Analyst expresses doubt regarding Xbox 360 shortage
by Conrad Quilty-Harper 
{ Nov 21st 2005 at 9:45AM }
Unless you've been living in a cave for the last year, you'll know that at midnight tonight the Xbox 360 goes on sale across US. After midnight, the question on every gamer's lips "will there be a shortage of Xbox 360s" will be answered. Whilst there's little doubt that there'll be a limited number of Xbox 360s available for sale in-store (due to a large number of pre-orders) on launch day, the numbers of 360s that will be supplied in the days leading up to Christmas are still unknown.
We've always been a little pessimistic towards the idea of an Xbox 360 shortage leading up to Christmas. It's certainly in Microsoft's interest to promote the idea of an Xbox 360 shortage. There's also evidence that there will be a shortage, all because of a little fear, uncertainty and doubt (FUD).
In a New York Times article on the subject of the launch tonight, there's a quote from Michael Pachter, an analyst with Wedbush Morgan Securities. He believes that Microsoft is "trying to turn this into the Cabbage Patch Kids". In other words, Microsoft wants the Xbox 360 to be the "must have" item this Christmas. Only the perception of a shortage can create this effect.
Reader Comments (Page 1 of 2)
vc @ Dec 18th 2005 9:42PM
I've disagreed with some of Michael Pachter's pronouncements in the past, but I'm in agreement with him on this one. The console's got a six-month lead on the competition. It's important that it still feel like a highly-demanded hot product when it's time for the Revolution and PS3 to launch.
Killian @ Dec 18th 2005 9:42PM
It's still gimmicky for a company to do this... You can create hype for a product by just making a good product as well. Availability isn't necessary the opposite of popularity...
the "dude" @ Dec 18th 2005 9:42PM
Hmmm....Cabbage Patch Kid or XBox 360????....I don't know what to do with my $400!!! Help!!!
Joseph @ Dec 18th 2005 9:42PM
Maybe we can consider the fact that pretty much EVERY TIME that something is announced with a potential shortage upon release, the product is still very easy to aquire. The idea is to have people purchase something out of worry, and if they fall into that trap then they deserve to pay the premium for this (the ebayers deserve it even more). There is absolutely NO REASON to purchase an XBox360 on launch, and the idea that Microsoft wouldn't be shipping more units prior to Christmas is absurd. As the article says, they want to sell as many units as possible, as quickly as possible, and this is a tried and tested method of doing this.
So anyone who's gonna be out there waiting in line, you simply cannot convince anyone that you're not buying into the hype.
Buckshot @ Dec 18th 2005 9:42PM
Is the Cabbage Patch Kid wireless?
rico @ Dec 18th 2005 9:42PM
hey "dude" wait till you see what till u see what sony and nintendo have to offer plus buy that time the 360 will have a price cut and better games so just wait and see man
rico @ Dec 18th 2005 9:42PM
sorry ment to say
hey "dude" wait till you see what what sony and nintendo have to offer plus buy that time the 360 will have a price cut and better games so just wait and see man
Guido @ Dec 18th 2005 9:42PM
100% correct .. but damn effective. I'm concerned I won't be able to get one, even though in reality I know it's ubsurd.
I really have to hand it to Microsoft with their x360 marketing. You can't deny the success it's been, creating hype for their product. Like em (or it) or not.
san @ Dec 18th 2005 9:42PM
Premium kits without games are going for $700+ on eBay, not shipping until the 22nd. I'd thought about picking up a 360 at Target on Tuesday -- which I'm almost sure I'll be able to do -- and selling it on eBay for a quick profit. But now that seems almost unethical.
Master misChief @ Dec 18th 2005 9:42PM
VC, I assume you were the author of this particular report on Joystiq, so I am asking you:
What other proof do you or the quoted analyst have to say that Microsoft is "faking" the shortage and spreading FUD ?? Is it just a fancy guess based on a hunch, or do you have any concrete proof to claim so?
Perhaps you would like to read this article ( http://www-03.ibm.com/chips/news/2005/1025_xbox.html ) quoting that the Xbox360 processor from IBM entered production in late October - so it so hard to believe that there will be periodical shortages during the busiest shopping season of the year catering to a worldwide launch?
All this talk of "spreading the FUD" is getting tiresome, and you could do better than to parrot this propaganda every day of the week.
san @ Dec 18th 2005 9:42PM
Wow. One just went for $810 on eBay. That's approaching insane.
san @ Dec 18th 2005 9:42PM
Real shortage or no real shortage, Microsoft is going to *promote* a shortage. Even if there is no shortage today, they want a shortage by close of business Tuesday. I think you'll have to wait until Tuesday to find out if hype equals demand.
the "dude" @ Dec 18th 2005 9:42PM
For the cabbage patch doll...or the xbox 360?
Stephen Pick @ Dec 18th 2005 9:42PM
I think the keyphrase that should be floated is 'Launch day shortage'.
A shortage on Launch day, nothing else. More will be available days after. And days after that and so on.
SO yeah, not everyone will be able to buy tomorrow. But wait till the weekend or a little longer, you'll all get one.
Felix @ Dec 18th 2005 9:42PM
It could be worse. If Microsoft did another type of advertising:"You wil buy it,you will buy it.Buy it or die!" It might work for 10 year olds.
And good luck to the campers tonight and those who might buy it on black friday(if there still are any 360's). Tip:Maybe wait for next week when all the holiday rush might cool down a bit?
Sense @ Dec 18th 2005 9:42PM
I hope the shortage is fake. I really do. What concerns me though is that it will probably be easier to just go out and buy the damned thing than it will be to pick one up if you have a pre-order.
Just doesn't seem fair to me.
Felix @ Dec 18th 2005 9:42PM
Also I don't feel sorry for the idiots paying $700 on ebay. Yet I wish I thought of that. Oh well,there's the PS3 next year...
Matt @ Dec 18th 2005 9:42PM
I think it will be nearly impossible to get one on launch day unless you wait in line early. I do believe that the system will be much more readily available within a week, though. The people who are going to wait in line are the people who want to guarantee themselves a system the first day. I will be waiting in line for that reason. I have to work tomorrow (launch day) and I doubt I'll be able to get one at 5 when I get off, so I want one tonight at midnight to get it over with and have the system in my possession and play it without worrying about future shipments. To me, it's perfectly reasonable to give up a few hours of my life to wait in line. Come 1 AM, I'll forget I ever waited in line and I'll be enjoying my xbox 360 at home with no worries. I'll be bringing some food along with my laptop so I can watch Seinfeld DVDs and listen to some CDs in line to keep myself sane. It'll be a little annoying, but to me, it's worth it.
Marcus @ Dec 18th 2005 9:42PM
Yay, twisting every little shred of news to sustain your crackpot theory.
Non-economists are horrible at speculating at these things because they make businesses into caricatures with either/or decisions.
The fact is that if Microsoft wanted to produce more 360s, the amount they'd lose PER UNIT would increase (not just losses as a whole). Saying that either the shortage is induced or real is silly when you look at MS's perspective, because I can say with 100% certainty that it's both.
Microsoft's willingness to take a greater hit by producing more consoles is discounted by what they gain from producing fewer consoles. The Morgan guy is right that they want to make the 360 into the "hot toy" of this season, because the press they get from that hysteria is free, whereas the loss they take from making more systems is not.
BB919 @ Dec 18th 2005 9:42PM
Sorry to burst your bubble guys but it's fake [marketing ploy]. Infact the Best buy launch numbers were largely fake. My best buy will have 300 Xbox360s available tomorrow.
Microsoft is quoted to be producing "tens of thousands" of units a day, for the past few months, do you really think that equals a shortage?
Nope. Just all hype. Trust me.
san @ Dec 18th 2005 9:42PM
"Saying that either the shortage is induced or real is silly when you look at MS's perspective, because I can say with 100% certainty that it's both."
Wise, Marcus. And I'd stand in line tonight and pay $500 w/ game if I really thought it would be worth it. I'm afraid with this system like no other I would be disappointed. It'd be, wow, I'm home with it and I can now play several games that I can also play on my other systems, but in HD -- if I had an HD TV and I'm just not going to go buy a middling HD TV only for this; I want HD LCD panels to drop some more in price and get one I really want rather than an $800 CRT-based unit that I bought just because the price was right.
I am *very* susceptible to hype. So much so that I almost regret not wanting to pick a 360 up tonight or early tomorrow. But for what? Ghost Recon 3? I'll be able to pick that up for my original Xbox. Wireless controller? Logitech makes an outstanding wireless controller for Xbox. Live? Got that. Etc...
mat @ Dec 18th 2005 9:42PM
Am I the only one who doesn't care about this launch?
Michael @ Dec 18th 2005 9:42PM
well the shortage made me think it was too much hassel and i got another console so f**k ms.
DICKSONY @ Dec 18th 2005 9:42PM
I just bought a sony 42 inch 3lcd hdtv. Played god of war, resident evil 4, shadow of collosus all weekend, and boy am i hyped up for the 360. i use component cables when using my ps2, and you can definitely makeout all the pixels and what not. The 360 is gonna change that. And its a media extender too! C'mon, Bangbus on a 42 inch through my xbox 360....Priceless.
Bloo @ Dec 18th 2005 9:42PM
"Am I the only one who doesn't care about this launch?"
Are you a gamer? I know if I didn't care - I would not have read the article, would not have clicked on comments, would not have typed in a comment, and would not have confirmed it. That sure seems like a lot of time spent on something you don't care about.
Anyways, for you younglings, the N64 came out in November and it was like hitting the lotto if you got one before March. So you never know.
dave @ Dec 18th 2005 9:42PM
#22 - nope, I'm with you. Frankly, games sell me on a system, not hype, and there isn't a single title in the 360's launch repertoire that intrigues me in the slightest. I'm holding out for that killer app.
Ron @ Dec 18th 2005 9:42PM
I talked with a local Wal-Mart today and the guy told me that they already have one shipment in and are expecting another shipment today. The initial shipments may have been done to worry people, but it looks like another wave is already coming... He also said that people started camping out last night...
san @ Dec 18th 2005 9:42PM
When I found out what "gamer pictures" are I couldn't help but think that this is not about games or recreation but about a lifestyle marketing campaign focused on generating a continuous revenue stream through constant "micro-upgrades". That's great if Microsoft can pull it off, but it will only appeal to a certain fraction of the market: young, trendy, socially inclined, with a certain amount of disposal income. Microsoft is trying to create a new gaming demographic focused on the 360; I don't think their really trying to tap in to the existing, diverse group of gaming enthusiasts. Or if they are, good luck. I mean, will *you* buy a gamer picture? A new paint job for your car, after you already spent $60 for the racing game and $50 Xbox Live?
Guru G @ Dec 18th 2005 9:42PM
Here is why there will NOT be a shortage:
MS is launching early so it can sell AS MANY AS POSSIBLE units before the other two launces(PS3 & Rev). A shortage would be defined as: people willing to buy a products but the product is not available for them to buy. This shortage would be exactly the opposite of what MS business plan is because it needs to sell as much as it possibly can. So therefore, there will be no real shortage. However, to generate some excitement, the shortage rumors have been spread around.
just think about it.... how can ms afford to have a shortage when its whole point of releasing the box so early is to gain a substantial lead over others?
Sense @ Dec 18th 2005 9:42PM
You know, you don't *have* to buy anything in the LIVE marketplace.
I agree that MS is trying to appeal to the demographic that buys ringtones, etc. But to say they aren't trying appeal to hardcore gamers is a little far fetched.
Gamers don't want or need extra gamer pictures, car paint jobs, etc. and they won't buy them. But they will want Gears of War, etc.
The only legitimate concern I see with marketplace is developers possibly releasing incomplete/unfinished games and then selling the extra content (that should have been on the disc) after the retail release.
As long as purchases don't give people a competetive advantage on LIVE, I'm fine with other people wasting their money.
tyrant @ Dec 18th 2005 9:42PM
i predict a shortage but not a complete shortage. MS says that this is how game console will be launched, why would MS make sure that there are no 360's to sell on black friday? the initial launch will be lower than the delivery that will be made to retail stores for the next week that should be double to triple the number of shipments, they had to have promised record sales on black friday and that there would be plenty to sell
dfd @ Dec 18th 2005 9:42PM
I think at this point, a console launch *has* to have a shortage, or at least a perceived one.
A console launch without a shortage on launch day looks like a failure.
Ryan @ Dec 18th 2005 9:42PM
I really want one. However, I know I'll be able to get one WHENEVER I get the money. In other words, great marketing by Microsoft, but the world's not going to end if you're without a new Xbox on 22nd.
Matt @ Dec 18th 2005 9:42PM
Does anyone know anything about their local Walmarts? Are people lining up already? What about you guys? Are you going to be lining up tonight? If so, what time? I'm heading to Walmart around 4 to see if there's anyone waiting and I'll decide whether or not to get in line based on what I see, but I want to know if anyone knows anything. Just trying to get a grip on what's ahead of me tonight.
JollyGreenGiant @ Dec 18th 2005 9:42PM
"Only the perception of a shortage can create this effect."
That's B.S. An actual shortage can create this effect too. I don't understand why it's so hard for people to believe there will be a shortage? It's a world-wide release of a highly anticipated product at Christmas time! There have been shortages all over the place for the iPod Nano...is Apple only doing it for the hype too?
airiox @ Dec 18th 2005 9:42PM
"Does anyone know anything about their local Walmarts? Are people lining up already? What about you guys? Are you going to be lining up tonight? If so, what time?"
In my area which isnt overly urban all of the Walmarts already have the max amount of people in line and its only 11am! So you probably are tough out of luck unless you camp out all night at another store. But who knows if that will even be a sure bet even now....
Zell @ Dec 18th 2005 9:42PM
The difference is, JollyGreenGiant, I don't remember Apple reporting shortages before the iPod Nano was even launched. Apple doesn't need to create frenzy, people simply want the product(s).
I feel a lot of people are going to be thoroughly disappointed when they get home with their Xbox 360, and the novelty wears off in a few hours.
Scott Vieth @ Dec 18th 2005 9:42PM
Who wants to tell #20 he's smoking crack? We saw the distribution lists that got leaked onto the internet, and I don't recall any of BB's stores getting 300 system.
Although, if he wants to live in his pipe dream, then by all means, enjoy it. :-)
Even local Game Rush stores that expected 10 systems are getting hosed with 5 pro's and 3 core's.
murph @ Dec 18th 2005 9:42PM
i'm going to Costco tomorrow morning. call your local store for details. mine's getting 34. i figure the line at costco will be shorter than at Best Buy and i can sleep in longer.
Todd @ Dec 18th 2005 9:42PM
This whole ploy has left a really bad taste in my mouth. How simple is it to create the illusion of a shortage? You take pre-orders and then only deliver 1/4 of them. Then when there is a bunch of buzz created you ship the rest out a little at a time. They are using your disappointment that you couldn't get your Xbox 360 (even though you pre-ordered) as word of mouth marketing.
Besides the hot holiday gift is always something that takes you by suprise. It's not something that they tell you that there is going to be a shortage of. It's something that suddenly takes off and becomes popular without the company realizing it's going to be such a hit.
James Emberton @ Dec 18th 2005 9:42PM
Even if you don't like the 360 or MS, and whether or not the all of this shortage business does in fact turn out to be true. We are talking about it. Everyone is talking about it. And that is better than any advertising money can buy. Those who want it will still get it tomorrow, next week, next month, or whenever. And those that didn't even have it on their radar now do.
Who gives a shit??? @ Dec 18th 2005 9:42PM
Im i one of the only people that is so uniteressted in this launch?? I actually feel sorry for microsoft and people who will by this xmas???? Half the launch games are on PC...3/4 are sequals and the less said about EA the better....I persnally think it isnt going to sell...i think gamers are finally coming out the misty forest and seeing that games are getting boring and they want something orignial and fun...One of the resons that the DS is doing so well.....I hand on heart dont think (my opinion remember) would by a 360 if it was even $99...... and once E3 comes closer with the promise of a revolution in gaming loomes then microsoft will have to pull the shit out there arses...or sink
JollyGreenGiant @ Dec 18th 2005 9:42PM
#42 If you don't care, why are you posting here? You have that much time to kill? Go ahead and feel sorry for me as I'm playing PGR3 on my 50" HDTV. Ya know what? Some of us don't like playing games on our little computer monitors attached to our stupid computer desks. My computer is for the internet and work, my 360 is for gaming. And if I was 12 I might get a DS, but since I'm not, I'll stick with my PSP. Thanks.
JollyGreenGiant @ Dec 18th 2005 9:42PM
#37 Funny, but I don't recall MS announcing a shortage. Show me where they did please. From everything I'v seen, the cries of shortages have come from the retailers and from blogs like this one.
RighteousDoek @ Dec 18th 2005 9:42PM
It's MADNESS....MADNESS I tell you. I've debated the ethics of getting a 360 and putting it up on eBay but I'm all buyer beware now. If people are stupid enough to run out and spend close to $1000 on this system, then it's our right...no, our duty...to exploit them.
EbaySeller @ Dec 18th 2005 9:42PM
My plan is to go hit a bunch of local stores (BestBuy, Walmart, Target, etc) in the morning and buy up a bunch of 360 premium consoles if there are any left. Then I will slap them up on eBay.
It is calling for a cold and rainy night in the Northeast tonight. It's going to suck to be waiting in line all night.
WTF @ Dec 18th 2005 9:42PM
I work at target and we are going to have 14 for launch - minus the 5 that the employees are setting aside for themselves. Don't tell me that we are not going to have a shortage on the first day. Weeks later, on the other hand, is a different story.
Loki @ Dec 18th 2005 9:42PM
Damn and I was so looking forward to being one of those retards that pays $1200 for a 360 off ebey......
Soothsayer @ Dec 18th 2005 9:42PM
#44 JollyGreenGiant: Have a read.
http://arstechnica.com/news.ars/post/20051101-5510.html
You're right in that Microsoft hasn't come out and said outright that there will be a shortage, but to quote the article:
"[S]igns from retailers indicated that the Xbox 360 console will be in short supply on its 11/22 launch date, and now that information has been semi-confirmed by Microsoft....
"Microsoft's CFO [is quoted] to the effect that the Xbox 360 won't face the same spike-then-slump phenomenon that plauged Sony's PS2 launch. The idea seems to be that would-be Xbox 360 buyers will be less unhappy with a steady but limited supply of consoles[.]"
Links to the quoting and other sources are in the article. So basically, Microsoft is deliberately planning to slow the supply stream to a trickle, not because of low supply, but in order to generate hype. Todd put it nicely: "They are using your disappointment that you couldn't get your Xbox 360 (even though you pre-ordered) as word of mouth marketing."
I find it funny that a google of "XBox 360 shortage" is saturated with claims of bogus. #1, "XBox 360 Conspiracy"; #3 is the article I quoted; #5, "Microsoft Plans Deliberate XBox Shortage (Slashdot)"; #6, "Xbox 360 shortage faked to spur demand? (Joystiq)"; #7, "No Xbox 360 shortage in Japan?"; #8, "Is the Xbox 360 shortage deliberate?"; #9, "Is There Really An Xbox 360 Shortage?"; #10, "Deliberate Microsoft Xbox 360 Shortage?" etc. etc.
However, if any of you still completely refuses to even consider the possibility that Microsoft is pulling something (it wouldn't be the first time), then you may head on over to Joystiq's new sister blog. A link is at the top-right corner of the site in a triangle shape; you may devoutly worship Microsoft there. Here, however, we will continue to call the bullshit.
Art Guy @ Dec 18th 2005 9:42PM
Soothsayer - I'm not sure how you come to that conclusion from the quote you provided. A more level minded person might gather that Microsoft's CFO means that there will be a steady but slow amount of systems to all locations, rather than having a hardware sales spike in the US and then nothing for a while becasue all the systems are being used for the European and Japanese launches (PSP). Taking this to mean a "fake" shortage was planned to create hype and there are warehouses filled with 360s waiting in the wings is completely speculative and without any basis in fact.