Microsoft Channel Stuffing

[Valkysas]

What's channel stuffing? click the link below and find out.

http://www.informationarbitrage.com/...oft_phili.html

I know Sony likes to count units shipped as units sold too, but this is the first time I've heard of a game company forcing extra units into the retail space in order to inflate those sales numbers.

[Toaster]

Re: Microsoft Channel Stuffing

^

10,000th Post

[Red Dragon]

Re: Microsoft Channel Stuffing

626th post ^

Now some might argue that retailers won't want to take inventory they don't want this time of year. But Microsoft has a nice trump card to play here. They simply say, "Well, we have a big consumer product launch of Windows Vista and Office 2007 coming up on January 30. Those who don't take XBox 360s might have some trouble getting inventory of those products." And given that those products are pretty much guaranteed to sell in the millions of units for the year at price points of hundreds of dollars, most retailers will just take the XBoxes and call it a day.

Man, that's just mean.

[JPS]

Re: Microsoft Channel Stuffing

And here it begins, the fall of a giant...

The results to date: 9.7 million Xbox 360; 6.6 million Wii; and 3.1 million PS3. So, the Wii has achieved around 2/3 of Xbox 360s sales volume after only four months, and this after conceding a 12 month head start. From Microsoft's perspective, this can't feel too good or bode well for the future.

[Red Dragon]

Re: Microsoft Channel Stuffing

only 100 bajillion dollars to go.

[JPS]

Re: Microsoft Channel Stuffing

I think Microsoft is on the edge of a corporate collapse, their products are getting worse and nothing is selling good anymore and Microsoft is losing ground quickly on everything except computers, which the only reason they have an edge on that is because thats what alot of businesses run on, and I dont thing its easy to transfer product databases from lets say Microsoft to Mac or Linux.

This is more of a thing for a TCC opinion

[Ivalice]

Re: Microsoft Channel Stuffing

GG microsoft.....GG

[Wavelength]

Re: Microsoft Channel Stuffing

Okay, first of all, wasn't "Information Arbitrage" coined by Thomas Friedman in The Lexus and the Olive Tree? What's up with them stealing his term? (Or am I completely wrong about where it originated?)

EDIT: Looks like the term is more commonly used than I thought, although I can't confirm (or deny) where it originated.

Further, it has come to light that Microsoft, in an effort to embellish its perceived momentum in gaming and its window into family rooms the world over, has been using the oldest and shabbiest of retailer tricks to juice sales figures for the Xbox 360: channel stuffing.

Well, it will inflate short term sales figures, but not long-term ones. Of course, you can overstuff your channels then "forget" to record that some orders were cancelled/sent back, but Krispy Kreme found out the hard way what the backlash of that is.

But Microsoft has a nice trump card to play here. They simply say, "Well, we have a big consumer product launch of Windows Vista and Office 2007 coming up on January 30. Those who don't take XBox 360s might have some trouble getting inventory of those products."

That's an **illegal** tying agreement (EDIT: tying arrangement, not agreement, my bad), pure and simple. Now, I'm not saying that never happens in business. But I doubt Microsoft, who's already on thin legal ice, is going to try to black-ball any major retailers, who would be more than happy to take MS to court and hit them for millions.

Let's not cry "Microsoft is dead" just yet. They're basically THE Gold Standard in software and OS, even if they don't deserve to be. Their company value is enormous. And XBOX was never there to make a profit--not yet, at least.



P.S.--Congrats on Post #10K, Valkmeister~!

[Kire]

Re: Microsoft Channel Stuffing

I wouldn't be surprised if it was found that Microsoft was stuffing the numbers, but it's kinda hard to dismiss the 360 as a total failure for the big selling chart dominators they've had (Dead Rising, Crackdown, Lost Planet, Gears of War).

[Valkysas]

Re: Microsoft Channel Stuffing

That's an **illegal** tying agreement, pure and simple. Now, I'm not saying that never happens in business. But I doubt Microsoft, who's already on thin legal ice, is going to try to black-ball any major retailers, who would be more than happy to take MS to court and hit them for millions.

It's not illegal. They dont have to supply their software to anyone they don't want to.

not the first time retailers have been forced to do certain things to get stuff from companies. Sega forced retailers to drop the Bleemcast software if they wanted to continue recieving any Dreamcast hardware or software, for instance.

[thetruecoolness]

Re: Microsoft Channel Stuffing

Well it'll be a long time before Microsoft is dead. They still have around 70% or more of the computing market (thanks to lot's of exclusive deals and proprietary interfaces and formats, but that's another story), and looking for a job, if you don't know a .NET language you're not quite as desirable (since I guess spending money on the software is better than spending it on better programmers who know Open Source languages, but whatever).

But yes I do think Vista was a disappointment, they really didn't add anything beyond what could have been gotten from Windows Update. I think they're getting lazy because they've been at the top so long, they don't think Apple or the Open Source movement is ever going to gain any significant ground on them, so what do they care. Most people are not computer literate and will willingly buy the next Windows because it's 'new'. Plus they maybe starting to realize what a mess their current kernel and file systems really are. Not that I've delved too deep in them, but when they can't come up like a journalized or DB backed file system like pretty much every other OS in 5 years, something is not going right.

As for the 360, I think that's really too early to call, as much as I really don't like Microsoft as a company, they have really made a good system this time, and though online becomes pretty much a double fee service, it still seems well worth it for the experience it offers. Plus Microsoft has really good 3rd Party Support, and has a solid library for the 360, and had a pretty good one for the XBox. So yeah the Wii may win the mass market, but I think the 360 is still going to be able to hold it's own in that, and may take the core market.

Well that article is pretty long, so I'm sure I'll edit this abit later once I finish reading it, but this really doesn't surprise me much from them. Since so many of their new products only work on Vista, Microsoft forcing things down people's throats is old news (IE anyone?).

And yeah this really isn't illegal. Shifty certainly, but pretty sure on most agreements with retailers Microsoft has the right to deny any of them the ability to sell their product, just like any company can.

[Wavelength]

Re: Microsoft Channel Stuffing

Quoted directly from Wikipedia:

Tying is the practice of making the sale of one good (the tying good) to the de facto or de jure customer conditional on the purchase of a second distinctive good (the tied good). A classic example of de facto tying is the selling of razors at a loss and making the profit on the blades. It is illegal when the products are not naturally related, e.g., requiring a bookstore to stock up on an unpopular title before allowing them to purchase a bestseller.

Using Vista and Office don't relate (from my point of view) to using an XBOX 360, so this would indeed be illegal. I believe Microsoft actually pulled this back in the days of Netscape vs. Internet Explorer, and got nailed for it twice.

[thetruecoolness]

Re: Microsoft Channel Stuffing

Quoted directly from Wikipedia:



Using Vista and Office don't relate (from my point of view) to using an XBOX 360, so this would indeed be illegal. I believe Microsoft actually pulled this back in the days of Netscape vs. Internet Explorer, and got nailed for it twice.

Fair enough, but really it comes down to enforcement. How often is this enforced I wonder?

Certainly not a smart move for MS in the long run.

[Perversion]

Re: Microsoft Channel Stuffing

As far as MS, Nintendo, and Sony are concerned, they're selling product to some of the world's basest impulses. In other words, gaming consumers are just seen as drooling hordes of idiots. And that's a near accurate summation (especially in light of many of the overzealous replies here). Which makes it all the more ironic that the image of the hardcore gamer has, within the last decade, morphed from having anything to do with intelligence, consumer savvy, or game prowess to mere ownership of various platforms. Again, this is a concerted market effort to reduce the gamer to a paying customer and nothing more. What this suggests for gaming journalists, however, is that your analyses and observations will fall mostly on a crowd of deaf and dumb who have been crafted and honed by years of precision marketing to refute all criticism of the industry and its players with the sort of rhetoric employed by political pundits . Good luck trying to shine light where it's not wanted.

This was quoted from a comment further down after the actual article.

[Jeroak Nelave]

Re: Microsoft Channel Stuffing

Looks like MS is scared, and while i'm sure they are not as afraid of the PS3 as they are the Wii, this doesnt bode well for MS, especially with the super high defect rate of the 360. Apparently, the defect rate is over double that of early PS2s (i'll try and find the article i saw).

They have a cheaper product, but it shows in the manufacturing apparently...but its kinda ironic...i dont really have problems with my 360.

...

*knocks on wood*

Edit: and the reason i mention this in relation to this article, is that MS is trying to inflate their numbers to make it seem like they are doing so much better than the competitors.