The Divnich Tapes: Xbox 360's July Disappoinment

August 19th, 2008, 18:16 Posted By: wraggster

The biggest story this month is clearly in the hardware category, with all the major consoles posting lower than expected results. For today, we will specifically analyze the Xbox 360, as it posted one of the most disappointing results of the year.

So, why all the fuss about July's performance? Because analysts like myself expected a lot more.
Our reasoning behind it was -- at the time -- logical. Price cuts typically increase sales 20-30 percent in the short-term, but we reasoned that because this was a "temporary" offer, consumers would rush to retailers to get an Xbox 360 before inventory ran dry.

This is exactly what happened, but, in hindsight, we forgot to take into consideration a few crucial factors.

First, this was a clearance sale on only the Pro model, which means that consumers who planned to purchase the Elite model would not likely be enticed by this offer.

Those who had planned to buy an Arcade model in July, however, were likely attracted by the offer. But keep in mind that this does not add more Xbox 360 sales -- it only shifts market share between the models.

We were right when we speculated a 20-30 percent increase in short-term sales; however, we applied that to overall sales when we should have just applied it to the Pro model market share. Working it out, mathematically, adds a little more clarity.

http://www.gamasutra.com/php-bin/new...hp?story=19876

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