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Author Topic: 360 Launch Blows...  (Read 1689 times)
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HankRaptor
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« on: November 18, 2005, 02:20:51 PM »

I would like to have a 360 on launch day... I preodered 3-4 months ago.. thinking that was MORE that enough time.. just to avoid this crap I will preorder the PS3 the first day you can.

If I dont get a 360 this year... it wont be THAT big of a deal... not the end of the world, as I am REALLY backlogged on gaming.. there is CIV 4 to pickup, GUN to play... F.E.A.R. GTA-PSP... (you get the idea)

But this launch is UNREAL

stores getting 6-18 UNITS!?!?!?!?!? Are they actually trying to SELL THESE DAMN THINGS? As far as Im concerned not having product to sell is horrendous...

A retail product with a big marketing push, with no actual product.... kinda nutty...
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« Reply #1 on: November 18, 2005, 02:22:05 PM »

Actually, it looks like MS has some sort of deal going with Best Buy
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« Reply #2 on: November 18, 2005, 02:34:03 PM »

Quote from: "HankRaptor"
I would like to have a 360 on launch day... I preodered 3-4 months ago.. thinking that was MORE that enough time.. just to avoid this crap I will preorder the PS3 the first day you can.

If I dont get a 360 this year... it wont be THAT big of a deal... not the end of the world, as I am REALLY backlogged on gaming.. there is CIV 4 to pickup, GUN to play... F.E.A.R. GTA-PSP... (you get the idea)

But this launch is UNREAL

stores getting 6-18 UNITS!?!?!?!?!? Are they actually trying to SELL THESE DAMN THINGS? As far as Im concerned not having product to sell is horrendous...

A retail product with a big marketing push, with no actual product.... kinda nutty...


Yeah, but massive shortages and sellouts everywhere = lots of press and hype. It worked for the PS2 and MS is probabily banking on it working for the Xbox 360.

The PSP has plenty of product available and it was considered a failure cause lots of untis were available and people thought nobody wanted one cause it was so easy to find.
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HankRaptor
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« Reply #3 on: November 18, 2005, 02:44:31 PM »

Quote
Yeah, but massive shortages and sellouts everywhere = lots of press and hype. It worked for the PS2 and MS is probabily banking on it working for the Xbox 360.

The PSP has plenty of product available and it was considered a failure cause lots of untis were available and people thought nobody wanted one cause it was so easy to find.


Hetz, this is more evidence of the SICK and TWISTED world we live in.... a failure because they had product to sell LOL! Psp has sold over 10 million now I think...
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greeneggsnham
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« Reply #4 on: November 18, 2005, 03:07:17 PM »

Lean manufacturing strikes again! slywink

Despite the (apparent) lack of units in retail, the launch seems to be going ok for MS. Good hardware, with great reviews, very positive reviews for the launch titles, no other next gen competition on the radar. As long as MS can continue to trickle units into retail (which given the current situtuation, are almost guaranteed to sell through) they will -OWN- this holiday sales season.

The only thing I could see hurting MS would be Sony dropping the PS2 to $100. And given the arrogance displayed at Sony right now, I don't see that happening. Plus, even if the PS2 did drop, I'm not sure it would affect sales that much, as the 360 is really geared more toward they high end market; they probably already have a PS2 if they want one. The buzz might would cause more backlash than lost sales.

For the consumer, maybe not so good. For the manufacturer, is teh win!
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« Reply #5 on: November 18, 2005, 03:42:07 PM »

If they dropped the price of the PS2 I'd get one.  Not that Microsoft would be losing a 360 sale because of it (can't remotely afford it), but I might finally break down and get a PS2 at $100.  Guitar Hero is calling me.
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The Grue
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« Reply #6 on: November 18, 2005, 04:36:26 PM »

Quote from: "CrayolaSmoker"
If they dropped the price of the PS2 I'd get one.  Not that Microsoft would be losing a 360 sale because of it (can't remotely afford it), but I might finally break down and get a PS2 at $100.  Guitar Hero is calling me.


+1
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Kevin Grey
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« Reply #7 on: November 18, 2005, 04:57:02 PM »

Quote from: "greeneggsnham"
For the consumer, maybe not so good. For the manufacturer, is teh win!


I disagree on the win for MS.  Demand is good but inablilty to even meet preorders hurts them.  Since the round of phonecalls from Gamestop went out last night, I've read numerous reports of people planning on cancelling their preorders.  And for parents getting the 360 for their children watiting until after Christmas just won't be an option.

Demand is going to go way down after Christmas and probably won't pick up until March or so once the next wave of "big" software titles.  If MS wants to get a substantial lead on Sony they need as many 360s in consumers' hands before the PS3 launches and inability to meet even preorder demand during the Christmas season just isn't doing that.
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HankRaptor
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« Reply #8 on: November 18, 2005, 07:10:32 PM »

I agree with you Kevin, maybe they shouldnt have planned a world wide launch.
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« Reply #9 on: November 18, 2005, 08:42:57 PM »

Here's somethning to consider ... Microsoft looses money on every 360 they sell. The hardware costs exceed the selling price by a pretty good margin, I would think.

It is to their benefit to spread that loss over a couple of financial quarters, while amping up the long-term publicity via reports on demand and shortages.

It's not a big conspiracy, I don't think ... it's just not necessarily to Microsoft's benefit to put a 360 n the hands of every single person that might want one this Christmas.
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« Reply #10 on: November 18, 2005, 09:01:04 PM »

Actually, the games are the profit margin. The more systems means larger install base. The development of the system is their current cost-tank... getting the products out there is their #1 concern.

That being said, MS isn't too worried about the cost right now... they want to dominate the market, and to do that they've got to get the market whipped into a fever, and then let people gorge on their product as it becomes "available".

I don't condone it, I don't support it, hell I don't even like it, but it is what it is. They've got to play the game. Everyone has including Nintendo and Sony.
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« Reply #11 on: November 18, 2005, 09:17:35 PM »

There's no 'win' for Microsoft at all.  They're still losing money on every hardware sale, just like they did with the original XBox.  It's all about the games, folks -- and a smaller installed base just doesn't help MS.

MS doesn't need to engineer a shortage either.  The 360 is the first next gen console in the market by months.  This fervor isn't engineered, it's natural.
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Calvin
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« Reply #12 on: November 18, 2005, 09:18:37 PM »

Quote from: "Purge"
Actually, the games are the profit margin. The more systems means larger install base. The development of the system is their current cost-tank... getting the products out there is their #1 concern.

That being said, MS isn't too worried about the cost right now... they want to dominate the market, and to do that they've got to get the market whipped into a fever, and then let people gorge on their product as it becomes "available".

I don't condone it, I don't support it, hell I don't even like it, but it is what it is. They've got to play the game. Everyone has including Nintendo and Sony.


I believe this is correct. The plan is to absorb what ever loss you can afford (and eventually lessen that loss as manufacturing and parts becomes cheaper)and make your profit margin off of games as your installed base gets bigger. Hopefully that model will work for them smile
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Hrothgar
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« Reply #13 on: November 18, 2005, 09:46:36 PM »

From what I've read and what some market analysts have told me, Microsoft appears to be doing things differently, not wrong.  Instead of big initial shipments, they plan to have a smaller, sustainable stream of shipments.  

This gives the a few things.  First from a supply management perspective, they can route more shipments to the areas with the greatest demand.  That means less unsold units sitting on shelves somewhere.  The can also route core units away from areas where they aren't selling to areas they are since its the more limited SKU.

Second, the steady stream keeps both the product and the demand highly visible.  This lets sales people give customers hope of finding a unit before Christmas.  This also lets web communities shout alerts to each other (e.g. OMG, they just got 10 360's at the TRU @ Westchase).  I remember from the PS2 launch, several successful sites sprung up around the idea of keeping track of where units were available and sending email alerts to people when inventory showed up on the web.  

As a side note, I had a friend who wasn't particularly interested in the PS2 at launch.  He knew how hard they were to find.  So when he saw one at a store, he snatched it up.  Of course, he told himself he was going to sell it, but he broke down and opened it and played it.  It worked out in the end.  It served him well during his one year tour in Korea.

Finally, it gives Microsoft leverage and opportunities.  Stores with high attach rates and accessory sales might well get units before others.  Then as each shipment sells out, Microsoft can issue another press release and give us the updated sales totals.

Partially it's a good plan, partially it reflects how much better inventory management is now compared to five years ago, and partially, it shows how flexible shippers have become in that time span.  I'm sure their competitors will take note of their successes and failures.
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« Reply #14 on: November 18, 2005, 10:26:53 PM »

Quote
This lets sales people give customers hope of finding a unit before Christmas.


Maybe someone from MS should have sent a note to Gamespot before they sent out their "you probably won't get one before Christmas" calls.  Local news has also been running stories this past week about the impossibility of finding one at the store.  So much for "hope".  

Quote
Partially it's a good plan, partially it reflects how much better inventory management is now compared to five years ago, and partially, it shows how flexible shippers have become in that time span. I'm sure their competitors will take note of their successes and failures.


Again, I don't think this is a "manufactured" shortage at all.  Good inventory management means being able to fulfill all of your preorders even if you don't want too many additional systems on the shelves in order to create an impression of greater demand.  Not even being able to provide systems for customers who preordered during the summer means they're experiencing unforseen problems in the manufacturing process.

If MS really wants to create hope then they should issue press releases stating something to the effect of "while demand is so great that all units will likely sell out launch day, Microsoft is committed to regular shipments throughout the holiday sesaon."  Instead you have EB and Gamestop admitting they don't know if a second shipment will even arrive before Christmas.  

Loved ones are going to decide soon how they are going to allocate their Chrismas funds.  If they have the impression that a 360 will be impossible to find then they are likely to shift that over to a Video iPod or whatever and if more 360 product magically appears in a few weeks it may already be too late.  

I don't think these shortages are any sort of "master plan" from MS but are instead fallout from overstimating their ability to perform an unprecedented world wide launch.
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Hrothgar
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« Reply #15 on: November 19, 2005, 05:21:57 AM »

If you preordered during the summer, whoever was taking the order was doing so before they knew how many they were going to receive in their allocation.  Of course that's risky.  On the one hand, you prove to Microsoft that you have demand.  On the other, Microsoft is under no obligation to fulfill that demand in the first shipment.

Obviously, they can't do dynamic shipment allocation until the first sales data cames in.  They'll probably notify stores of their next shipments the night after launch or the following day.  So on say Black Friday Walmart will know when their next shipment will come in.  If they can tell their customers, their next shipment should be on shelves next Tuesday (or whenever), that's hope.

But, if you're in the shoes of Gamestop manager, all you know is that until Microsoft gives you the next allocation numbers, you only have one confirmed shipment.  Sure, Microsoft might be planning weekly shipments, but until you get that confirmation that units are tagged for your chain and your store, it's only fair to tell customers that you don't have confirmed units coming in.  Sure, everyone is disappointed, but you get to blame Microsoft.  Then, whenever you get your allocation information, you get to make the "Hey, you're in luck" calls.

I'm sure the Microsoft press release touting the sell out of the initial shipment will also mention their commitment to regular shipments throughout the holiday season.  So keep checking in with your favorite store.  They'll probably also mention the total number of units they plan to ship this year and by the end of next year.

Keep in mind that Microsoft has commitments to all their retail partners.  The initial shipment has to be spread a little extra thin since they don't want to rebuff any partner they need down the road.  After that, they only notify partners as shipments come available.  

And Microsoft does have those commitments world wide.   The slightly staggered launch doesn't significantly help with that.  Though I'd guess the greater than expected shortages are more due to manufacturing hiccups than shipment problems.  For some reason (or many reasons), it always takes longer than expected to start up a production line and longer than expected to reach production rate goals.

I'm not saying their plan is perfect or even that it will work well.  It's ambitious and could fail.  However, if it works, it's bound to be better than what we usually see at console launches.
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« Reply #16 on: November 19, 2005, 05:59:20 AM »

Quote from: "Hrothgar"
If you preordered during the summer, whoever was taking the order was doing so before they knew how many they were going to receive in their allocation.  Of course that's risky.  On the one hand, you prove to Microsoft that you have demand.  On the other, Microsoft is under no obligation to fulfill that demand in the first shipment.


That's not true at all.  I know for a fact that both EB and GameStop were given "sure thing" numbers back in June that they used to determine reservation quantities.  It was only in late September that MS began warning that they might not be able to meet those numbers after all.  That's when both chains (and everyone else who was doing pre-orders at the time, including WalMart online) stopped.

Sold out is sold out.  Shipping enough to GameStop and EB to cover 90% of the pre-orders would achieve the same "shortage" marketing hype and do so without alienating core customers.  What we have instead is the situation that arises when you miss your manufacturing targets by a wide margin.
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« Reply #17 on: November 19, 2005, 06:21:49 AM »

Well, maybe my local Gamestop and EB were just clueless, but they didn't have anything firm on preorders until September.  They were just putting names on a list.  So either the corporates didn't do a good job sending out the information or the local managers didn't understand.  Of course, they were also taking preorders before June.

Beyond that, we're both saying the same thing about manufacturing.  To be clear, I was talking about the logistics plan, not marketing.
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« Reply #18 on: November 19, 2005, 06:38:43 AM »

Quote from: "Hrothgar"
Well, maybe my local Gamestop and EB were just clueless, but they didn't have anything firm on preorders until September.  They were just putting names on a list.  So either the corporates didn't do a good job sending out the information or the local managers didn't understand.  Of course, they were also taking preorders before June.


I don't know about EB, but GameStop had "guaranteed" pre-orders for the first few weeks after E3 but everything after was "non-guaranteed" and the stores were told to make sure customers knew that.  Most customers are not that angry as a result - they knew it was not guaranteed.  Some choose to ignore that part and are mad.  The ones that are cancelling now are the ones so far down the list that it will likely be after Christmas before they get one.

That said, an EB manager I know told me that they received an email with an apology from MS for failing to provide the number of systems promised and asking employees not to blame EB's management.   I work for GameStop and we've been told unofficially that MS had made committments.  In September at our manager's conference we were told unofficially that we would get at least 90% of our pre-orders covered on day one.  As it stands, it's about 20-25% That said, no retailer is going to officially bad-mouth MS because they all want as many 360's as they can get so, of course, they will say nothing.

Add to that the 10,000 units they gave away in that Mt.Dew promotion and the 5,000 units they are giving to their employees and you see more evidence that none of this was planned.
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Hrothgar
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« Reply #19 on: November 19, 2005, 07:01:10 AM »

I'm not defending their manufacturing shortfalls.  Nor am I saying they're making the right choices in their allocations now or in the future.  Clearly they have enough units if they just wanted to fulfill preorders, they could do it.  That would probably leave some big retailers out in the cold.

If I haven't been clear, I apologize.  When I'm talking about shipment allocations, I mean the percentages of total available units.  Less units results in everyone getting less across the board.

Shortages now are not reflective of the failure of the logistics plan.  However, if by next Friday, you, as a store manager, still don't know the details of your next shipment, that will be a sure sign of failure.  Perhaps you can tell us then.
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