Microsoft Slashes Xbox 360 Sales Estimates

By Scott M. Fulton, III | Published 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.

Click here for details of Liddell's statements to analysts yesterday.

Comments

"I bet there are many PS3 and WII owners laughing their heads off over this..."

Silly Fan Boy, Trix are for kids!

Check this! Microsoft's not loosing money on production any more! HAHAHAHA!!! How long till your silly PS3 can clam that?

(Wii won't be long, which is just as good news as the Xbox360!)

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So Microsoft finally admits what we all know, Xbox360 sales are bombing, as people discover it's not as next-gen as Microsoft originally told us it would be, for that, we need to buy the new version of the Xbox360, which does the cool stuff...

Despite what people think, I think Sony got iy right, and played the "release it when it's ready" game...

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Indeed, I wouldn't want to be one of those owners left out in the cold, by the new Xbox360, released just over a year after the 1st version....

I bet there are many PS3 and WII owners laughing their heads off over this...

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I'm concerned. If Microsoft realizes their competion is any outdoor activity the entire planet will be endangered.

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To all the fools that think the new Xbox only brings HDMI and 120Gb to the party, I have bad news, the IPTV feature is also only available on the new V2 Xbox360..

http://www.theinquirer.n...ault.aspx?article=37101

"Windows 'expert' and peddler of all things Microsoft, Paul Thurrott, recently confirmed the possibility of an updated Xbox 360 console, specifically for the recently announced IPTV additions.

In a new edition of 'Windows Weekly', Paul says that a new version of the Xbox 360 will be coming in late 2007 and that only the new 360 will have the ability to use IPTV."

There you have it. 10 million Xbox360 owners left out in the cold....

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I'm one of those guys.

I am waiting for the mk2 version (with 65nm CPU, a bigger HDD and if it comes HDMI - which will mean nothing but a more flexible set of connection options to me).

BTW howls of derisive laughter at all those suckers clinging to their dreams of 'future proof' HDMI 1.3.
I hear HDMI 2 is on the way & coming soon.

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As soon as everyone heard the new HDMI version, as if that was any big deal, they all decided to wait for the new one.

The 120GB HD is the only real plus. Woo hoo, they added DRM controlled HDMI to the XBOX that offers no better picture than component.

All of you brainwashed zombies who think the HDMI actually looks better can start flaming now. You only think it's better because the guy at Best Buy told you it was. Then you look at the picture and nod your head and say, "it does look better". I used to pull that crap on the sales floor all the time. I would tell the customers what they were going to see and hear, once it's in their head, you can easily manipulate them.

Thank god I don't do retail anymore. Most people dont know anything about electronics, and on the rare occasion someone came in who knew more than I did, I put the screws to him and just came right out and asked if they were actually going to buy something or just talk my ear off about how much they know.

That usually gets them out of the store in a hurry. These are the same people who come to the store for a demo, then go on eBay to buy it at 10 over cost.

Weren't we talking about the 360? Now I'm all fired up, where's the Tylenol.

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First of all.

A newer revision may or may not be announced, but people were excited about a CPU die shrink, meaning a cooler system, meaning perhaps a quieter system. a 120 gig drive and an HDMI port for people with newer HDTV's etc.

Now, as to your working retail, and getting into pissing matches with your customers, well, no wonder you don't work retail any more, the store is most likely better off without your kind scaring customers off :)

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Obviously you have never worked directly with the public. In my 30+ years of face to face, head to head dealings with the public at large, I feel he has a right to express himself based upon his experiences.

Having worked retail for 7+ years, I can state that most people don't really know what they want only what they think they might want. Most are woefully uninformed about new technologies with a smattering of half truths and half understood rumors. Bosses tend to lean on employees to move whatever it is that upper management has decided to sell.

Who remembers Beta? 8 tracks? Audio cassettes? Vinyl Records? ALL of these were at one time the latest tech. All are now gone from the mainstream replaced by the latest and greatest. Perhaps the idea of selling questionable tech like HDMI is anathema to the poster you belittle so thoughtlessly. The poster expressed his dislike for a job he found he could not stand to do, so he is no longer doing it. Perhaps he would do better to educate fellow consumers on the tactics employed by retailers to sell their wares. Not all merchants are honest, remember just as so are the consumers.

A bit of honesty on the part of ALL of us would go a long way to fixing the evlis so pervasive in current culture.

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Thanks chief,

I was a really nice guy on the sales floor, when you are honest about what people need and don't need, you will find they end up spending more money just because they like you.

I had the highest close rate out of everybody, probably because I'm a retard and I like to make people laugh. It goes a long way.

When you tell someone they don't need an HDMI because component looks as good or better and the cables are way cheaper, they usually want the HDMI cable anyways. It's called the takeaway, I saw it first hand at a sales meeting earlier this year with a billionaire client.

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HDMI does look considerably better than component, anyone that thinks otherwise, does not understand what is happening to the signal path between equipment.

Anyone that thinks they can see a better (or even similar) picture between HDMI and component, is either:

a) lying, because they don't like the DRM that HDMI can support

b) has a faulty or low quality TV

c) is blind, or blinded by their $100 monster cables.

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Say what you will about Microsoft, but the fact is that Microsoft did come out and lowered projected sales estimates. They did this ahead of time, which is more than you can say for Sony. All the lies Sony has been feeding everyone lately are just too numerous and too ridiculous. I hate Sony and I'm not a big fan of Microsoft either, but you have to give credit where credit is due. When Microsoft screws up or their projections are off, they usually come out and admit it. Something you will never see Sony doing.

Anyway, if you want to look at this headline as a negative against Microsoft, you can. Although it is in fact a negative for the console market altogether. These "next-gen" consoles are simply not selling as well as they were expected. You have to give props to Nintendo on their Wii though. It's doing much better than I expected, for sure. :)

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I agree that the headline is not really a negative against Microsoft, but you have to remember that Microsoft is famous for low-balling earnings and sales estimates to help drive stock and smooth over slow periods (remember their 'cookie jar' accounting practices that the SEC raised hell over?).

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Hope this turns into a lower price.

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Haaaa Haaaa!

Idiots.

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Well at least they are changing the sales estimates before the end of the quarter unlike some unmentionable companies that claimed 4 million then halfway through a quarter 2 Million, then finally at the end of the quarter 1 Million of their widgets shipped in the US as meeting their "goal".

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So why report this and forget to report that they also mentioned Microsoft sold 4.4 million 360's in Q4 of 2006? Was it not in the same Microsoft report that you guys are reading from?

EDIT: Oops, see that they did mention this in an earlier article. Sorry guys I missed that (doh)

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Because it's Microsoft, and it's 'cool' to bash them. You know that if this was Apple news, it would be quickly glossed over.

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Yeah but normally betanews bashes sony alot too, so by making MS look good sony would look worse, right?

Nah, they've bashed sony too often recently, and since their company is an equal opportunity basher, it's Microsoft's turn now :P

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I don't think that this is a Microsoft bash so much as it is general commentary that the industry in general appears to be slowing.

Sure, Liddell is cutting his own forecasts (which MS has done w/ other products in the past in order to beat analyst's predictions for a boost in share prices), but he is also predicting no change in market share - an indirect way of saying that all consoles will experience a similar slowdown.

There is no bashing of anyone here. Just a dutiful report!

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They had another article stating the good news that they posted earlier.

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Lol it is not very hard to bash Sony.

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I'm going to say what I said to the fellows who commented that our story yesterday touting Xbox 360's high sales numbers for the quarter demonstrated a pro-Microsoft bias: It's an earnings report. It's not a position paper.

Here's the timeline from yesterday: When Microsoft posted its revenues at 4:00, we published a bulletin saying, expect Xbox 360 sales to have contributed to record revenues. Response: Not possible, site "X" reports earnings were down 28% or so. First of all, Reuters needs a new copy of Excel: Earnings were down 25%. But that's net profit, not revenue. Big difference. And Reuters forgot to mention that $1.6 billion of revenue was deferred until Q3. Reuters ended up correcting their headline. We didn't need to.

So the full numbers came out and we posted the update in the evening. Entertainment and Devices loses money, but not as much as first quarter guidance suggested, because Xbox 360 sales were so high. Response: Not possible. Hyperbole, smidgen of bias, etc. I checked my calculator and it doesn't have any bias, thank you. Xbox 360 sales saved Microsoft's numbers from tanking.

We also reported on page two yesterday that Xbox 360 sales projections were down. Nate and I were talking this afternoon and realized that only now were the financial sites catching up to that headline, so we ran this story today: Microsoft slashes sales estimates. It's the same news reiterated, and I freely admit it. Response (granted, not across the board, for which I'm grateful): It's cool to bash Microsoft, and this was just another opportunity for us, maybe since Sony wasn't available.

I've said it before here, and it bears repeating: You strangely know you're doing something right when you get called out for both negative and positive bias for the same story.

I know it's easier to think of water-cooler technology issues in a black-and-white context. X sucks, Y rocks. But there is no single issue I can name today in the broad scheme of technology where any pair of brand names, concepts, products, corporations, manufacturers, vendors, product lines, operating systems, or human beings fit that X and Y template.

There is never black and white; there are only shades of grey. Our job is to add color and detail to the grey areas, which means distinguishing the facts so you can recognize them without an instruction manual. It means there will be one light grey area and one dark grey area from time to time. It's not bias, it's not bashing, it's perspective. And it can all change in a nanosecond.

-SF3

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I think the leak of a new version of the xbox360 with an HDMI and 120GB hard drive has and will put a major damper on sales. A lot of people are also expecting a price drop, so they are waiting... and waiting...

The PS3 is also such a disappointment, it put a wet towel on the entire game console world.

Wii is amazing, everyone loves Gears of War on the Xbox 360.

I want a bigger hard drive for my 360, MS has download movies, but the 20GB hard drive is a joke.

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Well, sorry I hit a nerve :\ I was just being kinda silly, but since I MISSED the other article you had before, that would be my bad.

Many BN readers, me included, suffer from OMIF disease (Open Mouth Insert Foot) because we have selective reading comprehension. Me? I just screwed it up because I neglected to read the first frikin sentence or somehow missed the fact that there was a hyperlink to your other article.

In all seriousness, I do believe you guys are fair. Sometimes a tiny bit of bias might possibly be seen in one paragraph or article, but for every one of those you have the other side of the argument presented in another paragraph or article. That is (pardon the borrowed phrase) fair and balanced.

"You strangely know you're doing something right when you get called out for both negative and positive bias for the same story."

Just in case someone missed it in your previous post--that is dead on.

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