No shortfall in XBox 360 shipments -- unless you look at the trend

We reported earlier in the week that an analyst had noted that XBox 360 shipments were running light compared to the original forecasts made during its launch. A reader commented that we got our numbers mixed up on that -- the analyst was only counting North American shipments, whereas the prediction I was measuring it against was for XBox 360 shipments worldwide. So I did some digging, and thought I would set the record straight, right or wrong.

First, I looked up the original prediction, which I cited from the Seattle Post-Intelligencer:

Microsoft Corp. expects to ship 4.5 million to 5.5 million Xbox 360 video-game consoles between its release next month and the middle of next year.

But the company will deliver the units at a steady pace, not overloading the market immediately upon launch, said Chris Liddell, Microsoft's chief financial officer. That disappointed some analysts who wanted the company to ship more consoles sooner to take full advantage of the initial interest in the new machine, and to capitalize on its head start over Sony's next PlayStation.

So that's 4.5 to 5.5 million by July 1. Cool. But in May, we also got an update:

Microsoft Corp. Chairman and Chief Software Architect Bill Gates today staked the claim that the Xbox 360™ system will have a 10 million-unit head start by the time the competition enters the market and more than 160 games by the end of the year.

So in fact, we're tracking against two predictions. In Microsoft's SEC filings this week we got some actual numbers:

Entertainment and Devices Division revenue growth of 70% over the prior year was driven by demand for Xbox 360™ consoles, software, peripherals, and Xbox Live. Xbox 360 has sold 6 million consoles worldwide life to date and achieved record cumulative attach rates for software and peripherals in the United States, while Xbox Live passed the four million member mark during the quarter.

So that's 6 million to date, where the date I assume to be September 30, not October 26. But when we dive into the 10-Q filing, we find another little tidbit in there:

We sold approximately 900,000 Xbox 360 consoles during the first quarter of fiscal year 2007.

So those 900,000 units are included in the six million units sold to date. Backing that out, we find that Microsoft sold 5.1 million units by July 1, which falls nicely within the range of 4.5 to 5.5 million. So they made it! There's no shortfall after all!

True enough. But take a look at that sales trend shown in the graph at the top of this posting. In Q3, Microsoft sold half as many units as in Q2, after three quarters of growth. In Q3, there was no lack of supply of units to sell. That graph shows a lack of demand. Perhaps, and I emphasize perhaps, Microsoft has satisfied the market demand for XBox 360s at this price point. Or, perhaps they stuffed their distribution channel a bit in Q2 to make the July target.

All I know is that that trend has to reverse course in a big way over the next six weeks, in the midst of what we have to assume will be Sony's aggressive launch marketing, to hit that 10 million unit prediction.

Technorati Tags: Games, Gaming, Marketing, Microsoft, XBox 360