Xbox 360 Shortage Rumor Control

[Evil Avatar]

Gamespot has a nice article online (http://www.gamespot.com/news/show_blog_entry.php?topic_id=23907002) doing some background research and rumor control on the recent rumors that Microsoft has engineered an artifical shortage for the Xbox 360 console system on launch day.

Most gamers chalked up the 360 supply issues to general platform-launch woes. However, Arstechnica offered a much more conspiratorial theory. They propose that Microsoft is engineering the supply chain so the Xbox 360 will sell out at most locales. Why? Two reasons. First, widespread sellouts would create the appearance that the console is so popular that retailers can't keep it in stock--actually it wouldn't be an appearance, since it would technically be true. Then the media would pick up on the shortages, generating even more buzz about the console and giving it more free publicity.
Given the dubious nature of some of the sites reporting the "fake shortage" rumor, I would file this one under "Bogus". Will there be Xbox 360 shortages on launch day? Of course, but that is due to the fact that Microsoft is doing a worldwild simultaneous system launch, not because they are "holding back" any systems.

Don't put your trust in rumor blogs and anonymouse sources.

[Kanuck]

Actually, such a "controlled shortage" is the only way to ensure a continuous supply of 360s throughout the holiday season and beyond, and a fair distribution to the stores that actually sell them.

If they send out every system they've manufactured over the past months, we get a gigantic sell-off. Electronics stores wind up with a bunch of unfulfilled preorders, while toy stores sell a bunch of consoles to walk-ins; once they're all gone, we don't see one in the wild again for weeks, even months, because manufacturing and shipping these things takes time.

This isn't a controlled shortage, it's the same way any company tends to do things. They've got warehouses full of them, they send them out in a controlled manner, and try to ensure they never run out. After all, stores being sold out every few days is way better than Microsoft being sold out of Xboxes.

[Tennistoad]

Gamespot has a

Don't put your trust in rumor blogs and anonymouse sources.


Minus the spelling issues...Don't put your trust in paid off hacky web sites either.

[Evil Avatar]

Minus the spelling issues...Don't put your trust in paid off hacky web sites either.

Who is getting paid off and how do we get on that list? bapenguin... Everlost? Any of you guys getting paid off and not telling me?

I'm always the last 2 no.

[notcivx]

Minus the spelling issues...Don't put your trust in paid off hacky web sites either.

It's better than Kotaku. Or Worthplaying. OH MAN 38 NEW IMAGES OF A GAME I DONT CARE ABOUT I CANT WAIT FOR THEM TO TAKE 6 HOURS TO LOAD!

[fitbabits]

Who is getting paid off and how do we get on that list? bapenguin... Everlost? Any of you guys getting paid off and not telling me?

I'm always the last 2 no.
*puts hand up*

Just kidding, of course.

On the topic of manufactured shortages - meh. There's no way I can see this being true. Sure, there are reasons for doing so (ask Sony), but there are also many reasons for not doing so.

The only real way to find out is to ask Bill Gates - and it just so happens I have his home number here... :rolleyes:

[bean19]

Who is getting paid off and how do we get on that list? bapenguin... Everlost? Any of you guys getting paid off and not telling me?

I'm always the last 2 no.

I think he was referring to Gamespot, although that is equally stupid. I think they have the most "tough but fair" video game reviews to be found anywhere.

Anyway, I'm with Gamespot on this one. There is no way to tell one way or the other.

A rush on the X360 units is only helpful if they actually have units to sell. Getting free mainstream media press won't help them if they don't have a product available. Besides, I think they could roll out every unit they CAN make this year and still have a shortage. Remember, they are doing a world-wide distribution and if my town of about 250,000 wants 1500 units (my local Gamestop has 90 on reserve now, there are 5 Gamestops in town, 3 Wal-Marts, a Target, a Best Buy, a Toys R Us, and a Circuit City - So 450 preorders can be estimated into probably 1500 total sales for the area), that means that about 1 in every 166 people will want to purchase an X360 and can afford to purchase an X360 this Christmas. In the United states (population ~296 million) that is 1,783,132 units.

Oh. . . crap. I guess they COULD very easily be planning an artificial shortage to try to boost sales. Or any one of the numbers I've estimated could be wrong. Which is more likely? ;)

If I was an investigative reporter, I'd be looking at the distribution warehouses to see if they are sitting on product after they have "released".

Anwyay, this makes the release of 2 million units to the U.S. during the Christmas season seem much less like a shortage and more like planning for demand.

[Abednigo]

Whether it's true or not doesn't change the fact that it will be all over the news and MS will be getting a lot of free press for it.

[fitbabits]

Whether it's true or not doesn't change the fact that it will be all over the news and MS will be getting a lot of free press for it.
And all over well-respected websites, like EvAv! :D

[Everlost_MI]

Who is getting paid off and how do we get on that list? bapenguin... Everlost? Any of you guys getting paid off and not telling me?

I'm always the last 2 no.

Not I. But that does sound slightly better than the deal I got in trading half my soul for fifteen nanoseconds of fame.

[RMan]

Wether they're "holding back" systems or not, I think a shortage of systems is intentional (MS would hardly be the first or last to use this technique).

[Axiom]

It's not like an "intentional shortage" is going to cause someone not to buy the system eventually anyway. Only an idiot would do that. Whether the shortage is manufactured or not will not really change anything about the sales cycle.

[RMan]

Yea, it'll definitely be a positive effect, the average player will not know that MS didn't adequately supply retail outlets, they’ll just recognize that their retail store sold out. Many, if not most, will simply assume this is because of excessive demand because the thing is so cool, and be more likely to get it later (which is good, since their launch titles are likely to be weak). They’ve got quite some time to be the only next gen system on the market, it’s definitely worthwhile to do something like this if it generates a much stronger impression of the system’s worth.

[bapenguin]

MS pays me in hookers....it's great..... :rolleyes:

I'm gonna agree with the bogus deal as well...either way the system was going to sell out and make press. It would hurt MS to not have as many on the shelves as possible....especially during such a key time of the year.

If they have a faked shortage, and gamers are forced to look elsewhere for something...they aren't going to turn around and buy a 360 in a few months...

Microsoft has said, first to 10 million consoles sold "wins" this generation...whatever that means. They wouldn't jeopardize the one thing they have going for them over Sony...the head start.

[RMan]

It would hurt MS to not have as many on the shelves as possible....especially during such a key time of the year.
No, this is not true, it helps MS to SELL as many units as possible, having them on the shelves is not the same thing. There’s clearly a number of systems at which it’s bad for MS. For instance, if they’d have put 10M systems on the shelves, it’d take almost a year for them to sell out, and they’d have paid a premium for the system, reduced the general opinion of the system, pay too much for shelf space, and everything else that goes into such a release. 10M is obviously a high number, but the point is that clearly it’s NOT in MS’s best interest to put as many units as possible on the shelves, and they know this.
If they have a faked shortage, and gamers are forced to look elsewhere for something...they aren't going to turn around and buy a 360 in a few months...
Keep in mind, I don’t really put much stock in “faking” a shortage, I just don’t think they’ve busted their hump to manufacture the systems. It’s not smart to make a bunch of systems, then have them sit around, not when the parts cost less later and faster ramp-ups are always more costly. I think they generated enough systems to make sure they’re meeting only the hardcore demand, and no more.

As far as gamers looking somewhere else, that’s the point, there’s no where else to look. They know the early adopters are generally the hardcore types that already have the current generation systems, so I’m not sure what product you think they’re going to turn around and buy instead, unless you’re just saying they’ll buy something other than game systems, which is certainly going to happen. I’m not sure why they wouldn’t buy a 360 in a few months, especially if the perception is that you’d better get them while you can. The plain and simple truth is that demand can, and often is, increased by a shortage or perceived shortage of product, and MS is as aware of that. They have likely a year before their competition hits the streets, they’re interested in maximizing sales for that entire period, not just maximizing sales for December, and having a shortage this Christmas of some degree is good for long term sales.
Microsoft has said, first to 10 million consoles sold "wins" this generation...whatever that means.
Classic, and you bought this? If they were not the first system being released then they’d have said the first to 10 million doesn’t mean a thing, and would you have bought that? They said this because they know they’ll be at least 7 million 360s on the street before either other system is released, of course they’ll make it to 10 million first. It’s easy to win a race when you start early and get to declare where the finish line is.

[Royal Fool]

Am I the only one that hates Gamespot's rumor control updates? They're so badly written and researched, not to mention that the whole "Bogus or not bogus" thing really irritates me.

[yerok]

guys, guys, guys....

Having been pretty close to the business for the first xbox launch, and talking to the people making the decisions at that point (and comparing the ps2 shortages and whether Sony had planned their outages at that point or not), I can say pretty confidently that this is not conspiracy. It's pretty simple, and exactly what you'd expect: MS wants to sell as many consoles as possible, as fast as possible, plain and simple. Shortages that cause people to not have a console in their hands when they want one are bad. Any hype generated from the shortage is short lived, and the ill-will generated from the shortage is much longer lived.

Net: MS is trying to hit three regions nearly simultaneously, and trying to portion out a limited supply as widely as possible. That's the cause of the shortages. Conspiracy theorists should go back to wondering is the government is watching us through our TV sets.

[bapenguin]

No, this is not true, it helps MS to SELL as many units as possible

The sytems were selling out anyway. Hell when I preorded my XBox 360 back in August, the EB said they could only guarantee 3 more preorders because they knew then they'd have a limited supply. Remember, Developers only got the final hardware in late August....that only gives MS 3 months tops to manufacture all these systems for a global launch.


If you've seen the videos of the manu. process, it's all being done by hand for the most part, with power on testing of most systems. That kind of stuff takes serious time.


As far as gamers looking somewhere else, that’s the point, there’s no where else to look. They know the early adopters are generally the hardcore types that already have the current generation systems, so I’m not sure what product you think they’re going to turn around and buy instead, unless you’re just saying they’ll buy something other than game systems, which is certainly going to happen.

PSP, DS, A new slimline PS2 at a reduced price. There's plenty of options for gamers. How bout a new video card?

Classic, and you bought this? If they were not the first system being released then they’d have said the first to 10 million doesn’t mean a thing, and would you have bought that?

It's not that I bought it...I don't care who "wins" anything. The fact is MS wants to have as many systems out the door as possible by the time the PS3 launches, that's what that statement means.

[Mobeus Chronox]

The Wal-Mart I work at is only recieving ten consoles. eight of the core system and two of the bundle pack that includes the wireless controllers, remote and harddrive. A person I work with is planning on staying after work november 21st from 9pm til midnight to be first in line to get a bundle pack and use his employee discount.

[EyesNoMore]

EB stores, in Canada at least, have been told to tell all new pre-order customers not to expect their 360 until after Christmas. Which turns away many customers. MS would not be making friends by telling companies this and then saying, a week after everyone has sold out, "Oh yeah, here's some more."

[thFOOL]

What does this tell us, boys and girls? Don't go to Wal-Mart for your 360, 'cause they are the ones getting alll the 3-shittys.

[Talanvor]

Wait a second, ArsTechnica is just some rumor blog while Gamespot is a rock solid foundation for information?

I'm sorry, I'll need some time to gather what's left of my skull off of the carpet.

[Zeal]

I just think Microsoft realizes that people aren't impressed with the system. Shipping a ton to sit on store shelves wouldn't help its image, either.

[Goronmon]

PSP, DS, A new slimline PS2 at a reduced price. There's plenty of options for gamers. How bout a new video card?
I wouldn't say these were valid replacements for a next-gen system. Anyone who ends up purchasing a PS2 prolly isn't going to be in that market for a 360 anytime soon. The PSP and DS are handheld systems, sure, people might buy them if they can't find a 360, but I seriously doubt that they wouldn't still purchase a 360 once one became available.

[Talanvor]

A DS, okay, but a PSP? Those are frickin expensive. The average gamer isn't going to have $250 for that and then another $300-$400 lying around for a 360 in a short time frame.

[Achilles]

Yep solidly bogus. The best way to beat Sony would be to have as many consoles as they could out there before the PS3 ships. I don’t think some people realize just how hard it is to make 1,000,000+ of a high end consumer electronics device in a month or two. Sony’s shortages aren’t intentional, neither will these shortages be.It's not that I bought it...I don't care who "wins" anything. The fact is MS wants to have as many systems out the door as possible by the time the PS3 launches, that's what that statement means.Actually what it means is that the first system to 10 million gets the full backing of big name publishers waiting to see who they should throw their full support behind. Whoever gets those publishers "wins" the console war because they then have the games that people want to play.

[ElectricMonk]

well whatever they're doing it appears to be working because it's got people speculating about 360 shortage no matter what

[Nintendo Revolution]

Actually, I wouldnt label any of this bogus. If you've read any of Kotaku's coverage on the 360 and how retailers are handling it, you'll discover that it's obvious that Microsoft gave retailers false numbers.

I work at GameStop, Microsoft is given the task to tell the company when to stop preorders of the shipments. The second shipment was cut off way too late. Many people will find themselves with the reservation, but no 360 to redeem.

It's also the case with the first shipment reservations. People will be very angry, and I am not looking forward to it.

[mister_slim]

I doubt MS is holding back systems. I think they got a slow start on the manufacturing, so they don't have enough systems, and they realized that doing a worldwide launch would give them goodwill and low enough stock to get the media attention.
The sytems were selling out anyway. Hell when I preorded my XBox 360 back in August, the EB said they could only guarantee 3 more preorders because they knew then they'd have a limited supply. Remember, Developers only got the final hardware in late August....that only gives MS 3 months tops to manufacture all these systems for a global launch.
That's another reason to wait until after launch. Apparently the dev kits break really easy.

[bapenguin]

That's another reason to wait until after launch. Apparently the dev kits break really easy.

Interesting, hadn't heard that. Have a link or anything? Would make a good news post.

[Busted_Astromech]

I...think he somehow got that from your post, Bapenguin, and it's an erroneous conclusion.

Chiming in my own thoughts, I highly doubt Microsoft planned this shortage. For one thing, if this was an intentional shortage, surely they wouldn't make it this much of a shortage...my EB is getting half the number it thought it would. That's not 'clever marketing,' that's a doomsday scenario.

And slim, are you suggesting Microsoft decided to do an international launch after they knew they would be short of units? If so you're in error, because they had planned a universal launch way before they started the manufacturing process. In fact, I remember a Microsoft exec coming out and saying that the global launch was probably a mistake, as they won't be able to meet demand.

[Sinistar]

I can tell you that the shortage has hit my local EB.

They had about 80 preorders and they began calling everyone after the 15th person on the list or preorder AND fully prepaid to tell them that they were not going to have their 360 before Thanksgiving. But they said that all pre-orders would be filled by Christmas.

I was number 6 on the list - woohoo.

[Twigz'N'Berries]

I just want to understand this mentality:
MS has decided rather than sell hundreds of thousand more 360's right now, they are going to:
a) Simply not manufacture them becuase they don't want as many units in the hands of gamers as possible.
b) Manufacture hundreds of thousands and leave some in the warehouse while shipping some out. They want to warehouse the units instead of sell them for immediate profit?
c) Lie to all of the retailers and hype their numbers, only to cut them in half weeks before launch. MS wants to dissapoint retailers w/lowered revenue expectations and upset potential customers right before the holiday...especially with a rival console coming out soon.

The most logical explanation is that MS overestimated the amount they could manufacture and make a worlwide launch. They shot for the moon and made it about halfway. Many games were pushed back, others were 1/2 done and others look great. It sounds very much like a typical launch. If MS was smart, they would have pushed back the European launch another 2 weeks and sold those extra systems in the US. My only question is how many functioning 360s does MS generate in a single day?

PS:
I preordered mine the day preorders were being accepted, and I will have it at 7am on 11/22...along with an extra wireless controller, a plug and play kit, Kameo, CoD, Gun, Condemned, Quake 4, PD0 and NBA2k6 (though I may move the NBA2k6 to DOA4 or King Kong).

Don't cry, just hit up your local Wal-Mart at midnight...you won't have too much competition. :rolleyes:

As for not being too impressive, it really depends on the games. There are some that look great (PGR3, Kameo, CoD, Quake 4) and others that look mediocre. None look worse than anything we have seen on the past generation IMO.

[Stormeh]

I wouldn't put it past MS to intentionally cause a shortage, but I don't really think it's the case here. Given the complexity of the hardware inside the 360, I can see how they would legitimately have supply and yield issues to contend with.

[mister_slim]

Interesting, hadn't heard that. Have a link or anything? Would make a good news post.
There's a Call of Duty 2 postmortem on Gamasutra. The guy said 20 of 50 dev kits still work. Also, the game cost 14.5 million to make.
And slim, are you suggesting Microsoft decided to do an international launch after they knew they would be short of units? If so you're in error, because they had planned a universal launch way before they started the manufacturing process. In fact, I remember a Microsoft exec coming out and saying that the global launch was probably a mistake, as they won't be able to meet demand.
I'm saying that when they decided to do an worldwide launch they knew they wouldn't have the manufacturing capacity for the initial peak, but they figured a short would lead to media coverage and decided to go with it. It's the right decision for them, but they did know what would happen.

[Citizen Philip]

Too bad I submitted an article on Wednesday or Thursday about this very same thing, minus the spin, and it never saw the light of day. I mean obviously it's fine to post rumours about anything except XBox. Very fucking lame; I don't care about whatever favorites anyone has, but i still find this favoritism a good reason to stop coming here for unbiased and slanted news. I mean jesus, at least pretend to have objectivity when letting articles go through.

I'm glad when this RUMOUR got finally posted it was RUMOUR CONTROL. God forbid any negative Xbox rumour surface on EA. That would be terrible! :rolleyes: