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[Skeff]

XB1 probably need FIFA exclusive for Europe and CoD for US to turn this around.

Fifa exclusive is literally impossible, it's in the licensing.

 

[DoubleTake]

Well, the store in Manchester NH is currently averaging shipments of PS4s between 30-50 per week, selling 25-50 each week (so either almost sold out, or sold out), the Nashua NH store gets shipments of 30-40 with average sales of 20-30 per week.

XB1 is getting 40-50 ever 3-4 weeks in those stores, average 8-10 per week, each store. During the peak of the XB1 TF sales, those stores were at 15-19 per week. Take that how you will.

Wow...I said GODDAMN

 

[Liabe Brave]

At its price and with how few markets its available in, that's pretty damn good.

And, trust me, they could have been in much worse position with the popularity of the PS4 and the price disadvantage

Here's one of the most important lessons I learned from Sales-age GAF. In sales threads you often see people saying "[Blank] is doing fine if you consider that [x], [y], and [z]." They think this is a defense. But it isn't, because any statement structured like that can be rearranged to this, which has the exact same logic:

"[Blank] is not doing fine, and the reasons are [x], [y], and [z]."

 

[RealityPales]

Whoever thought to arrange a marketing deal between PlayStation and Watch Dogs / Destiny is a genius. That guarantees NPD dominance until the holidays.

But the holiday season should be interesting...

I don't think The Order or Halo 5 will make it. So will it come down to DriveClub + The Last of Us Remastered vs. Sunset Overdrive + Halo 2 Remastered?

I'm assuming the XBO will be $399.99 by June, so maybe that'll heat things up in favor of XBO as well? Or will it take a lot more than the price drop at this point?

 

[Cirekiller]

Well, the store in Manchester NH is currently averaging shipments of PS4s between 30-50 per week, selling 25-50 each week (so either almost sold out, or sold out), the Nashua NH store gets shipments of 30-40 with average sales of 20-30 per week.

XB1 is getting 40-50 ever 3-4 weeks in those stores, average 8-10 per week, each store. During the peak of the XB1 TF sales, those stores were at 15-19 per week. Take that how you will.

Guess we're never hearing sold through numbers from MS ever again.

I expect sales to be very week for the summer months for MS unless they have a price drop or value add.

 

[stonesak]

Don't forget surface and stuff is also in there. But its very unclear to me how those devices are actually doing. I assume like crap but I have no idea.

You know what they say about when you ass u me things, right?

Spoiler

They say, "Damn, Y2Kev's assumptions are spot on."

 

[Abdiel]

So those unsold XBO's are just piling up each week? Yikes.

Well, like I said. They've stopped sending weekly shipments. Not even bi-weekly shipments, really. They're typically a once a month thing... And in that month, they can sell through most of it. It's not like in January where we were getting weekly stops for no damn reason, and we'd have over 100 per store just sitting there like Grade Green building blocks.

 

[Tex117]

Certainly last generation taught us that a company can turn around their console....

That said, this is the first time Microsoft has gone head to head with Sony at launch...especially after Sony was humbled in the beginning of last generation.....

Microsoft s going to have to do something it really hasn't had to do yet....Actually focus on why gamers play games and not go for the easy money (multiplayer shooters).

 

[SwiftDeath]

I'm assuming the XBO will be $399.99 by June, so maybe that'll heat things up in favor of XBO as well? Or will it take a lot more than the price drop at this point?

I was previously expecting the E3 pricedrop to be to $399 but with the $450 TF bundles which failed to light the world on fire now being back at $499, I'm worried if MS will only drop to $450 with kinect, at best $399 without kinect

 

[Road]

Xbox bullet points:

• Xbox One sold in 1.2 million consoles, and Xbox 360 sold in 0.8 million consoles
• Xbox One has sold in over 5 million units since launch
• Xbox 360 sales exceeded expectations this quarter
• Expect to work through some inventory in Q4
• "In Hardware, we expect revenue to be $1.3 to $1.5 billion dollars in what is a seasonally slower hardware quarter. This number also reflects channel inventory drawdown for Xbox consoles"
• Xbox Live transactional revenue grew 17 percent
• 45% higher ($398 million higher) Xbox Platform revenue
• "Xbox Platform cost of revenue increased $486 million, due mainly to higher volumes of consoles sold and higher costs associated with Xbox One"

http://www.microsoft.com/investor/E...s/PressReleaseAndWebcast/FY14/Q3/default.aspx


And two random charts. Only consoles that launched in US+Europe in Q4.

The Xbox 360 Q1 number without Japan is from my ass. I just subtracted 50k (what was sold to consumers) from the reported shipment.

 

[Goodacre0081]

Why would they do that? Send them back to Microsoft if you have to, or let them rot on shelves until Microsoft officially drops the price. There's no scenario where a retailer would willing take a $50 loss on an Xbox One at this time.

I always thought retailers incurred fees if they returned stock to the manufacturer.

 

[Abdiel]

I always thought retailers incurred fees if they returned stock to the manufacturer.

Depends on the company, the product, and the arrangement worked out between seller/manufacturer. There's almost always some way for a retailer like Best Buy to send the product back, and even if there's a fee for doing so, it's better than eating the entire cost of the merchandise.

 

[Codeblew]

I'm quite happy there has only been one SKU from both Microsoft and Sony this gen.

Titanfall bundle was a new SKU in US. Many different SKU's for both in other regions.

 

[juicyfruitas]

Xbox bullet points:

And two random charts. Only consoles that launched in US+Europe in Q4.

The Xbox 360 Q1 number without Japan is from my ass. I just subtracted 50k (what was sold to consumers) from the reported shipment.

Nice charts.

Guess folks (and microsoft) can't really use the line of 'Xbox is selling great. It's tracking ahead of 360!' anymore

 

[gtj1092]

Usually these threads have info about profit and loss for the division. Was there anything posted.

With no big game launching this quarter to push bundles on retailers I'm expecting console shipments to drop below 600K for Xone then pick up in the June quarter if they decide to price drop at E3. Wonder how the September WW launch will go considering a lot of retailers in Tier 2 are sitting on unsold stock as it is. How many units will retailers be willing to buy in those countries after seeing how X1 sells there now although unofficially.

 

[fasTRapid]

Factor in the number of countries both consoles have launched in and the difference in sales isn't that surprising.

Oh so, PS4 beating Xbox One in its absolute core market in the month of its biggest release of the year by 19% is now better because on average the Xbox One is selling more units per country?

MS shipped 1.2 million in 2014 so far. Sony sold through 2.8 million in 2014 so far

!

 

[Gator86]

Oh so, PS4 beating Xbox One in its absolute core market in the month of its biggest release of the year by 19% is now better because on average the Xbox One is selling more units per country?

!

This sounds like a Major Nelson fun fact to me.

 

[Liabe Brave]

So here's an interesting question

In the same timeframe, Sony has sold 7M to consumers, MS sold 5M to retailers

Even assuming that PS4 is completely sold out which it isn't really, unless MS has a drastically lower production contract than Sony, where are those 2M other XB1's?

Microsoft is likely storing them in warehouses. We know they were making at least 1m consoles per month to start--the first units were made at the beginning of September, and by year's end they'd sold-in 3.9m. So unless their manufacturing contract allows production quotas to be varied (I have no idea how likely that is), then they've manufactured ~7m. This number is higher than their sold-in report by 1.9m units, and those would be in warehouses.

Note that I work in electronics distribution, and when I say "warehouses" I don't mean the places that receive truckloads of Xbox Ones and send small quantities to a bunch of retail stores. In the parlance, those are DCs (distribution centers). Whether the DC is owned by a retail chain or by a VAR, all the stock in them counts as "sold-in" because it's paid for and destined to be offered for sale in the short term. A warehouse, on the other hand, is a medium- or long-term storage facility for unsold goods. Indeed, they're worse than merely "unsold", as Microsoft will be paying stocking costs to the warehouse owner.

This problem will keep getting worse. They sold 1.2m units in calendar Q1, and project to sell less in Q2...which means they're already warehousing far more units than they'll need for the entire next three months. For months to come, every Xbox One coming off the assembly line will cost Microsoft not just the manufacturing price, but also gradually mounting stocking fees. Something like this:

          Made     Sold-in     Whse
Q4 '13    3.90m    3.90m       0
Q1 '14    7.00m    5.10m       1.90m
Q2 '14*   10.0m    6.00m       4.00m
Q3 '14*   13.0m    8.00m       5.00m
Q4 '14*   16.0m    12.5m       3.50m

*projected

Note that my sales projections, while not best-case, intentionally lean toward being too kind (they're better than 360's first- and second-year numbers in those quarters). And even still Microsoft would start 2015 with unsold stock nearly twice what they have right now.

 

[StarBlazers1]

Microsoft is likely storing them in warehouses. We know they were making at least 1m consoles per month to start--the first units were made at the beginning of September, and by year's end they'd sold-in 3.9m. So unless their manufacturing contract allows production quotas to be varied (I have no idea how likely that is), then they've manufactured ~7m. This number is higher than their sold-in report by 1.9m units, and those would be in warehouses.

Note that I work in electronics distribution, and when I say "warehouses" I don't mean the places that receive truckloads of Xbox Ones and send small quantities to a bunch of retail stores. In the parlance, those are DCs (distribution centers). Whether the DC is owned by a retail chain or by a VAR, all the stock in them counts as "sold-in" because it's paid for and destined to be offered for sale in the short term. A warehouse, on the other hand, is a medium- or long-term storage facility for unsold goods. Indeed, they're worse than merely "unsold", as Microsoft will be paying stocking costs to the warehouse owner.

This problem will keep getting worse. They sold 1.2m units in calendar Q1, and project to sell less in Q2...which means they're already warehousing far more units than they'll need for the entire next three months. For months to come, every Xbox One coming off the assembly line will cost Microsoft not just the manufacturing price, but also gradually mounting stocking fees. Something like this:

          Made     Sold-in     Whse
Q4 '13    3.90m    3.90m       0
Q1 '14    7.00m    5.10m       1.90m
Q2 '14*   10.0m    6.00m       4.00m
Q3 '14*   13.0m    8.00m       5.00m
Q4 '14*   16.0m    12.5m       3.50m

*projected

Note that my sales projections, while not best-case, intentionally lean toward being too kind (they're better than 360's first- and second-year numbers in those quarters). And even still Microsoft would start 2015 with unsold stock nearly twice what they have right now.

2 things: you're assuming that MS is warehousing them in 3rd party warehouses. They own many facilities that can house them. Second, at least a good portion of those will be sent to tier 2 countries for their launch later this year.
All of this is far-reaching speculation made by people (including myself) that really shouldn't be making it. I love reading about things like this and speculating as well as reading all these leaps in logic from reading an earnings report. There maybe some truth to some of these things.
Fact is, we really don't know. I will just sit back and play my PS4 and XB1 and enjoy them. I suggest we all should do the same.

 

[Psycho_Mantis]

Wait the 1.2 million number was shipped?

 

[SwiftDeath]

2 things: you're assuming that MS is warehousing them in 3rd party warehouses. They own many facilities that can house them. Second, at least a good portion of those will be sent to tier 2 countries for their launch later this year.
All of this is far-reaching speculation made by people (including myself) that really shouldn't be making it. I love reading about things like this and speculating as well as reading all these leaps in logic from reading an earnings report. There maybe some truth to some of these things.
Fact is, we really don't know. I will just sit back and play my PS4 and XB1 and enjoy them. I suggest we all should do the same.

2 things

1. Why would MS have spare warehouse room for 2M XB1's? Unless you're suggesting MS planned for this eventuality?
2. This is a sales thread so suggesting we all sit back and play games is simply put ridiculous. You can in fact not click on such threads as these if they apparently annoy you as such

Wait the 1.2 million number was shipped?

Yes MS shipped 1.2M XB1's to retailers in 2014

 

[ethomaz]

Wii U and Xbone have similar bars... weird.

 

[Sean*O]

Microsoft is likely storing them in warehouses. We know they were making at least 1m consoles per month to start--the first units were made at the beginning of September, and by year's end they'd sold-in 3.9m. So unless their manufacturing contract allows production quotas to be varied (I have no idea how likely that is), then they've manufactured ~7m. This number is higher than their sold-in report by 1.9m units, and those would be in warehouses.

Note that I work in electronics distribution, and when I say "warehouses" I don't mean the places that receive truckloads of Xbox Ones and send small quantities to a bunch of retail stores. In the parlance, those are DCs (distribution centers). Whether the DC is owned by a retail chain or by a VAR, all the stock in them counts as "sold-in" because it's paid for and destined to be offered for sale in the short term. A warehouse, on the other hand, is a medium- or long-term storage facility for unsold goods. Indeed, they're worse than merely "unsold", as Microsoft will be paying stocking costs to the warehouse owner.

This problem will keep getting worse. They sold 1.2m units in calendar Q1, and project to sell less in Q2...which means they're already warehousing far more units than they'll need for the entire next three months. For months to come, every Xbox One coming off the assembly line will cost Microsoft not just the manufacturing price, but also gradually mounting stocking fees. Something like this:

          Made     Sold-in     Whse
Q4 '13    3.90m    3.90m       0
Q1 '14    7.00m    5.10m       1.90m
Q2 '14*   10.0m    6.00m       4.00m
Q3 '14*   13.0m    8.00m       5.00m
Q4 '14*   16.0m    12.5m       3.50m

*projected

Note that my sales projections, while not best-case, intentionally lean toward being too kind (they're better than 360's first- and second-year numbers in those quarters). And even still Microsoft would start 2015 with unsold stock nearly twice what they have right now.

But they know what they need to do, it's a marathon not a sprint.

 

[Withnail]

Whoever thought to arrange a marketing deal between PlayStation and Watch Dogs / Destiny is a genius. That guarantees NPD dominance until the holidays.

But the holiday season should be interesting...

I don't think The Order or Halo 5 will make it. So will it come down to DriveClub + The Last of Us Remastered vs. Sunset Overdrive + Halo 2 Remastered?

I'm assuming the XBO will be $399.99 by June, so maybe that'll heat things up in favor of XBO as well? Or will it take a lot more than the price drop at this point?

Personally I expect this Q4 to be

The Order + Driveclub + Uncharted Collection vs Sunset Overdrive + Forza Horizon 2 + Halo 2A.

But Destiny is going to be the big game this Q4 IMO.

 

[Bluth54]

LOL.

.... At the the idea the Wii U will sell over 20 million.

This graphic is never gonna happen

Spoiler

No way Wii U sells that much

Edit: Damn it funky

You guys do realize those sales numbers are actually the ones for the PS2, Xbox and Gamecube right?

 

[ethomaz]

Microsoft is likely storing them in warehouses. We know they were making at least 1m consoles per month to start--the first units were made at the beginning of September, and by year's end they'd sold-in 3.9m. So unless their manufacturing contract allows production quotas to be varied (I have no idea how likely that is), then they've manufactured ~7m. This number is higher than their sold-in report by 1.9m units, and those would be in warehouses.

Note that I work in electronics distribution, and when I say "warehouses" I don't mean the places that receive truckloads of Xbox Ones and send small quantities to a bunch of retail stores. In the parlance, those are DCs (distribution centers). Whether the DC is owned by a retail chain or by a VAR, all the stock in them counts as "sold-in" because it's paid for and destined to be offered for sale in the short term. A warehouse, on the other hand, is a medium- or long-term storage facility for unsold goods. Indeed, they're worse than merely "unsold", as Microsoft will be paying stocking costs to the warehouse owner.

This problem will keep getting worse. They sold 1.2m units in calendar Q1, and project to sell less in Q2...which means they're already warehousing far more units than they'll need for the entire next three months. For months to come, every Xbox One coming off the assembly line will cost Microsoft not just the manufacturing price, but also gradually mounting stocking fees. Something like this:

          Made     Sold-in     Whse
Q4 '13    3.90m    3.90m       0
Q1 '14    7.00m    5.10m       1.90m
Q2 '14*   10.0m    6.00m       4.00m
Q3 '14*   13.0m    8.00m       5.00m
Q4 '14*   16.0m    12.5m       3.50m

*projected

Note that my sales projections, while not best-case, intentionally lean toward being too kind (they're better than 360's first- and second-year numbers in those quarters). And even still Microsoft would start 2015 with unsold stock nearly twice what they have right now.

MS can lower the production based in the demand... they are not making 1 million per month anymore. They don't need to mount everything too... for example they contracted 10 million APU chips and received everything but that don't means they mounted 10 million consoles... they can hold components to future production.

You are assuming that they are the MS production is like the Sony production but at the end of 2013 MS shipped 3.9m consoles and Sony ~4.5m consoles.

 

[AniHawk]

2 things

1. Why would MS have spare warehouse room for 2M XB1's? Unless you're suggesting MS planned for this eventuality?
2. This is a sales thread so suggesting we all sit back and play games is simply put ridiculous. You can in fact not click on such threads as these if they apparently annoy you as such

Yes MS shipped 1.2M XB1's to retailers in 2014

where's the 2m number coming from? they sold 2.5m consoles through march in the us. is there anything to have us believe it's 0.5-0.6m sold in the rest of the launched regions?

 

[SwiftDeath]

You guys do realize those sales numbers are actually the ones for the PS2, Xbox and Gamecube right?

Huh never put that together. I know that was the PS2 LTD though but never connected the dots around GCN and OGXB

That being said with the way the Wii U is tracking, that actually suggests Wii U is unlikely to get to 22M

where's the 2m number coming from? they sold 2.5m consoles through march in the us. is there anything to have us believe it's 0.5-0.6m sold in the rest of the launched regions?

Do you believe MS's production capacity is 30% less than Sony with PS4? If it's the same then there's at least 1.9M unaccounted for XB1's based on those numbers

I have trouble believing when MS signed their manufacturing contract for the XB1, they thought they'd have trouble selling this early in

I find it doubtful MS has made exactly 5.1M XB1's up to this point. 6M at least imo

 

[Quadraphonic]

But they know what they need to do NOW, it's a marathon not a sprint.

You forgot the most important word that made Hryb's statement hilarious.

It was as if they didn't see the problem until they got the NPD numbers handed to them last week.

 

[ethomaz]

Do you believe MS's production capacity is 30% less than Sony with PS4? If it's the same then there's at least 1.9M unaccounted for XB1's based on those numbers

I have trouble believing when MS signed their manufacturing contract for the XB1, they thought they'd have trouble selling this early in

Production capacity is based in estimated demand.

Sony increased the production from 2013 to 2014 while MS decreased. I guess Sony actual production capacity is 1.0-1.2 million consoles per month while MS production capacity is more close to 0.5m per month.

 

[SwiftDeath]

Production capacity is based in estimated demand.

Sony increased the production from 2013 to 2014 while MS decreased.

How? Production contracts for 1M consoles a month are not changed overnight. Foxconn would only accept such a contract with 12 months of production guaranteed lest they need to completely retool and retrain assembly lines and factories

We're at month 6

I could potentially believe Sony somehow managed to spin up extra factories but that seems incredibly cost-prohibitive

 

[ethomaz]

How? Production contracts for 1M consoles a month are not changed overnight. Foxconn would only accept such a contract with 12 months of production guaranteed lest they need to completely retool and retrain assembly lines and factories

We're at month 6

It is not like that... every month is made a new reestimate to future production and if Foxconn stop to produce Xbone they will produce others things... they have a lot of contracts.

Production is based in estimates demand... that is why in the holidays they increase the production.

Contract already anticipate these changes.

 

[mrklaw]

So whats the consensus? Great numbers when compared to Microsofts previous product but poor compared to the primary competitions?

Personally I welcome back my blue overlords.

Great launch figures, but I'd say Q1 numbers show a sharp decline, so I don't think overall the numbers look great. If that decline isn't reversed, they could be looking at a crappy number for 2014 sold through

 

[AniHawk]

Huh never put that together. I know that was the PS2 LTD though but never connected the dots around GCN and OGXB

That being said with the way the Wii U is tracking, that actually suggests Wii U is unlikely to get to 22M



Do you believe MS's production capacity is 30% less than Sony with PS4? If it's the same then there's at least 1.9M unaccounted for XB1's based on those numbers

I have trouble believing when MS signed their manufacturing contract for the XB1, they thought they'd have trouble selling this early in

I find it doubtful MS has made exactly 5.1M XB1's up to this point. 6M at least imo

i haven't kept up on the numbers. we know there's 2.9m ps4s sold through march and about 7m through the first week of april, so that means ~roughly~ 4m for the rest of the launch regions. i don't know what the sales in the rest of the world are for xbox one, but if we're looking at half a million then microsoft is in huge trouble.

personally i would expect worldwide sales to total perhaps 4m, leaving 1m unsold consoles throughout the world. not a fantastic proposition, but 4m consoles moved to customers in that span of time and with that price really isn't that out of the norm. the comparison to the ps4 is what hurts it. the ps4 is not your normal console launch. it's the fastest-selling console ever (outside japan). comparing the xbox one to the ps4 is like comparing the psp's respectable numbers to the ds's record-breaking ones. it skews perception when the result isn't all that bad.

at least that's how i see it.

 

[SwiftDeath]

It is not like that... every month is made a new reestimate to future production and if Foxconn stop to produce Xbone they will produce others things... they have a lot of contracts.

Production is based in estimates demand... that is why in the holidays they increase the production.

Contract already anticipate these changes.

The contract MS [and presumably everyone else] had with Foxconn predicted Hardware sales cratering in January? Or that MS would not sell through what was being produced?

It is by no means free, cheap or easy to change assembly lines from a hard contract like what a console would have. I don't know what makes you think it would be

i haven't kept up on the numbers. we know there's 2.9m ps4s sold through march and about 7m through the first week of april, so that means ~roughly~ 4m for the rest of the launch regions. i don't know what the sales in the rest of the world are for xbox one, but if we're looking at half a million then microsoft is in huge trouble.

personally i would expect worldwide sales to total perhaps 4m, leaving 1m unsold consoles throughout the world. not a fantastic proposition, but 4m consoles moved to customers in that span of time and with that price really isn't that out of the norm. the comparison to the ps4 is what hurts it. the ps4 is not your normal console launch. it's the fastest-selling console ever (outside japan). comparing the xbox one to the ps4 is like comparing the psp's respectable numbers to the ds's record-breaking ones. it skews perception when the result isn't all that bad.

at least that's how i see it.

Hmm if the PS4 wasn't in play, the XB1 numbers would be phenomenal, the hard LTD numbers are still fantastic but LTD in Q1 is less than ideal imo

I would say XB1's WW LTD is around 4.1M - 4.3M although mort quoted higher

I do believe that while there is probably some unsold stock with retailers [shipped, not sold-through] the real worry is if there is already XB1's not being sold-in to retailers at this point which could very well be the case depending on MS's production capacity for the XB1

 

[shinra-bansho]

Production capacity is based in estimated demand.

Sony increased the production from 2013 to 2014 while MS decreased. I guess Sony actual production capacity is 1.0-1.2 million consoles per month while MS production capacity is more close to 0.5m per month.

I believe you typically incur penalties for reducing fab utility so it would depend on whether the storage exceeded that presumably. Although I don't necessarily think that both companies had the same production capacity.

 

[jamiept]

All of this is far-reaching speculation made by people (including myself) that really shouldn't be making it. I love reading about things like this and speculating as well as reading all these leaps in logic from reading an earnings report. There maybe some truth to some of these things.
Fact is, we really don't know. I will just sit back and play my PS4 and XB1 and enjoy them. I suggest we all should do the same.

A sensible post.

 

[licktheenvelope]

Microsoft is likely storing them in warehouses. We know they were making at least 1m consoles per month to start--the first units were made at the beginning of September, and by year's end they'd sold-in 3.9m. So unless their manufacturing contract allows production quotas to be varied (I have no idea how likely that is), then they've manufactured ~7m. This number is higher than their sold-in report by 1.9m units, and those would be in warehouses.

Note that I work in electronics distribution, and when I say "warehouses" I don't mean the places that receive truckloads of Xbox Ones and send small quantities to a bunch of retail stores. In the parlance, those are DCs (distribution centers). Whether the DC is owned by a retail chain or by a VAR, all the stock in them counts as "sold-in" because it's paid for and destined to be offered for sale in the short term. A warehouse, on the other hand, is a medium- or long-term storage facility for unsold goods. Indeed, they're worse than merely "unsold", as Microsoft will be paying stocking costs to the warehouse owner.

This problem will keep getting worse. They sold 1.2m units in calendar Q1, and project to sell less in Q2...which means they're already warehousing far more units than they'll need for the entire next three months. For months to come, every Xbox One coming off the assembly line will cost Microsoft not just the manufacturing price, but also gradually mounting stocking fees. Something like this:

          Made     Sold-in     Whse
Q4 '13    3.90m    3.90m       0
Q1 '14    7.00m    5.10m       1.90m
Q2 '14*   10.0m    6.00m       4.00m
Q3 '14*   13.0m    8.00m       5.00m
Q4 '14*   16.0m    12.5m       3.50m

*projected

Note that my sales projections, while not best-case, intentionally lean toward being too kind (they're better than 360's first- and second-year numbers in those quarters). And even still Microsoft would start 2015 with unsold stock nearly twice what they have right now.

Very unlikely that Xbox One quotas can vary to that degree, though Microsoft may have built this into their original estimates and had certain producers only contracted to produce during the launch window.

Though if we've seen anything over the last year it's that the Xbox division has done some poor poor planning.

 

[ethomaz]

The contract MS [and presumably everyone else] had with Foxconn predicted Hardware sales cratering in January? Or that MS would not sell through what was being produced?

It is by no means free, cheap or easy to change assembly lines from a hard contract like what a console would have. I don't know what makes you think it would be

Every company predicted these things on contract... it is called Capacity Planning... there is no way a contract predict the same amount of production for the holidays period than the first months of the year.
After that you work every month using the data you have like inventory, demand, market trend to fit the production for the next months or quarters. That's why when you have a unpredictable increase in demand you face supply issues... and when your product have unpredictable bad sales you start to have a lot of inventory in the retail. If you have a increase in demand then in the next months you will increase the production... if you have issues to sell a product then in the next month you will decrease the production.

Some companies works with monthly orders and others with two or three months orders but I never saw one working with a fixed production for more than three months.

These planning are made regulatory... you have a team just for that.

 

[AniHawk]

Hmm if the PS4 wasn't in play, the XB1 numbers would be phenomenal, the hard LTD numbers are still fantastic but LTD in Q1 is less than ideal imo

I would say XB1's WW LTD is around 4.1M - 4.3M although mort quoted higher

I do believe that while there is probably some unsold stock with retailers [shipped, not sold-through] the real worry is if there is already XB1's not being sold-in to retailers at this point which could very well be the case depending on MS's production capacity for the XB1

i think the reaction to the q3 (fy, or q1 cy) numbers is also overblown. it's fairly in line with shipments of the xbox 360 over the last couple of years. maybe down by several hundred thousand, but nothing to indicate something disastrous. it all looks pretty good to me. healthy, at least.

 

[mrklaw]

What's even more troubling, is if they lower the price to $450, no one will fall for it, because most consumers have already seen the $450 price tag all last month by retailers.

They're now gonna have to drop the price by $100 if they want to continue to be relevant. AND bundle a game on top of that.

But if they want an official price cut to have any legs, then it makes sense to revert back to MSRP for a couple of months to allow the cut to have higher impact. They'll have to live with drastically lower volumes but April/May/June aren't great anyway so they can live with that I think.

Seems like it may have been tactical - either to win March or simply to run down their overstocks and avoid pissing off retailers too much. The last thing they'd want is returned stocks. Especially with them still seemingly overshipping, they'd run the risk of having to correct that and report that correction

 

[Fredrik]

What annoys me the most is all the talk about X1's piling up in stores when I still can't buy it unless importing up here in Sweden. If MS fails this gen they only have themselves to blame. Aren't we still talking about 13 countries for X1 worldwide?

 

[Razo999]

PS4 still sold out? http://www.youtube.com/watch?v=5KXrQYWbbIs#t=18s

I just checked Amazon, Gamestop, and Target. All have them online, and at all stores in my area (Northern Virginia)

This might come as a shock but there is a world outside of the States. I think he meant that.

 

[SwiftDeath]

Every company predicted these things on contract... it is called Capacity Planning... there is no way a contract predict the same amount of production for the holidays period than the first months of the year.

After that you work every month using the data you have like inventory, demand, market trend to fit the production for the next months or quarters.

That's why when you have a unpredictable increase in demand you face supply issues... and when your product have unpredictable bad sales you start to have a lot of inventory in the retail.

If you have a increase in demand then in the next months you will increase the production... if you have issues to sell a product then in the next month you will decrease the production.

Some companies works with monthly orders and others with two or three months orders but I never saw one working with a fixed production for more than three months.

We've had two examples thus far of MS's inability to predict demand for their console, 3.9M versus 3M for the holidays/launch and presumably now as they give out 5.1M shipped both in PR and in earnings reports [normal in earnings though]

I would never presume MS wanted the exact same production in Q1 as in Launch but all signs point to higher production than demand and the question is how much

The real crux of the issue is how much MS is producing I suppose although I have yet to see any XB1 shortages

i think the reaction to the q3 (fy, or q1 cy) numbers is also overblown. it's fairly in line with shipments of the xbox 360 over the last couple of years. maybe down by several hundred thousand, but nothing to indicate something disastrous. it all looks pretty good to me. healthy, at least.

I completely expect the XB1 to acheive a healthy LTD at the end of the generation, I tend to predict 60M but that's hard anyways

My point is simply that in the immediate I think MS is obviously facing a price problem but that may in fact be leading to a oversupply problem albeit perhaps I'm expecting too much production from MS in regards to their closest competitor. Hmm

What annoys me the most is all the talk about X1's piling up in stores when I still can't buy it unless importing up here in Sweden. If MS fails this gen they only have themselves to blame. Aren't we still talking about 13 countries for X1 worldwide?

Yes still 13 countries only

 

[Liabe Brave]

2 things: you're assuming that MS is warehousing them in 3rd party warehouses. They own many facilities that can house them.

Since you clearly know, how many facilities do they have?

About 2m Xbox Ones would require approximately 250,000 sq.ft. of narrow-aisle rack storage. This isn't really huge, but even if it would fit in their DC network's spare space there's still an opportunity cost. Racks full of product that doesn't move for months on end is not how business is done in logistics anymore, since it impinges on your flexibility to respond to other opportunities. This is why even giant corporations sometimes use third parties rather than their own buildings.

Second, at least a good portion of those will be sent to tier 2 countries for their launch later this year.

All those launches put together will be less than a million units. Last gen ~55% of all Xbox sales were in the U.S.; another 5% in the rest of NA; another 10% in the UK; and let's guess that all the other One launch territories add up to another 10%. That'd suggest launch in all remaining countries would sell ~1m units over the first 4.5 months. (The real situation is likely even worse, as several tier 2 countries already have stock, imported from neighboring tier 1s and included in the sold-in number we have now.)

All of this is far-reaching speculation made by people (including myself) that really shouldn't be making it.

I work for a giant electronics distribution company. I am speaking from a position of knowledge about the field, even if I have no direct insider info on videogame hardware. (We carry Microsoft products, but not consoles.)

 

[Earthanoid]

The contract MS [and presumably everyone else] had with Foxconn predicted Hardware sales cratering in January? Or that MS would not sell through what was being produced?

It is by no means free, cheap or easy to change assembly lines from a hard contract like what a console would have. I don't know what makes you think it would be

The contracts don't provide absolute numbers on what is manufactured each month. Companies using contract manufacturers like Foxconn will provide forecasts on what they think they'll need for the future, but they usually aren't bound to actually order what they forecast. They will place orders continuously to meet whatever demand they're seeing. If the demand is low, they just stop placing orders or they reduce them.

One of the things that has made Foxconn successful is that they have a lot of cheap labor available so they can turn production up and down fairly quickly. They don't change production lines, typically you can't switch a production line to another product. But Foxconn has the space and flexible workforce to let the production lines slow down or sit unused without it impacting their other production lines. MS might have to pay a penalty if their production falls below a certain threshold, but it's not like they're committed to build for a full year.

In terms of production capacity, another thing to consider is the complexity of the product. XB1 has more things in the box (thanks Kinect!) and most likely not everything is made in the same place. This increases XB1 complexity relative to PS4 so it probably takes longer to build. Then factor in something as basic as the size of the box; the XB1 box is larger than the PS4 one so they can't ship as many at a time. Put it all together and you've got a slower supply chain with less flexibility to ramp up and down.

 

[Hoo-doo]

It's fun to read the "but it hasn't launched in X countries yet!" rhetoric.

I'm assuming that's mainly talking about tier 2 countries in Europe.
But even in tier 2 countries, Xbox Ones are widely available and PS4's are out of stock everywhere. Microsoft finally "officially" launching there isn't going to do much when it has been on shelves ever since the tier 1 release.

If anything, Sony actually shipping units over there is going to make a way bigger splash in terms of monthly WW sales.

 

[ethomaz]

We've had two examples thus far of MS's inability to predict demand for their console, 3.9M versus 3M for the holidays/launch and presumably now as they give out 5.1M shipped both in PR and in earnings reports [normal in earnings though]

I would never presume MS wanted the exact same production in Q1 as in Launch but all signs point to higher production than demand and the question is how much

The real crux of the issue is how much MS is producing I suppose although I have yet to see any XB1 shortages

Well I guess they (and the retail) predicted Titanfall should sell more consoles in Q1... if you are MS and a big hype game in the hands you see three possible scenarios:

1) I have 900k on shelves so I will decrease my production and everything will be ok because the demand won't increase with Titanfall launch.
2) I have 900k on shelves so I will decrease my production and have supply issues at Titanfall launch.
3) I have 900k on shelves but I expect Titanfal to sell a lot of consoles so I will maintain my production to don't have supply issues at Titanfall launch.

They played the safest based in the expectations for Titanfall.

I don't know... I'm just guessing because I don't know the MS plans but I know the production of any product increase or decrease month by month based in plans/expectations.

 

[quetz67]

Why would they do that? Send them back to Microsoft if you have to, or let them rot on shelves until Microsoft officially drops the price. There's no scenario where a retailer would willing take a $50 loss on an Xbox One at this time.

Although it is the retailers that swallow the price cut, I am sure they won't lose any money. Microsoft is desperate to get XB1s from warehouses to retailers so they probably offer good enough conditions on new shipments that retailers can make those prices for the old stock without being to unhappy.

Otherwise they would just replace old stuff with new taking a loss without any incentive - which obviously none of them would do.

 

[Liabe Brave]

You are assuming that they are the MS production is like the Sony production but at the end of 2013 MS shipped 3.9m consoles and Sony ~4.5m consoles.

Microsoft started later; their first units came off the assembly lines at the beginning of September, while PS4 components were already being sent for assembly in early June, and production was projected to ramp to 1m units by September (meaning some smaller amount would be made before that). Production capacity of the two consoles definitely does appear to have been about the same during lead-up/launch.

MS can lower the production based in the demand... they are not making 1 million per month anymore. They don't need to mount everything too... for example they contracted 10 million APU chips and received everything but that don't means they mounted 10 million consoles... they can hold components to future production.

Fair enough; as I stated in my post, I was assuming fixed production quotas since I'd heard that elsewhere on GAF. If it's not the case, then storage of unsold units shouldn't be a problem for Microsoft.