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Xbox Shortages Continue, Console Meeting Goals
Eurogamer reports that Microsoft is finally beginning to get some more 360 consoles into the retail channel. From the article: "Xbox does not announce details of shipments, but I can tell you that we're on track to meet our 90 day forecast of 2.75 to 3.0 million units ..." Despite that level of success, Microsoft is still disappointed with production levels and sales.
Well ignoring the irony of saying that you shouldnt take other peoples word for it, yet you appear to only have other peoples word for it that the shortages are on purpose...
IT isnt clear at all that they're using scarcity as a factor, you dont leave a good chunk of your pre-orderers without there product. Those are you most valuable customers and they have very little impact on the walk in rush that gets the media headlines. Makes no sense for them not to fulfill those orders. There's also the fact that the 360 was a rush to get out, games printing before final checks, tweaks to the system being made right up to the beginning of production. Not to mention MS want to keep production costs down and getting production up to a level that would succefully fulfill demand would cost them vast sums of money.
There isnt any real evidence to support the idea that MS purposefully restricted supply and a host of good reasons why supply would be short. Nothing clear about it at all.
Yeah, releasing a product right before Christmas is always a shitty decision.
Anyone who'd have bought it in Spring 2006 can still buy it in Spring 2006. If they can't get one because they're all sold out now, they're not waiting any longer than they would have if Microsoft had held off the release as you say they should have.
Scenario A: MS is capable of making 500,000 units and delivering them to the USA. They do and sell 450,000 by the end of the year (I think they'd sell out, but I'll be cautious). They therefor take in 450,000 * $350 (average price of the two SKUs), or $157,500,000 gross.
Scenario B: MS is capable of making 500,000 units and delivering them to the USA. They make 300,000 and sell them all fast. They end up with tons of pent up demand (150,000 ready buyers according to my numbers). XBox 360s go for as high as $1000 each on eBay. MS makes 300,000 * $350 (because they only get retail) or $105,000,000 dollars. They lost out on a possible $52,500,000 which would be 33% or ONE THIRD of their possible gross intake.
So by making a shortage they:
I see ONE of those that is good for them. That means they traded $50 MILLION for good press. Don't you think that $25 million could have bought them good press?
Your logic makes absolutely no business sense. The only way your idea would work would be if (as someone in an article suggested, someone from Forbes or CNN perhaps) MS sold them auction format or on a sliding scale against demand so that when the 360s sell for $800, MS gets $780 of it instead of $330.
But they didn't do that. So a false shortage makes NO ECONOMIC OR BUSINESS SENSE. If you disagree, please (using my hypothetical numbers) show me how they would have derived more than $50,000,000 worth of benefit with the false shortage.
Comment forecast: Bits of genius surrounded by a sea of mediocrity.
Shortages like this almost always happen for any popular new console release. Even if Microsoft could have met demand, there are some good practical reasons not to.
1. Product defects: You don't want to get too many consoles out into the channel only to bring them back if some real show stoppers are discovered in the wild. Once you're sure everything is okay, you can make minor tweaks for the subsequent production runs using what the first run taught you.
2. No Dust Please: Too many consoles would mean some sitting on shelves gathering dust and people beginning to mumble about waiting for the first price drop. To the space conscious retailer, oversupply is probably worse than shortages.
3. Games Make Money: Each console is sold at a loss. You make your money from game royalties. Right now the number of available games is not very high and there really aren't any must have system sellers to speak of. (The Dead or Alive 4 delay killed the Japanese launch.) A console shortage minimizes money lost while game publishers catch up and hopefully produce the killer games that sell systems. *Cough*Halo 3*Cough*
Of course, I could be wrong about all of this, but in the end it does seem that something in short supply becomes all the more desirable, as long as it doesn't suck too badly.
To the making of books there is no end, so let's get started
That doesn't make any sense. Shortages are never good. The only argument you could make is that they wanted to be "the hot item for Christmas", but that makes no sense. It's a well known product that fanboi's have wanted since it was announced.
Holding off two weeks wouldn't have helped supply. Assume they are building as fast as they can, using far east slaves working factories around the clock. All they could have done to improve the shortage on release would have been to start building EARLIER, stockpile and release more initially, but as we developers know, that would have meant pushing up deadlines and maybe cutting corners on testing. In all probability they targetted november for delivery, but the compromise was that the designs didn't get to the factory in time to build up a huge number of units.
it just comes-down to straight-up incompetence?
Let me get this clarified..
one of the biggest, most powerful corporations on the planet - with approximately four years to plan this event - is having production/distribution problems?
Yup, incompetence. Case solved.
Perhaps Mr Gates would be better off donating the money he'd lose on this generation to charity.
TheN, he could leave the iNdustry to a real game coNsole compaNy.