Is There Really An Xbox Shortage? Some websites are convinced that “the whole shortage thing is faked to incite demand.” Microsoft’s CFO Chris Liddell recently told the LA Times that Xbox 360 supply won’t catch up with demand until the second half of the fiscal year, which ends June 30. Liddell told Reuters that the company expects to see more gradual Xbox 360 sales rather than a launch spike as analysts have predicted. How big was I thinking?
The original Xbox, while not a financial success, changed the way we play with innovative new features such as online games. The Xbox 360 will launch on November 22 in North America. Microsoft expects to ship between 4.5 and 5.5 million Xbox 360 consoles by June 2006.
Here in Canada, for example, almost every retailer sold pre-order packages of both prime and premium packages. Then last week, Futureshop.ca (online) announced that they will be selling 20 Xbox 360s online every day starting at midnight. Of course, locations like Wal-Mart will have units available on November 22, but there is a debate as to how many they will have. From one retailer to another, there seems to be a large information discrepancy.
Why would a company create the illusion that there is a shortage? Microsoft knows that the media loves a good scarcity. Seeing people lining up at the pump when the price of gasoline drops is a perfect example of the power of the media when it is said “shortage.” lunges around. Oil companies have seen record profits this year. Microsoft, of course, will make a killing in the short term, but by creating the impression that the Xbox 360 is the “hot item.” In this Christmas season, do you want the excitement to carry over well into the new year too? at least until the competition shows up.
When asked when someone will be able to walk into an EB Games store here in Canada and pick up an Xbox 360, an employee at Brantford Ontaro had this to say: We’re talking about pre-orders for the new year. It probably won’t be until March when you can go in and pick up a new console. That will be almost 4 months after the release date.
There is no competition right now! The Xbox 360 will be the only next-gen console on the market, period, at least for the next six months. The PS3 won’t be available until at least early spring. Why not take advantage of that advantage now, before the actual substitutes arrive? Microsoft knows as of now that the Xbox 360 is the market.
This isn’t the first time we’ve seen so much craze for a new product. The last time we had this craze was for a 1996 toy, with the Tickle Me Elmo doll. “Tickle Me Elmo” represents an economic truth. When demand for a product exceeded supply, the price rose until “the market cleared.” Through the media and incredible timing, the Elmo tickle doll was the ?? 1996 toy. On November 22, will the Xbox 360 create the same craziness?
Economics and conspiracy theories aside, maybe Microsoft hasn’t produced enough consoles yet to fix some kind of flaw. Of course, in the manufacturing world, these kinds of things happen all the time. But the discrepancy over how many consoles are available raises many questions. Ultimately, the timing couldn’t have been better for the launch of a new console.