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December 11, 2005

Xbox 360 Buzz: Chip shortage, compatibility update pain, and more

Posted by David Hunter at 12:19 PM ET.

Aside from the subdued launch of the Xbox 360 in Japan (see also Kotaku’s Xbox 360 Japan Launch Guide), there are other topics roiling the Xbox 360 waters this weekend. Prominent among them is the gaming news sites picking up on a Steve Ballmer interview in the Ottawa Citizen:

Q: The Xbox 360 has been a hot seller, and there have been shortages at some retailers. But some people say Microsoft has been creating the shortages as a marketing ploy. Why aren’t you making more?

A: We are making more. All stores are getting new units each week. Can we make as many as people want’ The answer is no, but not because we don’t want to. In these new consumer electronics devices based on new chips, there’s always the question of what yield will you get out of the manufacturing process of the new chip. We’re getting a little less, but not much less than the yields we expected, and we know that the yields we expected will probably outrun supply. But we decided to go ahead and launch rather than wait until post-Christmas and get a few million units out into the hands of users. We’re doing our best.

This has given rise to headlines like “Microsoft admits chip shortage ….” and speculation as to which chips are at fault, although the statement, which admittedly is somewhat difficult to parse, seems to indicate they were expecting an initial shortage in any case.

However, frustrated prospective Xbox 360 buyers can extract some comfort from the fact that Microsoft’s CEO will have to shop for his Xbox too:

Chief Executive Steve Ballmer will have to shop around for an Xbox 360 game console this holiday season just like the rest of us — it doesn’t come with his job.

“The Ballmer children do not have their Xbox 360 yet. I’m in the same boat as many of you,” Ballmer said. “Thanks to the wonders of Sarbanes-Oxley, management does not get a free Xbox 360,” he quipped at a meeting of technology industry executives.

Under financial disclosure rules, Microsoft would have to classify a free game console as income for Ballmer.

There was also a brief flurry when a backward compatibility update that added 7 new games, broke Halo 2. The update was briefly withdrawn, but has now been fixed.

Finally, Joystiq points out the “dangers” of Microsoft Points, the currency in the Xbox Live Marketplace:

Fourth, MS Points make transactions uber-easy on the Xbox 360. After the initial annoyance of setting up the 360, points allow subsequent transactions to happen in seconds. To buy a full version of a demo game that you’ve already downloaded to your Xbox 360 hard drive takes about five seconds. It’s the fastest commerce experience anywhere online with the exception of’s 1-Click feature.

And that’s why they’re dangerous. The marketplace user interface makes spending so much easier than any other shopping experience most of us have ever experienced that it’s quite possible to deplete your MSP balance before you’ve really even considered what you’re doing. It’s also just as easy to replenish your points balance with your credit card, which the Xbox 360 remembers for you.

That’s how shopping should be. Now if only the geniuses at Microsoft could figure out a way to keep those pesky credit card bills from showing up.

That would be a good trick indeed.

Filed under Executives, Steve Ballmer, Xbox

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3 Responses to “Xbox 360 Buzz: Chip shortage, compatibility update pain, and more”

  1. Microsoft News Tracker » Xbox 360 stumbles off the mark in Japan Says:

    [...] We knew the start was slow ([1], [2]), but Enterbrain’s Famitsu Marketing Data Service reveals how slow it really was according to Reuters: Microsoft sold less than half of the estimated 159,000 Xbox 360 consoles that were available in stores in Japan in its first weekend of sales, a survey result showed on Tuesday. [...]

  2. Microsoft News Tracker » Points International welcomes Microsoft Points Says:

    [...] Microsoft Points are the “currency of Xbox Live Marketplace” which we’ve mentioned previously here and here as an attractive way to enable purchasing for the varied Xbox audience. But you have to buy them at a retail store or via credit card online, so it’s not clear what the advantage is in taking them over to and redeeming them for non-Xbox merchandise. Could it be that Microsoft has additional plans for Microsoft Points? Filed under Xbox Listen to this article   [Permalink] [...]

  3. Gates says Microsoft developing an online payment system -- Microsoft News Tracker Says:

    [...] What Mr. Gates describes is a micropayments system rather like Microsoft Points which started out as the popular “currency” of the Xbox Live Marketplace, but since has spread to the Zune Marketplace and general merchandise. Heck, maybe it is Microsoft Points. In any case, it will give the folks at eBay’s PayPal and Google Checkout something to think about it. Filed under Coopetition, Xbox, Google, eBay, Microsoft, PayPal, Argo, Zune [...]

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