Seeking Alpha
Recommended for you:
Research analyst, tech, internet
Profile| Send Message|
( followers)  

By Carl Howe

I wrote a comment on a recent article about it being February before Gamestop will be able to satisfy all of last year's pre-orders for Microsoft's XBox 360 game system. So I thought I would do a little research to see what general availability looks like for the console now that it is about two months after launch.

Looking online at stores like Amazon, Best Buy, Target, and EBGames, there still is no supply of consoles. And the price-gouging on bundles we saw before Christmas still remains, with Amazon not selling any bundles below $900, while EBGames offers a Core system bundle at about just under $600. It's clear supplies are still very tight.

I'm not going to second-guess Microsoft's supply chain issues; I predicted last year they were going to have trouble. But I am going to suggest to Microsoft that they need to get out and talk about their now-serious marketing problem. All Microsoft's public statements to date have simply reiterated the goal to ship six million units by June, without acknowledging the dissatisfaction some of their customers are feeling as they approach the seven-month anniversaries of their pre-orders without delivery. Happy talk about "trying to satisfy overwhelming demand" isn't going to fix the damage being done to their brand.

The best thing Microsoft could do at this point is to have Robbie Bach or Todd Holmdahl start a regular weekly blog about how the manufacturing process is going and how many units Microsoft is actually delivering to customers. After all, Microsoft is trying to gain market share in a very competitive market, with the momentum in 2006 moving to Sony (NYSE:SNE) and Nintendo. It needs to differentiate itself by satisfying its customers better than its competitors. Keeping them in the dark isn't the right answer.

MSFT 1-yr chart:

Source: Memo to Microsoft: Xbox 360 Delays Are Damaging Your Brand (MSFT, SNE)