NEWS - Friday, March 14, 2008

Microsoft Explains 360 Supply Flub

Supply constraints or not, Microsoft can’t be too ecstatic that the PlayStation 3 has outsold its console for the second month in a row in February. But the purveyor of all things Xbox expects to get supply back in line in April.

Xbox 360 group product manager Aaron Greenberg told Next-Gen on Thursday just prior to the release of the NPD Group’s February US sales data that the shortages are still rooted in larger than expected holiday sales.

Greenberg said that Microsoft’s "number jocks" assumed that everyone who would typically buy an Xbox 360 in November and December would instead buy it in September or October after the September launch of Halo 3.

"We were wrong. What happened was the normal seasonality. November was twice the size of October and December was twice the size of November," Greenberg said. "What happened with the Halo phenomenon was just truly incremental on top of the normal holiday cycle.

"...Even at the speed we’re running at, it can take a couple of months to react to that."

Greenberg said that Microsoft is currently airshipping Xbox 360 hardware into the market, a practice not typical in normal supply situations.

He said that Microsoft is in a "much better" supply situation today than it was in February, but added that retailer demand is still currently higher than supply.

Microsoft expects Xbox 360 supply to be back to normal in April, prior to the big release of Rockstar’s Grand Theft Auto IV.

Greenberg admitted that although Microsoft does have hardware sales estimates for the GTA IV release period, the company is somewhat shooting in dark.

"We have never had GTA on day one. There is no real historical data point for us on this. ... If [GTA IV helps moves hardware] well beyond what we expect, we could be a little tighter [on supply] in May. But we’re hoping to get it right this time."


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