Microsoft Reports Doubling Xbox 360 Sales, Interpretation a Question [UPDATED]
According to Engadget, Microsoft has doubled sales on all Xbox 360 models between last weekend and the weekend before. I tried calling Microsoft's PR agency but didn't receive an answer, so I'm in speculation mode here, but I wonder if the report is entirely accurate, or whether there is significant spin with questions to be answered.
For example, Xbox has been in the number two seat behind Nintendo's Wii and ahead of Sony's PlayStation 3, but the Wii has been largely sold out everywhere. It could be that the combination of availability and lower price worked in the favor of the Xbox 360. There are other factors in play as well.
One is the seasonality of game console sales. Microsoft has said that it has typically seen 40 percent of unit sales in its second fiscal year quarter, otherwise known as October through December, which translates into roughly 13 weeks. That means we're getting around the time where average weekly sales go up by a factor of 60 percent -- probably not quite there yet, but some of the doubling is a jump you'd expect to see, as September is also an important month for retailers.
The other factor is the psychology of the holiday buyer. If you know that you're going to get an Xbox 360 for someone and you see that the price has suddenly dropped, you might pick it up early and put it away so you don't find empty shelves at the last minute. Between the two of these factors, some significant portion of the lift Microsoft has seen is either a sales increase you'd normally expect or a time shift in purchases that would have happened anyway. It may be that the strategy was smart, but it's still too early to tell, and it will take a analyst first that follows the numbers to give a more telling account.
[UPDATE: I heard from NDP Group, which said that a "significant boost in sales immediately after the price drop" made "total sense." However, they also said that the 100 percent jump in sales that Microsoft announced is based "on claims from some retailers that they experienced double sales" right after the cut, which sounds to me as though the numbers are probably not representative enough for Microsoft to accurately make the claim at this point.]
[SECOND UPDATE: I finally heard back from Microsoft. Here's the official statement:
Coming off the Sept. 3 price drop announcement, the weekend retail results are in: Console sales across all Xbox 360 models were up over 100% between Friday, Sept. 5 and Sunday, Sept. 7. The Xbox 360 Arcade system, now the lowest priced next generation console on the market at $199, showed the largest lift, selling at six times the rate it was the weekend before. (Microsoft internal data) According to NPD, 195,000 Xbox 360 consoles were sold in the U.S. in August, contributing to life-to-date spending of $10.7 billion on hardware and software, and a U.S. install base of 10.9 million units. (August NPD).Notice that there is no explanation of the limits of the internal data, and the NDP numbers say nothing about what the previous sales were. So, I stick with a lot of spin and little tangible information.]
[THIRD UPDATE: The NDP numbers that Microsoft mentioned look a lot less impressive when put into the context of the other numbers that NDP released. In the same month, 185,000 PlayStation 3 units and 253,000 PlayStation Portables. Nintendo moved 514,000 DS and 450,000 Wii units. In other words, even if Microsoft did manage a real doubling of sales, it would still be in second place in stationary console units and in third place overall.]
That still leaves me wondering why Microsoft is shutting down Ensemble Studios, which was responsible for the huge sellers Age of Empires PC game series as well as for Halo Wars (remember that Halo 3 ignited Xbox 360 sales last year). The claim is that it's a "fiscal" decision, but from the outside it sure seems penny wise and pound your head with a hammer foolish. If games drive console units, which seems a pretty safe assumption, why would you tinker with something that worked? Sadly, this must have come as a big surprise to the group as its home page still says that it is looking for programmers and artists. [YET ANOTHER UPDATE: The home page has now changed and the ad for talent at the bottom is now gone.]