Well i wonder how much is in stock then, because shipping only 1,6 million in 6 months sounds like a huge amount of consoles already in stock, compared to last year...
MS: "Record Revenues" thanks to 360
- Thread starter Dave Baumann
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Well i wonder how much is in stock then, because shipping only 1,6 million in 6 months sounds like a huge amount of consoles already in stock, compared to last year...
Johnny Awesome
Veteran
MS is clearing inventory for a big price drop in May and a summer process shrink to 65nm IMO.
They can sell 200K in NA, 100K in EU, and 25K in Japan every month from here to June = 325K x 6 months = 1.95 million consoles. They'll ship 1.6 million and the other 350k will come from retailer inventory, since they're somewhat overstocked from the holidays.
That's my take on things.
They can sell 200K in NA, 100K in EU, and 25K in Japan every month from here to June = 325K x 6 months = 1.95 million consoles. They'll ship 1.6 million and the other 350k will come from retailer inventory, since they're somewhat overstocked from the holidays.
That's my take on things.
This decision focuses on the idea that the profit in the future will be greater. Investors usually don't think like this. Future promises of better income are not as good as better income as of today. Time value of money.
The share price will be better if Microsoft makes more profit today than in some uncertain future. The dividend can be higher if Microsoft makes more profit today than in some uncertain future.
An investor, unless they are really in it for the long-haul, will simply want better profits today. They are more valuable.
I mean marketshare merely as a percentage of sales in this generation of hardware. Yeah, the PS2 had more, but you can have a lot and not equal the monolithic PS2 figures.
Let me put it this way: MS has enough marketshare that there's an obvious trend of 3rd party games going their way. I know "a lot" is vague, but I think it's accurate enough.
That volume is down marketwide is a reason against a price drop, isn't it? Wouldn't it be better to have a price drop when there's more of the market to catch? I'm not up on this side of things, but it makes more sense to me to price drop before Christmas (like GC's drop to $100) instead of in May (like Xbox's drop to $200). Of course, that's only if they can hold out that long, which remains to be seen.
That's really all I meant. Their hands were tied with the Xbox. Having to drop price by 33% within 6 months is not enviable. Getting to choose between value, price or nothing is enviable.
Even with all that, I think MS is in a much better position than they were with the original Xbox. Would you agree?
MS has the chance to highly influence which playing field the game gets played on, and surely that's more enviable than trying to keep the brand afloat.
Fair point. I don't know much about European sales, but that sounds reasonable to me.
Yet it is the job of CEOs to balance short terms returns with long term stability. You cannot cater only to the short termers. The fact MS makes a lot of money for short term investors should be enough as MS cannot bankrupt the future to spoon feed those looking for immediate maximum return.
You won't make all investors happy, but the goal is to make as many happy as long as possible. Real businessmen realize you often need to take a couple steps backwards to get ahead. Anyone seriously investing in stocks realizes that you are NOT investing in stocks for shortterm gambles. The market for investing is really a longterm investment.
of course ms are very concerned about wii its another console init? (then again nintendo are stuffing around by not producing enuf consoles, which cant be technically to hard to make compared to ps3 or the xb360 at launch)
the reason why that 1 million figure aint good is cause there were no cupply issues for the xb360 then so it doesnt bode to well for the coming months, ms must agree since theyve gone + done a sony + downgraded the expected shipped numbers for the second time.
scooby_dooby
Legend
Avaya; said:
The fact MS went all the way through 2007 without dropping the price already demonstrates a commitment to profitability, I think a pricedrop in the spring is a must for MS's longterm strategy.
Regarding the lower number of units forecasted, here is an excerpt from a WSJ article:
Elserwhere, some analysts were quoted as taking note of the reduced forecast but they didn't change their rating of MSFT, probably because the business does not materially affect MSFT's finances yet.
Now, why doesn't MS get grief for not delivering its previous "promises?"
Elserwhere, some analysts were quoted as taking note of the reduced forecast but they didn't change their rating of MSFT, probably because the business does not materially affect MSFT's finances yet.
Now, why doesn't MS get grief for not delivering its previous "promises?"
I think ms is being very stupid. This is the exact wrong time to be extra cautious and frugal. If they wait around, PS3 doesn't need much price drop to be in mainstream territory. Then MS might lose most advantages they have. The userbase edge is critical right now, yet they're letting it languish.
One price drop and the 20 gig PS3 is 399. That's the same as the 360 default SKU. If the big games like Metal Gear and FF start hitting and looking great, consumers might begin to choose the Sony box. This is a rare instance of the machines being basically the same technically. So you've got to ask why a consumer chooses one over the other.
Considering how fast the Xbox price was slashed to 199, MS is way past the point of being tardy. They have gotten complacent, afraid of a little fiscal pain, whereas they were downright masochistic in the Xbox1 era. I understand becoming more frugal and the luxury to do that, I just think they've taken it too far past a happy medium.
One price drop and the 20 gig PS3 is 399. That's the same as the 360 default SKU. If the big games like Metal Gear and FF start hitting and looking great, consumers might begin to choose the Sony box. This is a rare instance of the machines being basically the same technically. So you've got to ask why a consumer chooses one over the other.
Considering how fast the Xbox price was slashed to 199, MS is way past the point of being tardy. They have gotten complacent, afraid of a little fiscal pain, whereas they were downright masochistic in the Xbox1 era. I understand becoming more frugal and the luxury to do that, I just think they've taken it too far past a happy medium.
Agreed, They have a limited window and as Acert err Joshua :smile: put it the other day, Microsoft is at a point where they get to decide their future. Either go after the market aggressively and price drop to $200 this year or rest on their laurels and be content with a (slightly) profitable business.
Regarding the lower number of units forecasted, here is an excerpt from a WSJ article:
Elserwhere, some analysts were quoted as taking note of the reduced forecast but they didn't change their rating of MSFT, probably because the business does not materially affect MSFT's finances yet.
Now, why doesn't MS get grief for not delivering its previous "promises?"
Is that a serious question?
Agreed
Actually according to my friend who's a CPA stock trading is very volatile and short term. Long term you invest in mutual funds.
Good Point - but Mutual Funds/401k's DO invest in stocks (longterm) as well. They just aren't controlled by the individual.
Yes they're carefully selected as a group of stocks for longterm eg it's longterm as a group not as individual stocks. As individual stocks it's shorterm.
Depends on the mutual fund. Those aimed at low risk/low gain will not invest in stocks for the short term. Of course, they will not invest much in stocks at all, but what they do invest will be with an eye on stability.
If you do a price drop with a high inventory you imedietly get a very high loss.The produced units are count as sold units.So,after a big price drop(example 100$/unit) a 2 million inventory mean immedietly 200 million $ decrease on the income side.So,if they want to do a big pricedrop they have to do that in the begining of the fiscal year AND when they have a small invetory.
But it will srew up the supply chain,and increase the supliers losses(they stop the production,just to flush out the pipeline),or they will create a big inventory from the new units,but it mean they will have to push into the future a much bigger stopage for all of the suppliers.
I fail to see this putative limited window. It's not as though Sony has some magical capacity to rapidly cost-reduce the PS3 such that they can undercut the X360. Microsoft will be able to maintain a considerable price advantage in the foreseeable future. Someone who won't buy the X360 at $399 isn't going to run out and buy the PS3 for $499 or $599. Taking a loss to make the sale merely would bring it forward in time and not away from Sony.
I think Sony has a faster chance to drop prices because Blu-Ray will drop faster than normal compoments.
My point is, as ms has been hammering all this time, who has the EARLY lead is crucial. That gets you games support, which then snowballs, into an assured later lead.
So this time right now is very crucial imo. ms has a nice lead but it's not safe or a sure bet.
In some ways you are right about the price advantage, but there's a certain point where something becomes mass market, probably about 299. If ms fiddles around too much Sony will get there before you know it. Then even if ms is 199 it may not help them that much.
People will forego 199 purchase for a perceived better value at 299. But they wont go to 399 or 499. 399 and 499 are out of the mainstream.
scooby_dooby
Legend
Agreed, if Ms is smart they can take this generation by aggressive pricedrops early. As Acert says (I refuse to use the new name
) they can dictate their success. Will they think longterm, or will the pinch pennies for the short term? Only time will tell... If not, Sony will come from behind and be #1 again.
One thing that is fairly clear is that the market will be fairly evenly split, and that's all that really matters to me. Who is #1, doesn't really matter for much other than internet bragging rights. Whoever 'wins', it won't be by a huge margin.
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