Microsoft bravado undermined

Message to manufacturers contradicts sales statements as Xbox 2 shadow lengthens.

Posted by Staff
Microsoft bravado undermined
Microsoft has ordered suppliers of components for its Xbox console to cut back production, following the machine selling “at the low end of estimates” over the Christmas period.

This flies in the face of the triumphant statements made by the firm during the post-Christmas dissection, such as Neil Thompson’s, Director of Marketing, Xbox Europe. “We are pleased that this Christmas was the Xbox-green we predicted. Our increasing market share is great news for us. The steady increase in Xbox gamers over the year proves our strategy of offering consumers exactly what they wanted has paid off.”

Today the story, or at least the message to manufacturing partners, was somewhat different. “At our second quarter earning announcement, we reported that we will end the fiscal year within the sales range originally forecast, but in the bottom half of that range, and for that reason we have asked suppliers to make applicable adjustments,” said the firm in a statement.

This has lead to some drastic cutbacks in order levels, estimated to be approaching 50% of original expectations for the year, as exemplified by Focus Enhancements. The firm, which makes certain chipsets for the Xbox, said, “As a result [of Microsoft's statement], Focus Enhancements has been told by Microsoft not to anticipate purchases of the FS454 chips for Xbox in the first half of 2003 and that we will know future FS454 chip requirements, if any, prior to the end of the second calendar quarter of this year.”

It will be interesting to see how other component partners of Microsoft react to this in the coming weeks.

The question now remains, is this revision a direct result of Microsoft gearing up to launch its slimmer version of Xbox, expected to be debuted at E3 this May? We know that some of the components, not least the DVD drive, have been replaced…

We’ll have to see. Stay tuned.


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