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[Hitler Stole My Potato]

SEATTLE (Reuters) - Xbox (news - web sites) consoles were in short supply at several major retail outlets recently due to unexpectedly high demand for the video game machines, Microsoft Corp. said on Monday.

The world's largest software maker, which launched the Xbox in 2001 to rival Sony Corp (NYSE:SNE - news) (news - web sites).'s PlayStation consoles, said that "consumer demand is exceeding supply right now... we are working with partners to rectify the situation."

"We're working really hard to satiate (consumers') needs," a Microsoft spokeswoman said.
Microsoft said that holiday sales of its Xbox console exceeded expectations during the last three months of 2004, and in January raised its sales forecast to a global installed base of 21 million to 22 million consoles by June, up from the previous projection of 20 million units.

Earlier on Monday, Electronic Arts, the world's largest video game publisher, cut its quarterly earnings outlook on weak performance of older games and shortages of game consoles that spur new game sales. The company's shares fell nearly 13 percent.

LINK


Old news. New story.

 

[DarienA]

Ah so the hardware numbers would have been MUCH closer last month if MS had been able to meet demand!!!!!

 

[The Take Out Bandit]

Is this pre-emptive damage control due to imminent PSP bombs over Redmond?

Sony keeps this up, Microsoft's next console is gonna be named Toby. :lol

 

[Brotherman]

http://news.zdnet.com/2100-1040_22-5629023.html

Many major retailers are fresh out of Xbox consoles, with no indication of when they'll be back in stock. CompUSA's Web site shows the basic $150 Xbox package out of stock at all stores in metropolitan areas such as New York, Los Angeles and Northern California.

Amazon.com also is out of stock, while specialty retailers EB Games and GameStop only have used consoles or new ones in "bundles" that require the purchase of expensive add-ons. Bundles are also the rule for the online arm of retail giant Wal-Mart.

Best Buy was one of the few major chains to report widespread availability of the basic Xbox package both in stores and online.

Well, looks like you're still good to go as long as you go to Best Buy for an XBox.

 

[djtiesto]

It was like this back in Jan for me... couldn't find an Xbox anywhere I looked. MS really dropped the ball with this one... I have a friend who really wants an Xbox for the online fighters, hopefully he'll be able to get one.

 

[sol5377]

There is definitely a shortage (especially on the east coast) of Xbox's and the console would certainly have sold better in the last few months had there been stock, but it would not have reached close to PSTwo's numbers in February. Plus, that pent up demand was probably eased with people buying PSTwo's/GC's instead or just waiting a month or two more for stock to replenish.

 

[Blimblim]

I've talked to some people over at MS about this. They simply can't keep up with the demand. They had never anticipated that Xbox would sell this much last winter, and since then they still have a very big backorder. And of course it's too late to open a new production line or something like that, considering Xbox360 is just about ready to go.
Everyone at MS seems to be very upset about this, but don't expect the situation to get really better. At the end of 2004 a big part of the systems built for the european market was moved over to the US, but it still was not enough for the US, and created a big shortage in Europe too, especially in the UK.

 

[Azih]

Wow, MS inexperience shines through even in the late stages of their first console. MS is a software/technology company and I bet they expected everyone to start waiting for the new shiny Xenon as soon as it got close. I'm thinking they had NO idea of the lucrative end cycle a console with momentum (thank you Halo 2) enjoys.

Man the Xenon really might be launching way too early.


This is not going to be helpful moving forward, MS should resolve this as soon as they can.

 

[sonycowboy]

The crest has just about passed. Many retailers are almost caught up on both PS2 & Xbox.
Best Buy this weekend had stacks of both and so do my local gamestores.

From what I've heard, It really should be better and almost completely resolved by mid-April.

Xbox is definitely harder to find than the PS2, but I'm seeing them MUCH more frequently than during January/February.

 

[Catchpenny]

Gotta wonder how many of these potential sales will be lost. With the Xbox 360 unveiling just around the corner, and Gran Turismo/Resident Evil 4/God of War hitting on the other consoles, people may pick another option before they can find an Xbox.

 

[Azih]

How hard would it be to ramp up production anway? Why is it so hard to do in the console business?

 

[Hitler Stole My Potato]

The crest has just about passed. Many retailers are almost caught up on both PS2 & Xbox.
Best Buy this weekend had stacks of both and so do my local gamestores.

From what I've heard, It really should be better and almost completely resolved by mid-April.

Xbox is definitely harder to find than the PS2, but I'm seeing them MUCH more frequently than during January/February.

Read Brotherman's post. It doesn't look like this will be getting better any time soon.

 

[DarienA]

The crest has just about passed. Many retailers are almost caught up on both PS2 & Xbox.
Best Buy this weekend had stacks of both and so do my local gamestores.

From what I've heard, It really should be better and almost completely resolved by mid-April.

Xbox is definitely harder to find than the PS2, but I'm seeing them MUCH more frequently than during January/February.

numbers-wise(best guess) how much of an increase could MS have seen in the past two months if they had been able to meet demand?

 

[Pudding Tame]

Wow, MS inexperience shines through even in the late stages of their first console. MS is a software/technology company and I bet they expected everyone to start waiting for the new shiny Xenon as soon as it got close. I'm thinking they had NO idea of the lucrative end cycle a console with momentum (thank you Halo 2) enjoys.

Man the Xenon really might be launching way too early.


This is not going to be helpful moving forward, MS should resolve this as soon as they can.

Azih, I agree with most of your post, except about MS expecting people to start latching on to Xenon this early, most people probably don't even know it's coming yet.

Using all the experience I have from the gaming industry and the business world in general (i.e. none), I wouldn't be surprised if MS's XB production was based on something like 2 year old projections that didn't take into account the upsurge in demand.

 

[Catchpenny]

How hard would it be to ramp up production anway? Why is it so hard to do in the console business?

I'm guessing it takes substantial lead time to increase production, and right now Microsoft is also expending resources planning out the Xbox 360 production line. So as Blimblim posted, they're stuck. They have likely decided that the shortage does them as much good as harm in the long run.

 

[DarienA]

How hard would it be to ramp up production anway? Why is it so hard to do in the console business?

Speculation: Well I'd imagine it's harder for MS to ramp up production because many of the parts for the Xbox were/are purchased at bulk from 3rd party vendors?

 

[sol5377]

Best case scenario for Microsoft, imo: Get all stores restocked by the end of April so that demand is being fully met. Allow sales to top off by the summer, then drop the price to $129.00 or institute bundles and new colors. Stick to the $129 pricepoint through 2006 while the Xenon sells for $299+. It'll give gamers two solid options at two different price points. When the PS3 releases, Microsoft could go to $249 and $99, respectively. Two royalty streams from two different products would do wonders for their games' division bottom line.

Quite frankly, I don't see how retailers will have shelf space for all these different games (Xenon, Xbox, PS2, GC, PSP, GBA, GBSDS, PC, etc. etc) I guess they'll finally phase out PSOne and older Gameboy games and target Xenon, DS, and PSP for the cutting edge crowd who need the newest systems first and the Xb/PS2/GC/GBA to the mass market who are looking for cheap prices.

 

[Pudding Tame]

Never mind, Sol said it better.

 

[Deku Tree]

I've talked to some people over at MS about this. They simply can't keep up with the demand. They had never anticipated that Xbox would sell this much last winter, and since then they still have a very big backorder. And of course it's too late to open a new production line or something like that, considering Xbox360 is just about ready to go. Everyone at MS seems to be very upset about this, but don't expect the situation to get really better. At the end of 2004 a big part of the systems built for the european market was moved over to the US, but it still was not enough for the US, and created a big shortage in Europe too, especially in the UK.

So are you saying the xbox will be impossible to find by, say, September/October?

 

[BuddyC]

Two royalty streams from two different products would do wonders for their games' division bottom line.

Hardware != Profit.
Software = Profit.

So are you saying the xbox will be impossible to find by, say, September/October?

It appears he's just saying that they'll maintain their current level of output, so don't expect shipment number to change much.

 

[bigNman]

I dont get it. The xbox sold a good amount in the latter part of 2004 but I would have thought MS would have expected those numbers, not been surprised about them. And did it really sell that much more than previous years?

 

[mrklaw]

Its still fucked up in the UK, has been since before Christmas. Maybe they'll get themselves sorted out just in time for the Summer drop off in sales

Still, that should give them time to have an OK Christmas. I'm assuming they'll still want one more season of selling xbox 1 alongside 2?

 

[sonycowboy]

I dont get it. The xbox sold a good amount in the latter part of 2004 but I would have thought MS would have expected those numbers, not been surprised about them. And did it really sell that much more than previous years?

I think there were 3 major factors:

1) The Xbox reached the mainstream last year. A slew of high profile games and the $149 price point (early) helped it's penetration

2) The PS2 shortage from June - February. Microsoft themselves have stated that Xbox were greatly impacted by the shortage, and till now this has been the only reason they've given for their own shortage.

3) The HALO effect. They knew it was going to be huge, but there's no way in the world that they thought they would sell $125M on day 1 worldwide.