Microsoft Reveals 360 Shortage Reason

Matt writes "In a recent interview Steve Ballmer has been quoted as saying that the shortages everyone is experiencing are simply down to lack of chips because of low yields - they even considered delaying the launch because of it. In the end they decided to push on and just try and get as many consoles out there as possible." From the article: "Repeating the company's official line on the shortage crisis, which is now threatening to entirely undo Microsoft's attempts to win the next generation war, Ballmer said, 'We are making more. All stores are getting new units each week. Can we make as many as people want? The answer is no, but not because we don't want to.'"

Comments

Right.....

[Iriel]

So instead of waiting until the Christmas-ish time to make everyone's gaming season merry and bright, they decided to tease us with a mediocre launch of a paltry sum of systems? Some of which were even admittedly defective, and still haven't been replaced.

It's not the open-source geek in me that says this, but as someone who has seen good and bad marketing: I can't buy that story. They want to keep the problems to a controlled population so they don't have to pull a massive recall across the nation. The thing that I can't quite get is why they did this for hype (which I'm still convinced of, until intelligently rebuked) when they could have waited a little longer to make everything go smoothly. They still would have been several months ahead of Sony.

This is why I never buy new systems until at least 6 months after release. I'll let everyone else go through the beta-testing machines and titles before I toss a few hundred dollars into something that could end up sucking for another few years. (and that goes equally for Sony and Nintendo)

Re:Right.....

[Anonymous Coward]

Nintendo had lock-up problems (pretty severe ones) with the Famicom in Japan in 1983. They did the same thing Microsoft is doing now: offering free replacement/repair/take-care-of-it and all you had to do was contact your retailer. For this, Nintendo was hailed as a hero and company of the highest integrity in Japan, and the Famicom went on to control over 95% of the Japanese gaming market for half a decade... to say nothing of what it did as the NES here in America. Nintendo HAD to take that chance and rush their new unit out early or miss the 1983 holidays... so they took it. Chip problems happened, they did the replacements, and that's all there was to it.
Source: "Game Over" by David Sheff, a hardcover detailing Nintendo's history pre-1993.

From what I can tell, MS is doing the Same. Exact. Thing. I am far from a fanboy, owning all three major consoles (and no 360 yet), but I'm having a hard time seeing what they are doing as any different from what Nintendo did, to great approval, once before already. And we know how that turned out.

Major PS2 Similarity

[Puhase]

As I remember, the PS2 had its lower release number due to the complete meltdown of a chip forging plant. Yet Sony, by producing its own hardware, had enough in backup store in order to at least satiate a heathly part of consumer demand.

Ravenous demand is great if you can push your product out the door to feed the slobbering consumer zombies. How many parents are going to buy their kids $400-$600 giftcards so they can pick up the box later? I'll save myself by not wagering a guess, but my own experience is that kids want something to open and play with on Christmas, not the promise of getting something, and then maybe not even before they get back to school starting. This is not a debate on the merits of the system itself, but a revelation once again of how the marketing/finance departments simply don't communicate with the nuts and bolts guys. A bad situation just got worse.

Re:Major PS2 Similarity

[badasscat]

As I remember, the PS2 had its lower release number due to the complete meltdown of a chip forging plant. Yet Sony, by producing its own hardware, had enough in backup store in order to at least satiate a heathly part of consumer demand.

Yeah, and people thought that was bad. I waited in line for that launch, didn't get a unit and was really pissed off. But I had preordered online also and got a second shipment system - one week later.

I don't recall a time when a system launched and then was sold out completely for more than a week or so. I mean Ballmer's saying stores are getting weekly stock replenishments - what stores? Obviously not any of the big ones or we'd be hearing about it on all the tech blogs. My thinking is he's just pulling this out of his ass to make people feel better. I don't think they've shipped a single unit in the US since launch.

If we go a month between shipments (which seems pretty possible), then I don't even think you can call this a launch. This is more of a "test market". A launch is when you can actually put product in consumers' hands. A test market is when you test demand and also see how the system stands up to consumer use. That's what this feels like to me.

Game publishers can't be very happy about this either, especially as rushed as some of the launch titles obviously were. No doubt they'd have loved to have had another couple of months to finish up. And the stupid thing about it is, it's not like MS is getting any extra revenue because of Christmas out of the November "launch", because they don't have enough systems to satisfy demand in any case. They would have sold out regardless even if they launched in February or March.

It seems pretty freakin' clear at this point that this launch was rushed. I don't think there can be any argument about that anymore.

Every week?

[RealErmine]

"All stores are getting new units each week."

This is an outright lie. I, and I'm sure others of you, have asked at stores such as Best Buy if they had yet received any more 360 units since the initial shipment. The answer was "No, but hopefully soon." This was last friday, a week and a half since the initial batch. Maybe there is a single Wal-Mart and a single Best Buy, etc. somewhere that got one or two more units after launch day, but that stretches Ballmer's assertion pretty tight. By no means was it "all stores".

Re:Every week?

[brkello]

Or the employees are buying them up and selling them on ebay.

Game ratings

[tepples]

How many parents are going to buy their kids $400-$600 giftcards so they can pick up the box later?

Given the association of the Xbox platform with T and M ratings on original games, not as many as one would think.

Re:Tin foil hat theory

[Golias]

Lets see here....
Who is making the chips???
IBM? Correct?
Think this is IBM's way of getting back at M$ for buying "licenses" from SCO?

Actually, I was just thinking, "Microsoft is now seeing why Jobs decided to drop IBM for Intel. Looks like the X-Box changed platforms in the wrong direction."

Ballmer could sink Microsoft

[petrus4]

The man is a complete incompetent, and his repeated tendency of making a fool of himself in public cannot be good for the company's business. On top of that, we've had the large amount of grumbling on MS staff blogs recently about his policies behind closed doors, as well.

Gates should replace him, and soon, before he does too much more damage. If there's one thing Microsoft can't afford these days, it's deer-in-the-headlights leadership.

Re:What's kludging up the yield?

[SuperRob]

Great information on binning, but you leave out one very likely explanation. The chips are tested at their maximum possible speeds, but are clocked lower for the production unit. They probably ARE binning, just locking all chips down to a specific minimum speed.

That said, they don't have the option of selling lesser performing chips at lower speeds, and that'll kill your yields every time.