Microsoft's marketers frustrated gamers. Why?

by Vladimir Cole { Dec 3rd 2005 at 11:29AM }

Microsoft marketer John Porcaro responds vigorously to blogger "Shaded" who wrote that he believed it "ignorant or insincere" for Microsoft to continue to promote the Xbox 360 even as launch quantities were known to be very limited. He then made a request:

"My request is simple: Take off the front page advertisements, turn off the mass marketing emails and the TV advertisements until demand is more in line with supply. It is a matter of humility for Microsoft and respect for their customers."

We've heard forms of this request from readers here on Joystiq as well. Porcaro puts together a response where he lays out the marketing challenges in detail that should help readers increase their understanding of Microsoft's dilemma. It's a must-read for haters and partisans alike.

Several of his points support our oft-voiced theory that the Xbox 360 shortage is healthy and even desirable for marketing purposes, unfortunate as that may be for the early adopter crowd. Porcaro writes, "launching with too few units" can result in "too much demand." Exactly our point when we wrote about Xbox 360 shortages being created for marketing purposes. A product launch shortage is a demand driver in the short run, and—hardcore fanboys be damned—a necessary evil in generating demand amongst the broader market that Microsoft must capture in order to compete against the PlayStation 3 and Nintendo Revolution.

Reader Comments (Page 1 of 1)

splash @ Dec 18th 2005 9:06PM

I'm really against worldwide launches now. If you can't meet demand in one area, there's no sense in going into another area and disappointing millions there too.

Kouheikun @ Dec 18th 2005 9:06PM

"A product launch shortage is ... a necessary evil in generating demand amongst the broader market that Microsoft must capture in order to compete against the PlayStation 3 and Nintendo Revolution."

I'd totally have to disagree on that one. The casual gamers I know of don't want to fight with hardcore ones over a product that's in short supply. They'd be happy with the PS3 if it was easier for them to pick up. Of course, I'm no marketing major. Just my two cents.

DLS @ Dec 18th 2005 9:06PM

Shaded

Now that U have 1 xbox the shortage its not a big deal.

Hypocrite

Spence @ Dec 18th 2005 9:06PM

Not enough games, not meeting promises as far as reserves are concerned and generally the whole scratching overheating crashing situation means Xbox have frustrated a small percentage of gamers permanently.

Of course they'll have lots of happy bunnies willing to pay 4x the price on eBay.

Kevin Parrott @ Dec 18th 2005 9:06PM

"You guys have to understand our dilemna!" I get a kick out of every MS suit repeating this mantra, right next to their gamertag. Knowing all you MS mouthpieces have yours in hand (and probably got them for free) doesn't generate a whole lot of sympathy from those who still don't have the Xbox 360 systems they prepaid for months ago. It's almost like you're rubbing it in their faces. Something to consider, before you go begging for sympathy and understanding.

slow jilliams @ Dec 18th 2005 9:06PM

my theory now is that the limited availability is a result of a need to beta test the new xbox live features. stress test the new system on limited users and fold in more with each new shipment. the stigma of news reports of the whole network going down would be more damaging then the press coverage of shortages. from a laymens standpoint i think.

clement @ Dec 18th 2005 9:06PM

So the new xbox was fianlly released here in europe aswell and so far its still on the shelfs here and there. I guess most people already have a PC and will not let that new disguised one fool them.

Art Guy @ Dec 18th 2005 9:06PM

First of all, isn't this just par for the course?

Secondly... It barely even been a week since launch!!!

The US PS2 launch was months after the Japanese launch and they had supply problems for months. And Sony still had the hype machine running full blast. If you don't think there will be shortages IN THE FIRST WEEKS of the PS3 and Revolution you are deluding yourself.

All the "the sky is falling" posts are getting old.

Arch @ Dec 18th 2005 9:06PM

I have said it before and I'll say it again, if you want to win the entertainment war you better have systems to sell. Very soon the fan base will decrease because of simple frustration. The holiday season is the time to increase gamer base. If you miss it, there is no going back to picking new gamers. As a long time gamer, I am near the point of no return myself. If the 360's do not show soon, I may just keep my current gen system and play the upcoming titles. I will wait for the future price break and let MS take the additional loss.

Watership @ Dec 18th 2005 9:06PM

I think that's it really funny that people who preordered are blaming Microsoft. Microsoft didn't tell EBgames how many units they'd get. They didn't give numbers 4 months before. EBGames just TOOK the preorders. As much as they could. This is standard stuff with these guys. You have to preorder with cash, and they won't turn away cash.

I asked the local EBgames dudes if I'll be in the first shipment back in September, and they basically said this. "Absolutely". Then added later in November "Microsoft is screwing you".

D @ Dec 18th 2005 9:06PM

::sigh::

marketing strategy or not, aren't there usually shortages of consoles at launch? Why are people treating this any different? Doesn't anyone remember how hard it was to get a PS2? Or did that slip everyone's mind after their units crapped out?

gamedoctor @ Dec 18th 2005 9:06PM

After reading the post by the MS drone, its clear the shortage is part of their overall marketing campaign. I dont think they are holding back any units at all. Thats not what I'm saying. I'm saying I think its clear from reading this guy and others like him at MS that basically everything is going according to plan and that while they would like to make more units and sell more units initially, the long term goals are more important. The simple excuse this guy gives is that, in order to please you in the long term, we have to fuck you in the short term. No where does he say that its impossible for them to meet demand, but rather, it makes sense to do what they are doing and how they are doing it and to trust them that it will lead to more and better games etc. This means that they have this planned and are hopeful it will lead to overall stronger sales in the life of the console. I dont really have a problem with them keeping a tight control on supply in order to "manage" demand. I think they can gain more by managing demand and keeping it high, then they will lose by pissing off the hardcore. Afterall, they know the hardcore xbox fans will buy it as soon as they can no matter what MS does. They dont have much to lose really.

Vince @ Dec 18th 2005 9:06PM

Watching the Tulsa vs UCF game right now. Sponsored by Xbox 360. I think they sold me on buying one. Ill just go out right now and get one....Oh wait...nevermind.

Billy Dee Williams @ Dec 18th 2005 9:06PM

the way to win the entertainment war is to ignore message boards, newsgroups, and blogs from reactionary fanboys.

Billy Dee Williams @ Dec 18th 2005 9:06PM

the way to win the entertainment war is to ignore message boards, newsgroups, and blogs from reactionary fanboys.

Billy Dee Williams @ Dec 18th 2005 9:06PM

of course there are console shortages at launch, just before Christmas. unless, of course, it's a Jaguar.
heh.. Jaguar- Do The Math...

Billy Dee Williams @ Dec 18th 2005 9:06PM

of course there are console shortages at launch, just before Christmas. unless, of course, it's a Jaguar.
heh.. Jaguar- Do The Math...

epobirs @ Dec 18th 2005 9:06PM

Do people never learn? How is this different from the great majority of console launches and other items like new iPod models and even some Macs? It is the job of the marketer to create a perception of high desirability beyond available supply. This serves to keep the product's profile high after the initial demand levels off to be in line with supply. Two years form now the marketer wants people to see the units in stores and remember the furor over short supplies and thus have the consumer feel pleased to now be able to get one for himself. OTOH, having so much product that the stores at any given time has excess inventory sends a very negative message.

There was going to be a shortage regardless of whether the marketers hyped it or not. Once full scale production starts it is very costly to have the inventory sitting in warehouses. It needs to get out into stores and consumers' homes. Likewise, it is nearly impossible to have the manufacturing capacity for the initial very high demand period without becoming overinvested in that capacity and having production line go idle when the demand settles to a lower level. You have to target production capacity for what will be needed in the long term.

the_game_master @ Dec 18th 2005 9:06PM

Funny you folks compare this to a PS2 launch when you should really compare this to the Dreamcast launch, after all Microsoft has hired one of Sega of America's execs that headed the Dreamcast launch. I don't recall their being Dreamcast outages after that faithful 9/9/99 lauch date. To make things worse is that Xbox 360s are made here at home which ponders the mind of many gamer as to why they are so many stock shortages. But I can see right through Mircorosft's poor strategy, they could have easily made as many Xbox 360s for launch as they did with the original Xbox, Xbox's fanbase is nowhere near the size of Sony's. Microsoft just doesn't want there to be a scene shown in retail chains having plenty of Xbox 360s laying on the shelf like they are in Japan. So to prevent this Microsoft's strategy is lets make less consoles to sell and make it seem that if we're all out of them. Microsoft will be just alienating their core gamers who want a 360 by doing this, gamers who were probably there to get the original Xbox. A sad move, which can prove fatal if Sony and Nintendo sees this and take advantage of this come next year and not attempt Microsoft's mistake.

julio @ Dec 18th 2005 9:06PM

the_game_master:

"To make things worse is that Xbox 360s are made here at home"

Sorry to burst your bubble, but on the back of mine it says plainly "Made in China".

Brian @ Dec 18th 2005 9:06PM

For the love of Pete... this is a videogame console we are talking about here.

I remember when the "Tickle Me Elmo" doll was next to impossible to come by... but I don't seem to recall anyone lobbying PBS to stop airing Sesame Street until every child in America, that wanted one, had an Elmo doll of their own.

Videogames are a passionate hobby to many of us... and I can empathize with frustration in being unable to purchase a system if you want one. But just try and put this into perspective for a moment.

Flame me: Now.

Embassy @ Dec 18th 2005 9:06PM

D basically ghit this on the head...this was an inevitability...it was going to happen..it will happend with the 64..it happend with the ps2..it happned with the 360..and it WILL happen with the ps3 and might happen even for the Rev.but this is M$ we're talkin about..so of course they're gonna get more heat since everyone hates M$ so dam much...shortages are going to happen..defect are also going to happen...im sure as avid gamers u all know this..but your haterd of M$ is blinding u to single them out...

the_game_master @ Dec 18th 2005 9:06PM

#18
Hm, I didn't know Microsoft was outsourcing there Xbox consoles out to Asia to be made, so much for its reputation of being a genuine American system. I guess that moniker will only be owned by Atari then.

Galls @ Dec 18th 2005 9:06PM

#22

If the 360 was made here it would cost $700 to buy the core do to how much our workers demand to be paid.

And something tells me that while you are all made in america gun ho! You wouldnt buy a $700 360.

the_game_master @ Dec 18th 2005 9:06PM

#23
"And something tells me that while you are all made in america gun ho! You wouldnt buy a $700 360."

Now how did you read that from what I wrote? I hate Xbox, and I find it ironic that the console is made over there in Eastern Asia and it gets absolutely ignored by that region.

Ring on the PlayStation 3 come Spring '06!

Kuroshi @ Dec 18th 2005 9:06PM

The supply problems are not marketing. It's just production capacity. You can only produce so many machines. MS would like to sell as many machines as possible, as quickly as possible. Reserves are not done by MS they are done by your local store. It is thier fault that they pre ordered more than thier allotment. Machines will be in stores before christmas and most people will be able to purchase it. Shortages are not new. Electronics, toys, etc, and unlike gas they don't raise the price. There is no conspiracy, factories just have a certian capacity. Just because you've sold all you have on hand, you don't just stop and go home. You keep pushing because you know you will always get more.

JJL @ Dec 18th 2005 9:06PM

I'm tired of all this MS crap. I'm officially waiting for the PS3. They can take their box and shove it. oops I forgot... they're out of stock

K @ Dec 18th 2005 9:06PM

I love the PS3 fanboys posting that the PS3 will be out in Spring. Spring in Japan maybe. Maybe Christmas US next year. Don't get me wrong I hope the PS3 rocks with a new fantavision II. I mean it was so good before and maybe they will bundle a HDD like they did on PS2, oh wait they didn't do that and neglected everyone who was suckered in buying one later. Well at least they provided Toy Story graphics in PS2 as promised or maybe not. You know that even though I am talking a lot of trash about Sony I will say that I have high hopes it does delivers 50% on the hype because I will buy one then but don't hold your breath for a spring launch PS3 fanboys. As for the 360 shortage.. its Christmas, duh..and they like every corporation that loves the hype that out lives the shortage.

Chibi Maru @ Dec 18th 2005 9:06PM

That guy holding the Xbox in the picture realy looks like an annoying a$$hole.

Embassy @ Dec 18th 2005 9:06PM

lol@ people thinking the PS3 launch will be any different...actually it'll prolly be worse...

Mark in Austin @ Dec 18th 2005 9:06PM

Paris Hilton got one. For free.

:P

petecchia @ Dec 18th 2005 9:06PM

This "simultaneous" global launch was a complete failure, a few days delay and not enough consoles.

I will never pre-order anything unless I get a discount or something extra thrown in for free, period. I am the customer and I will buy how I want, the day a company tells me how and where to spend my hard earned money will be a dark and cold day indeed.

If the public plays ball with the whole "You must pre-order if you want it and BTW pay full retail" this is going to happen every time, including hardware shortages before a holiday to add spending frenzy.

My TV (like the majority in the UK) does not do progressive scan so that's another reason not to hurry.

Just like my first original Xbox, I will end up waiting a couple of months and buy it s/h for less and with one or two games with it.

It's not like we don't have enough games/consoles/handhelds/phones/PCs to play with already, no?

Arch @ Dec 18th 2005 9:06PM

My whole problem with this launch is exactly what many people have stated. "Every launch goes this way." No shit! So you are telling me a multi-billion dollar company did not know this would happen. MS elected to have this occur. It is as simple as that! Produce more or launch later... Very simple! Make more people happy = better PR, better launch selections... Should I go on?

nick @ Dec 18th 2005 9:06PM

I don't know how this can be compared to the launch of the iPod. I've owned 5 iPods now, and have purchased all either launch day or the day after the launch, simply by walking into a retailer, hours after a store opened, and picked one up. I even ordered one online directly from Apple, with week of the launch and experienced no difficulty.

By contrast, the 360 has been far more exlusive. It was only available on launch day (November 22nd) and sold out before any of the stores opened. Does that count as being on the shelf?? I visited 9 stores that day, which for me started at 4am, and unless you pre-ordered or camped out the night before, you had no opportunity to purchase a console. All stores in my area have been sold out since launch day. It's now 12 days later and it has not been restocked. My local Best Buy says they'll restock on the 18th-- 27 days later!!

For the record, I live in the US and am talking about Northern California.

I have never experienced anything like this before, and I've purchased several consoles now during their launches.

K @ Dec 18th 2005 9:06PM

I guess its a really popular console this year. The Ipod is a great piece of technology but you can't compare it to the 360 from a production perspectve either. Just think there wasn't enough PSPs available when it launched either and I don't think demand was even close to the 360. Could of Microsoft pushed out and have more on the shelf by stockpiling inventory and waiting until after Christmas, probably. But if they waited they would have lost a big opportunity for Christmas and I tell you what, I am glad they didn't. This launch has put game consoles at in the limelight. Last year consoles ranked number 9 out of the top ten holiday gifts this year its #2. If the 360 didn't launch do you think it would be so high. I feel the pain for anyone who can't get one but you will in some time and it will be sooner than if they waited to launch this Spring.

jbelkin @ Dec 18th 2005 9:06PM

Yes, in certain cases - you want to create the perception and reality of a shortage to generate frenzy and free PR. The problem is after that, you have to figure out how to tell people that they are in stock right.

As for video game console - you can ALWAYS always sell OUT - as long as you have some reasonable games, there are enough hardcore gamers who will buy anything - thousands of people bought the Atari Jaguar system (smaller video game market then) BUT there is no time like the holiday season to sell something at a minimum cost of $500 dollars (including tax & at least 1 game). After the holiday season, it becomes a major purchase instead of a must-have purchase - same item - same cost - completely different mindset.

I am beginning to suspect that MS is really holding back to create the hype - after all, if the rumors of 300,000 to Europe with a population of 300 MILLION people - even though they're not all gamers, that's like putting 3 cups of water in a lake - WTF?

IBM clearly has trouble getting chips out (see Apple story) so they managed to jerry-rig the plant to crank out a million before the holidays so MS could be first ... Now, they're probably busy replacing all the equipment ... Maybe MS is content with creating hype and waiting for the next round when Halo3 comes out to really sell them like crazy. They just wanted to be first but lot of good it did Dreamcast ...

If they really wanted to replenish, it's been TWO WEEKS - you would at least video of shipments arriving even if they all disappeared into the hands of fanboy ebayers ... but nothing except a blog by their employees ... basically MS does't care or understand consumers ... it doesn't look good ... at the rate they're going, they'll have a million consoles by breaking every rule (and maybe the plant) and losing $300 per unit - that only puts them about 90 million behind PS2.

Not to mention the $4 BILLION they've already spend ...

Christopher Coulter @ Dec 18th 2005 9:06PM

In doing some actual on-the-beat documented reporting slash mystery shopping for a biggie journalist...here be a quick summary...

Best Buy - Don't know, won't know, we have NO 360s. Go away. Every staff person is sick and tired of said question and bites your head off if you even dare ask. (Very rude). One rare nice guy, said maybe one shipment before Christmas, but he said worthless to check back as they are all accounted for. Annonyance level at Best Buy is pretty high on said issue.

Gamestop - Nothing until Jan, "recall, recall", One major Regional Mgr. calling it the worst launch in his retail career. Some big Gamestop Mgrs. meeting on how to handle the crisis. The outcome? Working with Sony to avoid repeat, betting bigger on PS3. Some Marketing shift to Sony. From the staff: our managers told us recall. Me: You sure? Them: Yes, honest. Me: You sure sure sure? Them: Yes, yes, yes. Me: I don't believe that. Them: That's what we were told.

Costco - No new orders, our system says the item is not there. We expect one shipment maybe, don't know how many. Please quit asking. Lots of other stuff in our store.

EB - Don't know, told weekly shipments, keep checking back. We haven't heard anything. Don't know about a recall. Don't know anything basically.

Toys R Us - Recall. Our Managers told us recall, MFST had to fix something. Nothing new, "check back after holidays".

Circuit City - What, who, where? We don't have them, don't know, not in our system, won't know. Don't much care. Stop bothering us.

Walmart - Our computer system says it's gone, not there. We don't know. Check back after holidays. "Not in our computer system" was repeated at least 5 times, by differing branches.

Sams Club - Huh? What? Check with the regular stores. We don't do that here.

Fry's - We don't know. No, no no, no, no. No, I will not check on the computer. I know already, the answer is NO! You need that repeated? And even if so, by some Act of God, only in a super-bundle something. Fry's almost worse than Best Buy per staff annoyance at said question. Ask the 360 question with extreme caution.

Target - Recall, recall. Our management TOLD us there was a recall, some conference call. MFST has had to fix something. We expect maybe one or two minor shipments, but nothing major until after New Year.

PS - Least some good news...

Guillermo Del Toro, director of "Hellboy", has been tapped to direct Halo, word on street at least. People will get their 360s just in time for the opening. ;)

the_game_master @ Dec 18th 2005 9:06PM

An Xbox 360 recall? Ha probably those older overheating processor chips they installed in the first batch. You want see a recall with PS3 come Spring.

ghost @ Dec 18th 2005 9:06PM

I bought a PSP the day after launch from Circuit City and my friend bought one a week later.

This is nothing like the PSP launch. I don't recall the PSP being scarce at all-- at least in my area.

Something else is going on. There were too few consoles at launch, and replenishments have yet to arrive some 2 weeks later.

The ONLY person I know with a console, is a friend who attended Zero Hour. And he is not experiencing any problems with overheating or scratched discs. Even the employees at Best Buy have questioned him, "How did you get one?"

I'm really frustrated by the whole situation. I've always been an early adopter, and that I can't get my hands on one, is making me reconsider whether or not I want one at all. If I have to wait until next year, I might as well just use the money towards a PS3 or Revolution.

Zet @ Dec 18th 2005 9:06PM

I love to way you have to bring in PS3 will have the same problem on launching.. Shortage and hardware. Wow, do you have insider info or something or that's just mere wild guess or your smokescreen attempt. PS3 will have at least 6-8 monthes to pumped out as many as consoles as they can and unlike MS who ignored analyst warning that rush lauched consoles problem. Looking at PSP launched, it seem to me that Sony had learnt from their PS2 launch mistake and PSPs were very well in-stocked(Sell same amount with XBOX 360) Stockwise they were doing pretty good, but hardwarewise, they failed on the Deal-pixel problem. Until PS3 come out with overheating problem or whatever problem, We all have no idea what problem is gonna have. Using PS3 will have the same problem like XBOX 360 as argument will only proof that you're FANBOY. Sony and Nintendo are closing watching XBOX 360 rushed launch now. Do you think the whole corporate will be stupid enough to make the same mistake? ....... We dont know, Time will tell

Shaded @ Dec 18th 2005 9:06PM

Special thanks to Vladmir Cole for the traffic and the objective reporting. It is quote an honor to be mentioned in Joystiq.

Comments to other comments:

Yes I realize I am a hypocrite for buying an Xbox 360 before I said I would - but the rest of what I said was still true. I did say "I'm a big fat liar" in my blog but I make no apologies for that.

I also liked the fact that Porcaro responded to me personally. To me it was not just a bunch of double speak.

And ah... if Paris Hilton wanted my Xbox 360, I'd give it to her in a heartbeat. Anyone that cares enough to listen knows she has a brain but thats already covered in my blog... somewhere... I think.

Duniyadnd @ Dec 18th 2005 9:06PM

What ticked me off the most was that Microsoft had the audacity to have a launch party and give out free consoles to people such as Paris Hilton, who won't even know how to turn on the console, or even use it, while gamers had to sit out the entire night in order to "maybe" get one.