The Xbox 360 could become one of the hottest gifts this holiday season...if Microsoft could find a way to meet demand. When the next-gen console goes on sale next Tuesday (Nov. 22), it won't be easy to buy one. Microsoft's goal of a near-simultaneous (just three weeks apart) launch in three global territories has put some serious constraints on stock allocations. Although there is no official figure, analysts have pegged the initial shipment in the U.S. as somewhere between 400,000 and 700,000 units.
Second wave blues
The general consensus among retailers is that, depending on the store, each location will only have between 10-50 units to sell. Furthermore, in some cases, even if you've pre-ordered the system you may not be guaranteed to come home with it on launch day. Some consumers who pre-ordered were unfortunately told that they were on the list for the second shipment -- which may not come until after Christmas.
Backing up these concerns over supply, retailer Game Crazy (which is owned by Movie Gallery) recently said, "While we remain excited about the Xbox 360 launch later this month, Movie Gallery has recently learned that, its initial allocation of the new Xbox 360 consoles will be below original expectations...We believe this issue to be industry-wide."
Some in the video game industry have suggested that Microsoft's initial Xbox 360 supply problem is a deliberate tactic meant to build hype for the console. If retailers put up "Sold Out" signs, people will think Microsoft's system is the hot item to get this holiday and beyond.
No conspiracy says MS
However, Peter Moore, corporate vice president of worldwide marketing and publishing for Xbox, says these conspiracy theories are all hogwash. In speaking with the Seattle Post-Intelligencer, he called the idea of creating an artificial shortage "ridiculous."
"I've seen all of the conspiracy theories. Somewhere in Roswell, New Mexico, we have a hangar where we're stockpiling it, creating false shortages. No...[we're] trying to get as many units to retail as we possibly can," he said.
One owner of a Game Factory retail store in New Jersey told Seattle PI, "They made a really unwise business decision, in my estimation, by trying to do a worldwide launch. This shortage looks worse than any one I've ever seen before."
Moore, not surprisingly, stands by Microsoft's decision despite the difficulties a global launch creates for the company and for the retail community.
"You can challenge the decision, but we made a decision a long time ago that we're going to ship this holiday in the three major regions of the world," Moore stated. "I think when the dust settles, it will be proven to be the right thing, and it will become the default way that you launch a video-game console in our industry."
He continued, ""It's difficult. A lot of retailers, I think, stretched their allocation. Individual retail store managers said, 'I'm going to take a fly that I'm going to get 200 Xbox 360s on day one and take the preorders accordingly,' and they only got 100 or 150. Well that's 100 or 50 disappointed people. We have to manage that."
Microsoft has sold roughly 22 million Xbox consoles and expects to do much better with the Xbox 360, especially with its head start over Sony's PS3. Microsoft currently said it's aiming to sell up to 3 million Xbox 360 units worldwide within 90 days after launch. A recent Merrill Lynch report predicted that Microsoft could sell 10 million units before the PS3 even makes its debut in North America.