 0

    There are so many great games coming out for the XBox plus a ton that I still have on my wishlist. I still have years left out of my current xbox. Not going to waste all that money on a new system just for "better graphics" when I can spend the money on older games.

  12. Seems like a fair estimate by cylcyl · · Score: 1

    With X-mas coming up and no competing release, I suspect that they can easily move 2 million xboxes by end of the year and 3 million in 90 days. The shortage thing is just marketing BS. The only reason the number would not be made is if the box flops out of the door, which does not look like will happen

    With 3 million units. 1.5B is not unreasonable as it is 500$ / console. thousands will be sold in the 1000$ + bundles. As there is no point in buying it without a game. $350 is the minimum that can be spent. But since there seems to be very few stores offering the $299, $399 will be the norm in the first month where the bulk of the units will be shipped, and + one game will bring the min revenue per xbox to 450$, pretty close to 500$

  13. Revenue != profit by amliebsch · · Score: 1

    Revenue is roughly the same as receipts, that is, how much money came in through the door. Profit what is left after you subtract how much money went out through the door. So Microsoft certainly may not be profiting on Xbox sales, but they sure are counting on revenue!

    --
    If you don't know where you are going, you will wind up somewhere else.
    1. Re:Revenue != profit by Andy_R · · Score: 1

      Maybe that's an american usage? To me in England, revenue = profit, and what you are describing is called turnover.

      In order to get the highest number possible for PR purposes, Microsoft will probably be getting their figures from the prices shops will be selling at, not the prices they are selling the machines to shops at, and they may well be including units that shops have ordered on a non-cancellable basis by shops (but have not yet been delivered) in their count of how many have been 'sold' too.

      --
      A pizza of radius z and thickness a has a volume of pi z z a
  14. Fuzzy math anyone by shoptroll · · Score: 1

    So they're not going to have enough at launch, but they're planning on on selling 3 mil in 3 months? Screw the Irish Potato famine... this is an console famine... or something. Are they expecting terrorists to raid their stockpiles in the warehouses and take all the precious Xboxes?

    Seriously... This is why supply + demand sucks.

    I'm glad I'm not holding my breath for this system. They're seriously monkeying with gamer's wallets this time around. I'm glad I'm not getting my hands dirty with this system.

    --
    Insert Sig Here