Microsoft's John Porcaro addresses XBox 360 supply issues

I have to give Microsoft credit. Some of their people -- specifically John Porcaro -- are trying to provide information about the supply situation for XBox 360s this holiday season. But the comments on the blog tell a story that the XBox backlash we predicted is quite real and may be encouraging some buyers to wait for Sony. From where we sit, this make "lemons out of lemonade" sold-out strategy to account for production shortfalls doesn't sound like it is working quite as well as Microsoft had hoped.

I think some of the comments raise legitimate points:

The weekly restocking seems like propaganda to me. MS knew the demand based on pre-orders. I believe that alot of US preorders are in Europe and going to Japan. Every retailer I have spoken with says the same thing, (and I am D.C. as well). I pre-ordered mine in JULY, and I did not recieve my product on the 22nd. At the time I was told that no one had any idea when the next shipment was coming, maybe next year. As of this morning, 12-3-2005, my local store tells me maybe before Christmas, and the corporate office of EB has no official statement since MS has told them nothing official. My problem with this is that MS and it's disributors had a very good idea as to what the demand was, based on preorders. Yet, when MS announced that it would be unable to fufill it's orders they continud to take peoples money for more orders when they had no intention of delivering them on the promised date. This has left a very bad taste in my mouth. Had I known that my preorder was worthless I would have obtained a refund and taken my chances waiting in line with everybody else.

Another commenter notes:

I would love to side with Microsoft on this one, there isn't a supply problem, there isn't a demand issue. There are a large number of profiteers scooping them and fouling the system. As for retailers lying to customers the only thing that Microsoft could really do to improve their image is to release weekly how many boxes have been shipped and to who, or at least tell the retailers if they don't start informing their staff they have to resort to that.

Then again, maybe the retailers are telling the truth and microsoft is spinning it. However I'm #75 on my local eb pre-order list, my 'guy' said they are getting a few in each week and should receive a large order before christmas. I'm guessing a large number of xbox 360's are stuck on a freighter in transit to the usa and elsewhere.

This is a great marketing example where simple and direct communication would help A LOT. Microsoft should do two things:

1. Get specific about what is available for Christmas. Sorry, three million in 90 days isn't useful information. Consumers want to know what chance they have of buying your product. If they know that there are 500,000 pre-orders and Microsoft has supplied 400,000 to the US, at least they know they should go buy an iPod instead.



2. Start communicating actual shipment quantities. Most consumers now believe that the weekly refreshment comment isn't true. The only way you are going to be able to turn that around is to issue weekly press releases telling consumers how many are making their ways to retailers.

This stuff isn't hard. The best marketing is just honest communication. But if consumers don't get it, they start to suspect that someone is behind their disappointment, and that suspicion falls on the brand behind the product. If Microsoft doesn't get this right, they can kiss their hopes of gaining share in video gaming consoles goodbye.

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