This past holiday season saw the release of the first of three next generation consoles: Microsoft’s Xbox 360.
Microsoft hopes the 360 will kick start the next revolution of gaming with its powerful graphical capabilities and in-depth online Live infrastructure. They want you to experience a new level of online gaming and community.
If you can find one, that is.
On par with all console launches, the 360 launch saw a shortage of systems. The shortage, however, was more extreme than most imagined.
The Internet rumor mill points the finger at Microsoft, claiming they are intentionally creating a shortage to create a fierce buzz surrounding the console, hoping it will boost future sales.
While this has been a common claim among gamers everywhere during most console releases, it’s hardly based on any fact. Creating false shortages may seem like a good strategy at first, but financially it doesn’t make any sense.
Buzz can be good, and may make some people take notice, but at $400 the 360 is hardly an impulse buy. Most people won’t put down $400 for something just because it has some surrounding buzz. The gaming community is generally composed of dedicated people who know what they want and often align themselves with a certain brand. They are aware of a system and its capabilities far before the general public is and are often unfazed by buzz.
The other gaming type, the casual gamer, may be affected by buzz more than the dedicated, but if that’s the case, why has a shortage of a product given them time to get over the buzz and move on?
Microsoft would also attract the ire of gamers by not allowing them to purchase their system immediately. And gamers are likely to pass over the system altogether if they have trouble getting it or get fed up with the company.
The bottom line is that Microsoft loses money with each 360 sold (hoping to make it back in software and peripheral sales like the original Xbox). It makes sense that they would want to sell as many units as they can. Consoles generally have a life of around four to six years, they aren’t flash-in-the-pan fads that benefit from buzz. It’s a long-term investment for each company that produces them.
Peter Moore, a Microsoft corporate vice president, addressed these rumors when he said, “I’ve seen all of the conspiracy theories. Somewhere in Roswell, N.M., we have a hangar where we’re stockpiling [360s], creating false shortages.” He retorted with a simple “no” and called the rumors “ridiculous.”
So if it’s not false shortages, then what is causing such an unprecedented shortage? The answer is Microsoft’s launch strategy.
Most console launches start in Japan, move to the United States and finally unveil in Europe. Each launch is generally separated by a few months. While some gamers don’t like seeing other regions of the world get the hot new system before them, it makes sense from a production angle.
Console manufacturers often want to get their product out as soon as possible to get a leg up on the competition. This means launching while production of the consoles is just starting to ramp up. This is the reason for minor shortages on most console launches. Staggering a region’s launch by a few months gives production time to ramp up a bit more.
However, with the 360, Microsoft decided to go with what Moore called an unprecedented launch scope. They released the 360 in all three regions almost at once (a total span of three weeks). While Moore claims this gives gamers a fair treatment all around the world, it is also the reason for the shortage.
To combat it, however, Microsoft is keeping the supply chain constantly refreshed. Most console launches have a general one- to two-month delay between launching and refreshing their supply chains. Microsoft plans to have shipments coming every week.
“We believe this is the better approach because it provides predictability to retailers and consumers around product availability,” Chris Liddell, Microsoft’s chief financial officer, said.
So what can you do to get your eager hands on a 360? Well, there are several tips I garnered from embarking on my own trek to find one (I was successful about a week after Christmas with minimal effort).
The first thing is to generally avoid the smaller boutiques like EB Games and Gamestop. These franchises took preorders and likely have a long list of orders still to be fulfilled. So most of their shipments coming in go right to people that have already prepaid for it. You’ll have the best luck with major retailers such as Wal-Mart, Target and Best Buy. These companies didn’t take preorders and dish out the 360s on a first come, first served basis. They also get regular shipments that are bigger than smaller retailers.
Scope out these places and ask the employees when shipments usually come in and what time they are put out. Then just casually stroll in around that time and see if you can pick one up.
Also be sure to get information from several employees. Most either don’t really know or just don’t care. The first Best Buy I went to told me they weren’t able to say over the phone if they were in stock, but suggested I come in anyway. The first worker I asked said they were sold out. While waiting for a friend to find something else I asked another employee who said “yeah we got some in the back.” Then he went back and got me one. So it’s wise to take several avenues of approach at the same venue just to make sure.
As time goes on the demand will wane and the shipments will be bigger. Until then, it’s all up to good timing and a lot of luck.