Are the Xbox 360 shortages a marketing ploy? Some say yes. A conspiratorial view to be sure, but one that is sure to generate a bit of free publicity and extend the release hype for awhile. Even now, this blog is discussing the release of a Microsoft product and contributing to the hype. There are stories out there about Target and Best Buy retailers being told by Microsoft to prepare for this shortage long before they received their shipments. The visual impact of a Sold Out sign overtop of the Xbox 360 gives it an exclusive feel, a sure way to heat up the market. If the shortages are a fabrication to sell more units, the next question is how long will the shortages last? Can there be any benefit to continuing the shortages past Christmas? How many units will they sell after Christmas? A shortage in late November, only to load store shelves with the hardware early the very next month should produce optimal impact for delivering sales. But to maintain the shortages beyond the big spending Christmas season and Microsoft runs the risk of losing its Christmas season sales advantage of PS3. The other factor in fabricated shortages might be the cost of unit production which is a money losing proposition before Christmas but will drop with every passing month. If Microsoft thinks they can create a great hype around their Xbox 360 during the holidays and then sell like bandits in January, I personally think they’re suffering unmentionable levels of big business hubris. If these rumors are true, benefit should be maximized if Dec 25th could arrive with a few units sitting on shelves.
If it’s a ploy, it’s clever but dangerous. How many pre-orders that weren’t filled because of the shortages were simply cancelled? Part of the marketing strategy was to release before Christmas which they hoped would give them a jump on the PS3 due to be released sometime in spring of ’06. If this is a ploy and Microsoft waits ‘til Jan, that’s Q1 ’06 for the real numbers of units to hit store shelves and at the earliest you see PS3 trickle into the market in Q2 ’06. That’s cutting it close Microsoft!
The gains of a pre-Christmas release will be lost because for gamers on the bubble between PS3 and 360, waiting another month or two (after Christmas) isn’t likely to be a problem. How many parents are going to give their kids that Xbox 360 IOU for Christmas? It’s hard to say. But there are sure to be those parents who aren’t going buy an Xbox 360 if they can’t get it by mid December, they’ll just get their kid that BMX instead.