Analyst: Xbox 360 supply "disrupted"
Goldman Sachs analyst Rick Sherlund says production capacity limiting shipments; demand outweighing supply.
Basic economic theory is built on the idea of supply and demand. Microsoft's Xbox 360 clearly has the latter, but the limited former has gamers chomping at the bit.
"It is clear that something disrupted the supply of Xbox 360 shipments," says Goldman Sachs analyst Rick Sherlund, according to a report from Forbes.com. "And there does not appear to be any end of year catch-up in shipments."
Sherlund believes that 1.3 million Xbox 360s have shipped worldwide through the end of 2005, its first 40 days on the market.
If that estimate is correct, Microsoft must ship an equal number of consoles in the next 50 days, or it won't make its self-stated goal of shipping a minimum of 2.5 to 3 million units in the 360's first 90 days on the market. However, reports from retailers say the second shipment of 360s, which went out just before Christmas, was a mere trickle compared to the initial shipment.
Microsoft may not only be taking a hit by not producing enough Xbox 360s to satisfy demand. Anticipation for the next-gen console is keeping the market for the original Xbox and its software at a standstill--NPD Funworld's numbers for November showed a 75 percent decline in Xbox hardware sales.
"We expect pent-up demand for the next two quarters to drive Xbox  revenues, so the issue at hand is production capacity and not demand," said Sherlund.
Got a news tip or want to contact us directly? Email email@example.com