Microsoft Slashes Xbox 360 Sales Estimates

[Spankey]

Microsoft Slashes Xbox 360 Sales Estimates

Microsoft Slashes Xbox 360 Sales Estimates
By Scott M. Fulton, III, BetaNews
January 26, 2007, 2:12 PM
As BetaNews first reported early yesterday evening, during its regular quarterly earnings call, Microsoft Chief Financial Officer Chris Liddell stated he's cutting unit sales projections for Xbox 360 game consoles for the first calendar quarter of 2007, by as much as three million units.

While vigorous sales of about 10.4 million total units worldwide by the end of last year helped Microsoft recoup the enormous, though anticipated, costs of having built Xbox 360 in 2005 -- added to the costs of launching the Zune MP3 player in 2006 -- Liddell's warning seems to be a signal that the video game market may be in for a slowdown in general.

Market share projections, Liddell said, will be unchanged - meaning, Xbox 360 isn't expected to lose customers to either Sony's PlayStation 3 or Nintendo's Wii. Instead, he appeared to be giving signals that possibly rising inventory levels could be indicators of demand declining at higher than seasonal levels.

Last month, Microsoft executives provided guidance to industry analysts projecting worldwide unit sales totaling 13 to 15 million units since launch, by the end of March. Now that number looks more like 12 million, indicating projected sales of only 1.6 million units this quarter.

The downturn will also impact sales of software, accessories, and subscriptions to Xbox Live, Liddell added, potentially bringing to an abrupt end a stream of unexpectedly positive revenue from the Entertainment and Devices division.

Earlier today, Liddell told Reuters that he believes the first half of this year was always going to be slow anyway, adding that there's a "reasonable amount of inventory in the channel." Which certainly eliminates the possibility that Microsoft's running out of consoles; the problem may be quite the reverse.

[Maximus]

LOL at MS!

They can't give these things away!

[dialog_gvf]

Oh, I love it! You know what is perfect? The fanboys can't respond positively.

3,000,000 fewer Xbox 360 -> At 2% attach rate for the add-on that means 60K lost add-on sales.

Let's see them claim the attach rate will be BETTER than 2%. It only means MORE lost sales.

Gary

[dialog_gvf]

They shipped 10.5 million by the end of 2006. So, this means they think they'll only ship 1.5 million for Q1!

Ooops

[JTK]

Ok so they dropped expectations from 13-15 million to 12 million?

Big deal.

Maybe I'm missing something, but those are still pretty good numbers any way you cut it.

[iceman]

oops...

[JTK]

As BetaNews first reported early yesterday evening, during its regular quarterly earnings call, Microsoft Chief Financial Officer Chris Liddell stated he's cutting unit sales projections for Xbox 360 game consoles for the first calendar quarter of 2007, by as much as three million units.

Ok, put like that, it's a bit more signifigant.

While vigorous sales of about 10.4 million total units worldwide by the end of last year helped Microsoft recoup the enormous, though anticipated, costs of having built Xbox 360 in 2005 -- added to the costs of launching the Zune MP3 player in 2006 -- Liddell's warning seems to be a signal that the video game market may be in for a slowdown in general.

You can count on it, especially when the console scene especially is so homogenous and lacking innovative and creative titles.

And charging $60 a pop for these games just isn't cutting it.

How did we go from a few years ago where they were talking about game prices could come DOWN to this?

Market share projections, Liddell said, will be unchanged - meaning, Xbox 360 isn't expected to lose customers to either Sony's PlayStation 3 or Nintendo's Wii. Instead, he appeared to be giving signals that possibly rising inventory levels could be indicators of demand declining at higher than seasonal levels.

Typical. Hype has died down and everyone knows what you got and they either take it or leave it.

Last month, Microsoft executives provided guidance to industry analysts projecting worldwide unit sales totaling 13 to 15 million units since launch, by the end of March. Now that number looks more like 12 million, indicating projected sales of only 1.6 million units this quarter.

Only? That's not a bad figure, although it's going to be interesting to see where it goes once the PS3 starts getting some of their bigger exclusives starting in March...the same time Europe and the rest of the world are brought into play, so to speak.

You really can't know much about a console until you get to the 10 million figure or so anyways.

The downturn will also impact sales of software, accessories, and subscriptions to Xbox Live, Liddell added, potentially bringing to an abrupt end a stream of unexpectedly positive revenue from the Entertainment and Devices division.

Guaranteed.

Earlier today, Liddell told Reuters that he believes the first half of this year was always going to be slow anyway, adding that there's a "reasonable amount of inventory in the channel." Which certainly eliminates the possibility that Microsoft's running out of consoles; the problem may be quite the reverse.

I should hope so! Shortages should be a thing of the past for everyone at this point, especially the 360 having been out for a year already.

[dialog_gvf]

Originally Posted by JTK

Ok so they dropped expectations from 13-15 million to 12 million?

Big deal.

Maybe I'm missing something, but those are still pretty good numbers any way you cut it.

They projected shipping 10 million and shipped 10.5 million through the end of 2006. Those are numbers the stockholders already knew about.

Their projections were 2.5 - 4.5 million in Q1 and now they are projecting 1.5 million.

You don't see the big deal there?

If those were billions and the units were dollars of MS earnings, I'll bet people would faint.

Gary

[JTK]

Originally Posted by dialog_gvf

They projected shipping 10 million and shipped 10.5 million through the end of 2006. Those are numbers the stockholders already knew about.

Right.

Their projections were 2.5 - 4.5 million in Q1 and now they are projecting 1.5 million.

You don't see the big deal there?

Put like that? Yeah, it's fairly signifigant.

If those were billions and the units were dollars of MS earnings, I'll bet people would faint.

Gary

Indeed.

Maybe OT, but I just have to wonder:

MS, like a lot of other companies, has gotten so big and spread their net out so far and wide...the backlash has to be coming soon. They've got their hands in just about everything at this point.

Too much...


What's the old adage about doing one or a few things very well (specializing) vs. doing a whole lot/everything but not very well at all?

Hopefully you get my point.

[mbslrm]

Originally Posted by JTK

Right.
MS, like a lot of other companies, has gotten so big and spread their net out so far and wide...the backlash has to be coming soon. They've got their hands in just about everything at this point.

Too much...

What's the old adage about doing one or a few things very well (specializing) vs. doing a whole lot/everything but not very well at all?

Hopefully you get my point.

Or, you should be like Sony, and be the best there is.

[JTK]

Originally Posted by mbslrm

Or, you should be like Sony, and be the best there is.

They're the best at some things.

[dialog_gvf]

Originally Posted by JTK

What's the old adage about doing one or a few things very well (specializing) vs. doing a whole lot/everything but not very well at all?

Hopefully you get my point.

Absolutely. There were already shareholders grumbling that MS blew away shareholder equity on the original Xbox (4 billion deficit).

At some point, shareholders will scream "enough!" and pull MS back to the core business of OS and Office products.

$5 billion loss on game boxes?! That's 10% more cash they could have had for the shareholder.

Gary

[JTK]

Originally Posted by dialog_gvf

Absolutely. There were already shareholders grumbling that MS blew away shareholder equity on the original Xbox (4 billion deficit).

At some point, shareholders will scream "enough!" and pull MS back to the core business of OS and Office products.

This is what I'm waiting to see their shareholders and especially Toshiba's finally say in regards to this whole HD-DVD charade.

$5 billion loss on game boxes?! That's 10% more cash they could have had for the shareholder.

Gary

^^ And this is supposed to be one of MS's strongest areas right now.


It can end up getting worse with this:

Toshiba's stockholders (God help them) should already be climbing the walls as far as HD-DVD is concerned, but even MS, with their deep pockets can't be far behind that same condition.

Things like this piece of news and what we all know will be inevitable issues with Vista (not the least of which is obscene cost) are going to chip away from several sides.

It's just a matter of time. Something has to give, even if the first thing is the patience and tempers of some of the major shareholders.

[MyXBR3isMygf]

They also said at E3 they were going to have 10 million xbox live subscribers by May. At CES, they had just under 5 million. Should probably slash those estimates too.

But, wait...innacurate MS estimates? NO! I thought Sony was the ONLY company in the world who ****** up predictions..hahaha.