MS CFO doesn't see a sales spike with X360

[mckmas8808]

Sales of Microsoft Corp.'s (MSFT.O: Quote, Profile, Research) soon-to-be launched Xbox 360 console will be more gradual throughout the company's current fiscal year instead of a huge sales spike when the video game machine is launched on Nov. 22, Microsoft CFO Chris Liddell said on Thursday.

"The analysts were expecting more of a launch spike than we were," Liddell told Reuters, saying that he expected a "more gradual ramp toward" meeting revenue targets.

Microsoft forecast revenue in the December-ending quarter of $11.9 billion to $12.0 billion, while analysts, on average, had expected revenue of $12.26 billion in the December quarter, according to Reuters Estimates.

So like expected from a few people here the Xbox 360 will not have a huge number of released units at launch this year. Obviously this is due to a worldwide launch. Any thought?

 

[Shifty Geezer]

World-wide launch won't affect number of units released. Number of units for sale at launch=number of units made. Worldwide launch just affects regional availability, so there'll be less XB360's in NA because that launch number is also in the EU and elsewhere. Wonder if include the antipodes in that 'worldwide' launch?

 

[scooby_dooby]

They're having supply issues, only gonna be able to supply 1.5mil this year.

Oh well....I'll have mine!

 

[Qroach]

demand has alerady out paced how much they could make. I actually know people calling me asking where they can find one becuase eveyrone is sold out. that has never happened before. The EB near my place has a 5 page list of pre orders.

 

[Edge]

> " that has never happened before."

Well when you have serious supply side issues, that's not hard to do.

 

[Carl B]

Yeah, I think 360 will have it's supply soaked up for quite a few months after launch on current interest alone. Still, the supply issues could have a more dogging effect in Europe and... Japan? Who knows. I don't know what the CFO is downplaying a 'spike' though - it's clear they'll sell out of everything 360 related this holiday season.

 

[AlphaWolf]

Yeah, I think 360 will have it's supply soaked up for quite a few months after launch on current interest alone. Still, the supply issues could have a more dogging effect in Europe and... Japan? Who knows. I don't know what the CFO is downplaying a 'spike' though - it's clear they'll sell out of everything 360 related this holiday season.

A spike would indicate that demand would taper off rapidly.

 

[Xenus]

A spike would indicate that demand would taper off rapidly.

Not necessarily it could also mean the quick sale of stocked up launch units followed by the slow ramp up of production.

 

[Carl B]

^^^What he said.

I'm not trying to impky 360 interest dies off quickly, I'm simply saying I think there will be sudden 'spike' in the XBox crew's revenue.

 

[wireframe]

So like expected from a few people here the Xbox 360 will not have a huge number of released units at launch this year. Obviously this is due to a worldwide launch. Any thought?

This could be straight-talk, but also note that it is in Microsoft's best interests to release a conservative estimate if the analysts' estimates are "very good". Why? You never want to inflate expectations unless you feel you are not being noticed enough, then you make a raucous. If the crowd is already doing the yelling for you then you want to play it down, humble-like, because that will mean that if the external estimates prove correct you are suddenly the "golden boy" and if you don't meet analysts' expectations you have a "told you so" to fall back on, a sort of "no, we are not doing poorly. We are exactly where we planned to be and it was you who got too excited about the prospects."

It's a win-win to issue conservative statements when everyone else is already predicting you to be the next messiah. ("He's not the Messiah, he's a very naughty boy!" - Monty Python's Life of Brian )

 

[Nesh]

. Obviously this is due to a worldwide launch. Any thought?

or probably due to cost minimization

 

[mckmas8808]

Ok I just thought of another question.

Being that now we know that the Xbox 360 will release relatively low amount of units in Japan and EU would the early first to jump to next-gen help MS the way they have been talking about the last 9 months or so? Obviously EU is Sonyland and Japan just hated the Xbox so in these regions will the early jump actually help much?

 

[Guden Oden]

Oh well....I'll have mine!

Pretty much my sentiment exactly. MS will definitely sell all they can deliver, don't really see what there is to make such a fuss about. Sales discussions always bore the hell out of me anyway, the only people who seem to care about stuff like that are those that let their self esteem be dictated by the success their particular console brand does in retail...

 

[scooby_dooby]

FYI: MS is forecasting 4.5-5.5 million sold by June 2006.
http://blogs.mercurynews.com/aei/2005/10/microsoft_makes.html

 

[PARANOiA]

Ok I just thought of another question.

Being that now we know that the Xbox 360 will release relatively low amount of units in Japan and EU would the early first to jump to next-gen help MS the way they have been talking about the last 9 months or so? Obviously EU is Sonyland and Japan just hated the Xbox so in these regions will the early jump actually help much?

On the contrary (speaking for the EU here since I'm in Australia, which is part of the EU thanks to convicts in 1788)... I think EU will be the biggest "bite" for MS with the X360's global launch. You have to keep in mind Europe always gets screwed with machine launches, getting them 6-12 months after Japan and the States.

Seeing the brand new technology on the shelf at the beginning of 2006 (not that that's Australia's release date, but that's another issue!), when we probably won't see anything comparable until late mid-late 2007, in my mind will generate much more sales for the EU market than other regions.

Relating to low-volumes for the EU, I can only see this helping MS here, too, since it creates the perception of a super-hot product that can't keep up with consumer demand. I actually can't think of a console that hasn't done this, except for the PSP launch over here last month. Probably cos most people who wanted one imported/Ebay'd.

I for one, while not going to get a X360 at this stage, am very pleased that we're "on the radar" for the new technology, and hate the fact that this market is an afterthought.

 

[Deepak]

http://news.yahoo.com/s/nm/20051028/tc_nm/ltech_microsoft_xbox_dc

"Microsoft Corp.'s (Nasdaq:MSFT - news) new Xbox 360 video game console may get off to a slower start than initially expected, but the software giant's plan to keep production steady and expectations low may help it win against rival Sony Corp. (6758.T), analysts said on Friday.
Current-generation Xbox sales have slowed ahead of the launch and Microsoft cautioned that early Xbox 360 sales would not be as high as expected, sparking an initial sell-off in the company's shares."

******

This is odd....(according to analysts, who else)

"SLOWER IS BETTER
Console makers such as Nintendo Co. Ltd. (7974.OS), Sony and Microsoft initially lose money on each console and make that up in game title royalties. Only after hardware costs come down do console makers reach break-even and make a profit on the machines.
"Given the business model for the consoles the more Microsoft can backload those hardware sales, the better it is for them financially," said Rosoff."