Microsoft executives have predicted that shortages of the first next gen console by Microsoft will outstrip supply. It was initially announced they’d make 2 million units to be shipped worldwide. Estimates by industry analysts like P.J. McNealy of American Technology Research () have dropped expectations to about 1.8 million still others say there could be as few as 1.4 million going out this Christmas season. Since these number are spread across the world it’s possible that as few as 300,000 units could find their way across North America.
We’ve seen these shortages before, when Nintendo DS launched last Christmas and who can forget the huge shortages of PS2 when it launched Q4 2000. The excuses given are problems with parts suppliers getting product to assembly. Since these parts (notably the central processor and graphics processors) are on the front edge of the technology they’re quite expensive to make. It’s been estimated that Microsoft is subsidizing the Xbox 360 to the tune of $76 dollars per unit. That’s a loss they’re willing to take for a chance at making Xbox 360 the #1 (or even #2) game console of the coming generation of game machines.
The tangible evidence we have that these shortages are for real is the price gouging for pre-orders. Sure you can stand in line at Wall-Mart to get one at retail when it first comes out. But some retailers aren’t selling them this way. GameStop for instance is only selling Xbox 360 as part of pricey bundles that include extra hardware but the cheapest you’re going to leave GameStop with a 360 for is $700. Even more overt price gouging has already started on eBay where on Oct. 19th it was reported that an Xbox 360 pre-order was sold for $1500. Here is a pre-order currently at $622 for a machine that will retail for almost half that price.
Yes, it’s the true spirit of Christmas on display at eBay.