"Last weeks attacks on New York and Washington are allready having a devasating effect on the U.S. economy, and some analysts are warning the worst is yet to come." -abc news

Microsoft has to be just a little worried about the American and world economy. The strikes against the WTC and the Pentagon could't have come at a worst time for Microsoft as they prepare the launch for the xbox.

I believe that the xbox will fail horribly this holiday season. Has anyone seen the amount of people being laid off at the airliners? 20,000-30,000 a shot! This will have a devasating effect on our economy and will kill Christmas spending. The xbox and Gamecube are going to be the last items people are going to worry about!

Thoughts?

I dunno,
This past week we've seen downturns in every sector but cable. Financial gurus think that's because people are staying indoors and looking for home entertainment rather than going out.

That actually bodes well for Xbox and gaming. Let's also not forget the huge boost relief spending from the government is going to spur for the economy... I just wouldn't invest in tourism or travel these days.

-Andrew

Bub,

I disagree. I believe that people aren't going to spend 300-500 dollars on a console, when that could be used for an extra car payment, gas bill or rent. I still believe this winter, especially if we are engaged in a war, that playing video games is going to be the last thing that people are worried about.

I'm with Bub here. Look at any dark period in American history and you see alot of people spending money on entertainment - whether it's dancehalls or the 'talkies'.

If there are further attacks on American soil, which seems quite possible, folks aren't going to want to go out that much if there is alternative indoor entertainment.

What we might see is a change in the content as more attention and dollars slew towards these higher end game machines. Less meaningless splatter and more light amusement. There's also a possibility that increasing interest in foreign affairs, history and military operations from grownups might lead to more thoughtful, realistic, simulations and recreations.

Just my two cents from the outside. What this means for the X-Box in particular I don't know. I decided a while ago that I was focusing on PC games for the near future and recent events haven't affected my decision.

Hard to say. During the Depression, people flocked to nickel movies, cheap circuses, and carnivals, to take their minds off of the grim reality of life during the century's worst economic downturn. Could be that mindless console gaming will seem like a good idea in these times, too.

OTOH, the Xbox ain't cheap, you can get a PS2 for less (much less if Sony dumps the price down this fall), and Nintendo will have their (cheaper) box as well.

As I said, I dunno.

Also, let's not forget the economy was on a slide to hell before 9/11. It's going to be very tempting to blame slumps in every sector on the Attack, but really that only affects certain key businesses.

But Ben is right. Massive layoffs will resonate. And Xbox will feel them, especially since there are cheaper alternatives like the GBA, PS2 and Gamecube.

-Andrew

I agree that people will want entertainment. It's just that for anyone laid off or in fear of being laid off, that initial $500 investment for an Xbox will be steep.

Microsoft's going to be pinched on other fronts too. The high tech industry isn't doing well and probably will not automatically upgrade to XP and Office XP like they might have in the past.

>you can get a PS2 for less (much less if Sony dumps the price down this fall)

Well, they're both $299 if Sony doesn't drop the price. I'm not sure if they will...time will tell.

Movie rentals have really gone up lately. Movie ticket sales are kinda low, but that's likely just because this is the slow movie season and all the movies out there suck. =) In general, though, entertainment spending goes up during trying times.

But hey, all those layoffs might be a problem. There are lots of new jobs being created right now as well (govt and military), so the turnaround on private sector folks finding new jobs might be quick. Or, maybe not.

>that initial $500 investment for an Xbox will be steep

I guess if you bought another $200 worth of stuff to go with it, it would be $500. Just like the PS2 last year. Or right now for that matter.

I personally think that whatever demand Xbox, PS2, and/or Gamecube will suffer this holiday season will not be enough to prevent them from selling as many systems as they can make. Demand might slim down a bit, but not as far down as supply. Well, maybe in the PS2's case, since they can manufacture more.

Will anyone be selling Xboxes on Day One with, well, just the Xbox, for $299? All the preorder deals so far seem to have been bundles, at the $500 mark. While overall the bundles are priced fairly, that's still sticker shot territory.

For families concerned about the economy, I'd have to think a $500 video game purchase will be hard to justify. Maybe for Xmas, I suppose.

The hardcore video game fans will buy both Xbox and Gamecube if they have the money. It's going beyond that crowd to get sales that might be hard.

"Will anyone be selling Xboxes on Day One with, well, just the Xbox, for $299?"

Yes. The bundles are apparently the result of an edict from Microsoft that says that retailers can only pre-sell a certain percentage of their allocation (the rest has to be sold off the shelf). I guess retailers figured that if they could only take so many preorders, they'd better make them all count. Thus the expensive bundles.

Ask Jason about it, though--he's the person I heard that from.

Well, my wife works for AA, and she's really worried about her job right now. Needless to say, that makes us a little more "money-conscious" than usual.

AA is also talking about the possibility of several rounds of layoffs. This first one of 20,000 employees could only be the first. I think a lot of AA employees will be a little nervous about keeping their jobs.

I doubt you'll see anyone in the airline industry buying an xbox this year.

And with all those unemployed workers flooding the economy -- doesn't look good.

But, then, like Jason said, MS will probably sell every xbox they can manufacture in the initial rush. And, if any company in the world can afford to lose money, it's MS.

Michael-- For a second I thought you meant your wife works at Alcoholics Anonymous. I figured their business would be getting better.

As for the Xbox, it sounds like Microsofts first problem will be producing enough units. We're hearing a lot of rumblings about the actual initial shipment being far less than originally projected. 300,000 units as opposed to 600,000-800,000. Makes all those promises about not fucking up the Xbox launch the way Sony did sound pretty hallow.

But I can see demand being far less now. Maybe people will still buy videogames, but they may be more value conscious. A Gamecube or a price-dropped PS2 (which I'm still guaranteeing will happen) will be far more attractive at a full C-note less then the Xbox. I can see this helping the PS2, especially, with parents buying the console and a handful of used games.

On a completely unrelated note, anyone watching this A Tribute to Heroes telethon? (it's only on every channel). Couldn't they find an American to sing God Bless America? I'm not saying Celine Dion should've been barred from participating, but she's a French Canadia, for godsakes. And nobody sang the National did they?

Brad Grenz

http://gamespot.com/gamespot/stories/news/0,10870,2813174,00.html

That's a recent interview with Ed Fries where he discusses some of the preorder stuff. Basically, Microsoft wants to make sure at least half of the launch units are there for people to just go buy off the shelf, so they're "encouraging retailers" to limit preorder allocations.

As for why preorders are all bundles - that's a complicated economic issue dealing with both MS and retailers, but it's not unlike the PS2 situation last year. You could preorder just a PS2, but when they figured out that they weren't going to be able to fill your preorder for two months, they changed all the preorders over to bundle deals.

>Makes all those promises about not fucking up the Xbox launch the way Sony did sound pretty hallow.

I agree, except for one detail: they're keeping retailers in the loop. With the PS2, retail locations thought they would get like 200 units, actually got 23 on the first day, and were like "what the HELL!?" And then they didn't know when more were coming, or how many. They were mighty pissed.

MS has now backed off the "day one number," which to me sounds suspiciously like 300-500k on the first day. They promise that the fact that they're manufacturing in Mexico means they can send trucks with more units up every day, instead of new stock by ship every two or three weeks. We'll see.

They just started manufacture, and claim they can churn out 150k a week when it's going full steam in Mexico. But I think they're not there yet. My guess is 50k for the first couple weeks, maybe 80k the next couple, then 100k for a couple, then full production. That would put them at around 500k for launch day, and 650k by Thanksgiving weekend. And easily within the 1-1.5 million by year's end.

Not an unreasonable launch amount - about equivalent to Gamecube actually and, if you believe retailers, a good bit better than what they actually recieved for the PS2. But it's way behind Dreamcast, where retailers actually recieved and sold through like 900k units on the first day.

Jason-- I was willing to believe your numbers up until that last bit about the Dreamcast. If the PS2 launch was the most successful launch ever at around half a million units the first day, then the DC numbers would neccisarily need to be below 500K.

And those production numbers for the plant in Mexico seem awfully optimistic. The plant is just were the Xboxes will be assmbled, right? The GPU will be fab'ed elsewhere, yes? While it may be possible to assemble that many Xboxes a week, I doubt the nVidia GPU/north bridge can be produced that quickly.

But you're right. Giving the retailers a heads up was good of them. Everyone knew ahead of time the initial shipment would be half the million promised, but no one told the stores how that would affect their supply. It's not like it would be half across the board, population centers would likely recieve preferential allotment. On the other side you've got retailers ending Xbox preorders and asking Nintendo for more Gamecubes.

>If the PS2 launch was the most successful launch ever at around half a million units the first day

There's a big disparity between what Sony claims and what retailers claim. Sony claims about twice what retailers say they actually got and sold through. Apparently, and I'm not the head of a major retail chain so I only know what I've heard and read, retail chains paid for an allocation of 2-5 times the units they actually recieved. The major retail chains gather that they actually moved around 300,000 units on the first day, and didn't get many more for over a week.

By contrast, the claim for Dreamcast is about 410,000 the first week, and most retailers say they actually got that many. (can't find "day one" numbers, but nobody got resupply within a week, so it's close to that)

I honestly don't know why my memory said 900,000 for Dreamcast. Bad memory, BAD! (hits with rolled-up newspaper) Just ingore my bullshit.

I know this much for sure: at my local three video game retailers (Babbage's, EB, and Toys R Us), and at a much larger Toys R Us where my cousin works in Pensylvania, I actually bothered to find out what they got on the first day. In each case, the stores actually recieved like 200 Dreamcasts on the first day, and maybe a quarter of that PS2s, if they were lucky. Very few stores turned down anyone who preordred a DC, but with the PS2 I had preordered months in advance, I was like #80-something on the list, and it took them like two months to get to me.

The point is this: you can sell like gangbusters on the first day, or be backordered forever with major supply problems, but it doesn't necessarily mean success or failure for your platform. It's a marathon race, and it's won in the 2nd and 3rd years when you move from 5 million users to 50 million.