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Xbox Shortages Continue, Console Meeting Goals

Posted by Zonk on from the not-enough-green-circles dept.

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.

2 of 66 comments (clear)

  1. Re:Great question, sherlock! by MBCook · · Score: 4, Insightful
    Sorry, but I call bull. What good does a shortage do MS? Hype? So what?

    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:

    • Make less money (by 33% with my fictional number, probably could sell MANY more than my guess)
    • Frustrate consumers
    • Have fewer consoles to sell software for
    • Make buyers hold back until they are able to get one by which time the PS3 hype machine will be in full spin
    • Get lots of press

    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.
  2. Re:Great question, sherlock! by bigman2003 · · Score: 4, Funny

    Yeah, it's like that whole Christmas tree thing...if people would just wait a few days later, they could find them out in the street!

    --
    No reason to lie.