Freeman
Banned
PSP is still alive.
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MS CFO: Manufacture of Xbox Consoles may slow down or stop...
- Thread starter Miles Quaritch
- Start date
PSP is still alive.
BigSpleenRupture
Banned
You fail to know how business and large scale projects work, this got sign off and input from all major players at MS. Just blaming mattrick is simply fantasy. He was a part of it but people blame him because he was the public face. Many at MS share the blame here. MS as a whole had a vision for xbox that didn't jive with what consumers wanted, no one person is solely to blame.
I have no clue - there are various structures and they would be specific to the contract MSFT has signed with Foxconn. I would have to do some digging.
mangochutney
Member
No one said it is or is not exclusive to Xbox.
You said it doesn't imply they are going to reduce production volumes.
But this simply cannot be the case if they're telling you they expect to see less consoles in the channel and also that as it is usually a slow quarter, retailers will be buying less and selling less.
Not sure how you can't see that by selling less but making the same you only serve to increase the amount in the channel. The only way you can sell less and have less in the channel is to make less.
Or maybe the PS4 is only selling that well, because Microsoft fucked everything up that they could have fucked up.
PanicFreak
Member
What this says to me is that there is a zero percent chance that Microsoft will make a Kinectless bundle at this E3. Assuming Pachter is correct and they will be producing 12 Million Xbox Ones with 12 million Kinect 2.0s, they will have to sell through a lot of inventory before they can actually adjust what's in the box.
Price drop at this E3. Kinect drop at next E3.
Price drop at this E3. Kinect drop at next E3.
I doubt about this. The Kinect and the price are not the main issue, but the weaker hardware. The resolution gate really hurts Xbox One and will be a decisive factor for purchase the consoles.
BigSpleenRupture
Banned
YEah SONY deserves no credit, did nothing right...................................... They justy coasted on MS mistakes.. So by that token do you agree 360 only sold because sony did everything wrong with ps3??? Ludicrous.,
shinra-bansho
Member
I said the interpretation of the comment's meaning was wrong, in my opinion. That it's referring to the level of inventory that the channel will hold. That doesn't imply or preclude Microsoft reducing production. I highly doubt they're stopping production. They may continue to produce at current levels, and hold that inventory, despite wholesale/retail channel drawdown. Or they may not. It may already be factored into production schedules. Or it may not.
On the whole, I think people are reading far too much into the statement, which as far as I can tell is simply saying:
"Expect lower shipments and revenues next quarter because retailers don't usually order as much in CYQ2."
Inventory is typically recorded as the lower of cost or market value.
If the realizable value of their inventory assets fall, at a certain point they would need to recognize an impairment loss to revalue that inventory.
I wrote "that well", not that they wouldn't sell at all in case Microsoft didn't fuck up everything.
Yeah was afraid of that since Foxconn's contracts are probably so tailor made since they involve production line creation and training. Would you agree though that there would probably be a penalty of some sort though? Every fixed contract I have dealt with has had a bailout option but it was usually pretty costly.
PanicFreak
Member
GLaDOS: still alive
BigSpleenRupture
Banned
It's irrelevant, you can play the what if game for eternity.....it's irrelevant, sony did almost everything right with ps4 period. Sounds like an attempt to dis-credit ps4's success. Putting out a better product then the competition is the point.
Baron_Calamity
Member
For everyone saying this is no big deal, you gravely do not understand modern manufacturing. Before I begin, I'm just talking about manufacturing realities, the console is probably going to be fine. I work in IT for a place that does manufacturing internal and external so I have some perspective on this.
Manufacturing plants aren't just some willy wonka magic fantasy place. Production lines have to be specced, assembled, staffed, and set in motion for a predetermined speed for a predetermined about of time. There isn't a speed adjustment. If you want to produce less of something, its a costly retooling of the entire line. Unless you can somehow fill production arms with similar product, say like Apple did with the Ipad 3 by fitting in the very similar Ipad 2, this is a worse case scenario. This is more costly oops than the red ring of death. Most of the time, when a product isn't selling at the rate it was expected, companies will just warehouse the extra. if they don't sell, then eventually they clearance the inventory out because even warehouses cost significant money over time. Another option is just destroy the extra inventory as it comes of the boat and hope demand picks up so you can stop doing that. Those options are still cheaper than going to the manufacture and asking for less product or even stopping production early.
When a company asks a manufacture to stop or reduce production two things are likely going to happen. The company will have to pay the manufacture for all unproduced units even though they weren't produced nor will be delivered. The manufacture will then charge significantly more to produce any future units at less quantity. They may even be an extra fee on top of that because why not? Also the manufacturer may refuse to work with you on future products.
Manufacturing plants aren't just some willy wonka magic fantasy place. Production lines have to be specced, assembled, staffed, and set in motion for a predetermined speed for a predetermined about of time. There isn't a speed adjustment. If you want to produce less of something, its a costly retooling of the entire line. Unless you can somehow fill production arms with similar product, say like Apple did with the Ipad 3 by fitting in the very similar Ipad 2, this is a worse case scenario. This is more costly oops than the red ring of death. Most of the time, when a product isn't selling at the rate it was expected, companies will just warehouse the extra. if they don't sell, then eventually they clearance the inventory out because even warehouses cost significant money over time. Another option is just destroy the extra inventory as it comes of the boat and hope demand picks up so you can stop doing that. Those options are still cheaper than going to the manufacture and asking for less product or even stopping production early.
When a company asks a manufacture to stop or reduce production two things are likely going to happen. The company will have to pay the manufacture for all unproduced units even though they weren't produced nor will be delivered. The manufacture will then charge significantly more to produce any future units at less quantity. They may even be an extra fee on top of that because why not? Also the manufacturer may refuse to work with you on future products.
open_mouth_
insert_foot_
Solution:
-immediate slashing of system to $399 through retailer discounts/promos
-at E3, announce permanent $399 price and a $349 Kinectless bundle that comes packaged with Forza and 6 months of LIve.
that $349 bundle will move units and will finally be a nice competitive proposition when compared to PS4. If they want to move even more units, swap Titanfall in for Forza.
-immediate slashing of system to $399 through retailer discounts/promos
-at E3, announce permanent $399 price and a $349 Kinectless bundle that comes packaged with Forza and 6 months of LIve.
that $349 bundle will move units and will finally be a nice competitive proposition when compared to PS4. If they want to move even more units, swap Titanfall in for Forza.
It goes manufactered → (inventory) → retailers → customers
In Xbox One's case, the demand is set inventory > retailers > customers
While PS4's are basically handled straight through to the customers:
manufacture < retailers < customers (outside of NA at least)
In Xbox One's case, the demand is set inventory > retailers > customers
While PS4's are basically handled straight through to the customers:
manufacture < retailers < customers (outside of NA at least)
Interfectum
Gold Member
This isn't good for anyone. The PS4 cannot carry this generation on it's own.
If they really want to move the units, then it must be:
349USD for standard bundle with Kinect (50 dollar advantage to cover the hardware disadvantage);
299USD for Kinectless bundle (main sellers)
mangochutney
Member
Yes you did. By disputing claims of a slowing or stopping in production saying 'that's not what she meant'.
Because even if it isn't what she meant (and yes, draw down can mean various things) under the scenario she gave of weaker sales and reducing levels in the channel it can only mean reduction of production because you cannot maintain production levels, sell less and end up with less in the channel.
CassidyIzABeast
Member
Meh. 360 had shipped 5 million in the same period and they'll be closing in on 5 million sold to consumers by the end of June. Considering their price and the nightmare pre-launch period they went through they came out alright.
BigSpleenRupture
Banned
Why not?? ps2 did fine.... You don't need sales parity to be competition. This is a fallacy.
BrokenIcarus
Member
You mean like the PS2 couldn't?
There is likely some "take or pay" provision for the first couple years.
Crimson_Gold
Member
Sarcasm? Joke post? Third party titles are the lifeblood of the industry. The ps4 plays those titles just fine
They're contractually obligated to keep producing a set amount of Kinects. He who must not be named said his contacts spoke of multi-year contracts.
MisterXDTV
Member
Microsoft would lose more money than they make at that price, you know the Bone is not exactly cheap to produce...
KungFucius
King Snowflake
Nothing now is normal. Manufacturing capacity has skyrocketed so you cannot even compare now to last gen.
I fully disagree. There is nothing wrong with having one clear console winner. Xbone will not be considered failure even if it sells less than X360 managed [which is already bound to happen].
Windom Earle
Banned
Well, one doesn't need to be a prophet to predict this after the recent update on their shipped/sold numbers. Interesting to hear it directly from MS nonetheless. Tough times for them are ahead.
shinra-bansho
Member
I dispute it because it doesn't imply or preclude production slowdown. It most certainly doesn't provide any implication of production halting. As far as I can tell, it's simply about the level of inventory that they expect retail to hold in the channel.
Since you seem to have missed my edit:
They may continue to produce at current levels, and hold that inventory, despite wholesale/retail channel drawdown. Or they may not. It may already be factored into production schedules already. Or it may not.
Nintendo currenly have $1.8B in Wii Us sitting in inventory.
On the whole, I think people are reading far too much into the statement, which as far as I can tell is simply saying:
"Expect lower shipments and revenues next quarter because retailers won't be holding as much stock in CYQ2."
Without any firm implications for changes or maintenance of production levels.
SyaraSystem
Neo Member
Pretty much gut check time for MS.
The question is, how hard of a kick in the margin on hardware are they willing to take?
The question is, how hard of a kick in the margin on hardware are they willing to take?
sixteen-bit
Member
Sounds like reality is setting in
BruiserBear
Banned
crazygambit
Member
Because manufacturing (for both consoles) was much, much better this time around. This doesn't really tell us anything about demand though.
BigSpleenRupture
Banned
Many are still in denial, just like all the But esram, but dx12, but SDK, but cloud crap, it's the same with sales. Human mind is a crazy thing
Yeah sadly with most of my friends they don't have an interest in the XB1 but the Vita doesn't really even exist. It is in a much much worse state.
Cthulhu_Steev
Member
Please stop doing "that", and while you're at it stop making suggestions that people who don't work in a sector have no clue about what happens in it.
* Possibly works in a high street bank fixing their printers.
Except Sony will not have that type of retailer stock problems, as demand for their console is still strong and retail presence of the PS4 is still not stabilized. With WatchDogs media deal and TLOU Remaster in Q2, they can maybe even surpass what they shipped in Q1.
A lot of "bad news for MS" stories are coming out just because Sony is extending their lead with each passing month. Xbone is selling fine by lastgen standards, but not nearly enough to match pace with PS4.
Caayn
Member
He's not playing the what if game. All he's saying is that the success of the PS4 is partially thanks to MS screwing up big time. There's nothing wrong with saying that.
Salvor.Hardin
Banned
Erm, sounds to me like some anonymous dude on the internet creating huge assumptions out of thin air to validate his own line of thought.
MisterXDTV
Member
Miles Quaritch
Member
Come on bro, the Vita is in steep decline. Software isn't selling, hardware isn't selling. (software sales across the Nordic states isn't just terrible, it's catastrophic) I'll be very surprised if it sees out 2015 without some kind of extreme action from Sony.
Hell, I'm expecting Sony to make moves this year at E3 to try and boost demand...
Baron_Calamity
Member
Deadly Cyclone
Pride of Iowa State
Well there is demand, and MS is nowhere close to Wii U land, so I think they're ok there. They just need to sell through the stock they have before pushing a bunch more out. People forget the the XBO is ahead of the Xbox 360 in where sales were at this time in the life of the console I believe.
While I feel PS4 is going to run away with this gen, Xbox One will still sell in meaningful numbers and I'm sure software sales will be strong for the platform. Therefore 3rd party support should stick around, so ultimately does it matter if it doesn't do as well as PS4? Owners of the system will still get the majority of games, so ultimately it doesn't matter to the consumer, they can choose between the two platforms with largely the same software line ups.