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Analyst reports Microsoft slashing Xbox 360 build plan by 40%

Pacific Crest analyst, Michael McConnell reported this week that rapid deterioration of consumer demand has forced Microsoft to slash its Xbox 360 build plans by 40% for the fourth quarter.

In his recent report of looming difficulties facing the chip sector, according to the Wall Street Journal, McConnell reported that he has “become alarmed by the rapid pace of deteriorating demand forecasts for Q4, the consistency of these findings throughout every level of the supply chain, and, most important, the magnitude of next quarter’s projected sales declines at semiconductor component vendors, which we believe to be underestimated by investors.”

Along with Microsoft, McConnell has also reported that HP and Acer have both also reduced their build plans.

Update:

Of note, the analyst's quote above was taken from a column published on Barron's website. Barron's is published by Dow Jones and Company who also publish the Wall Street Journal.
It is not known if the report from Pacific Crest's analyst is publicly available.
The Barron's article in question can be found here:
http://blogs.barrons.com/te...

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ranmafandude2181d ago TrollingShowReplies(3)
ndibu2181d ago

Correct me if I'm wrong but isn't this xbox 360's best year as far as demand and sales?

Anon19742181d ago

The last 18 months Microsoft reported, 360 sales were off 4 million units from the 18 months before that. Out of the past 5 quarters reported, only one quarter had positive year over year growth and in the first six months of the year alone they trailed the PS3 by 1.6 million consoles according to official numbers. On top of that Microsoft has been reporting (up until last quarter) a full year of declining revenue from the 360 console and declining software sales - offset by increased XBL revenue.

Since the 360s went on sale worldwide in Mid July we've seen a spike in 360 sales in the US but no official numbers are available from Microsoft for that time period, and the recent spike we've seen in US numbers probably has more to do with the price cut on old consoles then it does with the limited quantities of the 360s that are available.

And now it looks like Microsoft is dramatically trimming their 360 production. It appears there's a bit of a disconnect between how well Microsoft says they're doing with the 360 and what their actions tell.

Forbidden_Darkness2181d ago

Great reply Darkride66, you defiently deserve a bubble for that. The XBL revenue makes me wonder if that is the sole reason that upped the price to 60 dollars, to make a bit more because of falling 360 sales? Which isn't a big price increase, but there's nothing to really back up why they raised it for the gamers side of it, and with alot of gamers finding it hard to buy things in this economy, ten bucks is alot, especially for people who are getting hours cut or being laid off.

Nineball21122181d ago

You know, that makes sense to me. As Forbidden says, the increase in the price of Live may very well be due to the fact that there is declining revenue from the hardware side of things.

It'll be interesting to see the official numbers from Microsoft's financials when they are available.

catguykyou2181d ago (Edited 2181d ago )

The whole reason why Console makers can't make their systems life spans last longer than 6-7 years before releasing another system is because of this. They have to continue to sell lots of systems and they have dried out the market by that point. I expect to see new consoles announced at this years E3 with continued support of the current systems for another 5-7 years after (like the ps2 and ps1 did).

***********

@disagrees
Look at every console released thus far in the industry. How long of a life span did it have before the next iteration was released? This doesn't mean the company stopped supporting it, they just released the new product. To think that Sony or Microsoft or even Nintendo will just sit on the current gen consoles for another 5 years is ridiculous. I know some of you only just bought a console because of the price but that doesn't mean you didn't just buy 6 year old consoles.

outrageous2181d ago

Great piece...and Xbox 1 lost 3.7 billion...lol. How far back does this clown want to go...Who are all the people who are buying the new xbox since June???...LMFAO. How does he think Halo reach, Fable and CoD are gonna do for the 360 this holiday.

@Darkride66...keep crying, many analysts are predicting M$ may jump out in front of Sony by 10+ million units by the time the holidays are over...lol. It's been 5 years and Sony is still in last place, even with M$ not selling anything in Japan. XBL is the envy of the entire gaming world and has generated 1++ billion dollars. What was M$ net profit last year...exactly. Why don't you talk about Sony's 100's of millions lost every quarter...lol...oh yeah, that's right, Sony's on top, starting at the BOTTOM.

JBroken2181d ago

The guy asked about 2010 being the best year so far then you go and give him a long speech about the past 18 months

Nineball21122181d ago

Wha?

18 months = 1 year + 6 months.

According to my world, this is Sept. 2010.

So, less one year = Sept. 2009
Less 6 months = March 2009

Umm, yeah... 2008, not so much.

Wh15ky2181d ago (Edited 2181d ago )

The reason that new consoles are released every 6-7 years is advancements in technology not a "dried out market". The big profits are not made from hardware sales, they are made from software sales.

I think a new xbox and Wii COULD be announced next E3 but not because of their markets being "dried out" its because the technologies in their current systems are becoming very dated.

nickjkl2181d ago

why do you have one bubble that post is godly

bigwheelstuntshow2181d ago SpamShow
Oner2181d ago (Edited 2181d ago )

@ outrageous ~

-----------------------------
"many analysts are predicting M$ may jump out in front of Sony by 10+ million units by the time the holidays are over...lol."
-----------------------------

LOL is right. You keep hoping for that one to be true.

-----------------------------
It's been 5 years and Sony is still in last place
-----------------------------

Bzzz Wrong. #1 because the PS3 has only been out for ALMOST 4 years. But mainly for #2 because you said "SONY" which has PS2, PSP & PS3 just like Ninty has Wii & DS, Microsoft ONLY has 360 in the console market and are TRULY the ones dead last if you want to speak reality.

-----------------------------
...M$ not selling anything in Japan.
-----------------------------

You got that partially right!

-----------------------------
XBL is the envy of the entire gaming world and has generated 1++ billion dollars.
-----------------------------

If you think off the backs of people who have absolutely no choice to do so is "cool". Because everyone who has a

Wii
DS
PS2
PSP
PS3
PC
Hell even those who had Dreamcast's

All get the same ability (and some actually more) FOR FREE! But I ask what does M$'s "generated profit have to do with YOUR GAMING?

Nothing.

You play sales while EVERYONE else plays games...and honestly (especially right now) the 360 is in dire need of exclusive titles to keep up.

The Lazy One2181d ago

"and the recent spike we've seen in US numbers probably has more to do with the price cut on old consoles then it does with the limited quantities of the 360s that are available."

maybe last month. The S has been out for 2 months, and the sales are only going up. If it were more isolated to June, then maybe you'd have a larger point, but there's little evidence that 360S's are not selling.

Since the launch of the S, the worldwide sales of the slim have been doing better than the PS3 slim did originally, and without a $100 price drop to go along with it.

+ Show (8) more repliesLast reply 2181d ago
Kain812181d ago

i think it has more to do with the stockholders. The stockholders/Investors are against the 360 division... http://www.businessweek.com...

Non_sequitur2181d ago

I guess this may have to on how they report their inventory in their balance sheets.

bigwheelstuntshow2181d ago SpamShow
sack_boi2181d ago

This crapticle makes no sense at all.

commodore642180d ago (Edited 2180d ago )

well, what do you expect?

It was written by none other than darkride66.
It was submitted by none other than darkride66.
SMGamers.com is darkride66's blog.

The actual post from Barron's reports weakening demand across the ENTIRE chip sector, not just what the headline implies.

What's more, the 40% reduction in production for the 360 is likely a ramping down of production after extra 360s were produced for the expected spike in demand following the release of the 360s.
This was to be expected, ceteris paribus.
Darkride66, however, conveniently neglected to mention this.
Is anyone surprised?

As a perfect parallel example, the ps3 experienced a similar spike in demand following the release of its ps3 slim, and subsequent reduction in demand and production last year.
http://www.escapistmagazine...

Funnily enough, the author darkride66, seeks to spin this as a specific negative for the 360, when cutting back production is actually a feature of the entire 'chip industry' and not restricted to the 360 alone.
Why does he do that?

How is it that this has become a specifically negative 360 spin, when in fact a multitude of related industries are experiencing the same circumstance?
It makes no sense.

Unfortunately, we all know that Darkride66 has often made analytic excuses for the ps3 profitability, blaming the global financial crisis and the appreciating Japanese yen for the PS3 losses.
Yet, now, he doesn't seem willing or able to apply the same business sense.

I honestly wonder about that guy.

Now I am just waiting for Darkride66's multiple account 'Coljessup' to show up.

ColJessup2180d ago (Edited 2180d ago )

You keep accusing me of being DR66, yet I haven't got a clue why. Just because I call you on your crap? How many other users who disagree with you do you PM accusing of being DR? If you think everyone who thinks you're full of it is DR, you must see Darkride everywhere. "Ah! He's over there! Now he's over there! He's everywhere!" That's a little freaky if you ask me.

I PM'd DR and know a bit about what you're about. I haven't been on this site long, but one thing that's consistent, whenever I see you posting it's crap. At least DR makes sense and sticks to the facts. You should try it sometime, instead of lies you push. "It's just ramping down because of ramping up!"

Brilliant. Now try to prove that just isn't a bold faced lie that you made up. Where's the proof that Microsoft is ramping down because of increased production? All I see is an analyst saying MS is ramping down because of falling demand. The numbers DR gave above seems to back that up. A whole year of falling sales? Spin that, loser.

I don't know if this site is DR's blog and frankly I don't care. He links right to article and it says clear as day, Microsoft is cutting 360 making by 40% due to falling consumer demand. DR's article is right on the money as far as I can tell.

And what's this BS about ramping down production? Don't you think the analyst - who tracks the industry and chip sales would know if this was the case? And Microsoft didn't ramp up anything. The fact is the 360s is in short supply and Microsoft said they're in short supply. Why would they ramp down if they can't keep up with demand? Why don't you use your head?

You accuse DR of spinning this negatively. And then you try to positively spin a forced 40% cut in production. Do you have any clue how much of a loser that makes you look?

I look forward to continuing to shoot down your crap with plain, old fashioned logic. I'm pretty sure everyone already knows what a troll you are - but it's fun to cut you down because you're so out to lunch with your comments. You can't argue, so you just invent crap. It's hilarious.

Pretty obvious to me, you can't handle the truth!

Dragon_Hiko2180d ago

Very nice. +Bubs for owning the 'intelligent' trolls. ^_^
It's just so refreshing to know a few people can actually use their brains like you. Haha

Omega42181d ago

If they are having to cut down and they are still selling so much they should definitely be able to keep up with console demand when Reach and Kinect hit.

Forbidden_Darkness2181d ago

I just don't see Reach giving them more console sales, anyone who likes the Halo franchise or ever wanted to try it, should already have a 360. As for Kinect, time will tell, i'm wondering how it'll fair with new comers.

T9X692181d ago (Edited 2181d ago )

Halo Reach limited console, people that already own a 360 will sell theirs just to buy that one. That's like saying GT5 isn't a system seller because anyone who wanted to try GT should already have a PS3.

@lokiroo420 - Doesn't matter there is still a next gen GT game on the PS3, if you wanted to play GT on your PS3 its possible.

Halo isn't a system seller but GT is? Get the fuck outta here with your fanboy BS.

Halo Reach has over 2 million pre-orders which is more than most PS3 exclusives sell in the entire existence, to say its not a system seller is just idiotic. Some of you guys try so hard to spin the dumbest shit its not even funny.

EDIT:

http://www.amazon.com/gp/be...

Look at #4 on the list, and you're going to tell me Reach isn't a system seller? This is just Amazon to, that's not including every other retailer around the world. You kids are in denial.

lokiroo4202181d ago (Edited 2181d ago )

No its not the same as people wanting gt5, there hasnt been 3 games released with the gran turismo name.

edit:
"Halo isn't a system selling but GT is?" Care to write that in English?

fooltheman2181d ago

what hit what? all those angry moms that throw disfunctional kinect at your head?

wollie2181d ago

Except a real GT games hasn't been released for the PS3

lowcarb2181d ago

Halo has become a must have household name title unlike GT5. Because of this just like the Wii I can see many newcomers jumping on the Reach360 bandwagon. If gamers wanted a console to play GT5 so bad they would have already purchased one for Gt5p by now. This holiday will end the speculation once and for all.

likedamaster2181d ago (Edited 2181d ago )

Sounds like the same regurgitated bullcrap I see on every other thread about Halo.

Halo moves consoles.

nnotdead2181d ago (Edited 2181d ago )

all of you are idiots. big games will bump console sales. i doubt Reach will have the same impact as Halo 3, but it will have one non the less. GTP isn't GT5. i have no idea how one could argue Reach will push consoles but GT5 won't, because GTP already came out.

+ Show (4) more repliesLast reply 2181d ago
UNCyrus2181d ago

US isn't the only region that matters, you forget that

frelyler2181d ago

I get what you are saying, however there have already been three halo games thus far in the 360's life cycle. There have been ZERO GT's and a lot of people have said in there comments all over the web that they are waiting to buy a PS3 until A:) a price drop or B:) GT5 comes out. There has already been a price drop so I would imagine there would definitely be a sales boost. The same could be said for 360 IF there had been no Halo games this gen yet, but that is simply not the case. Just thought I would point out your failed/ lack of logic. Also you seem so angry do you need a hug?

Steve_Urkel2181d ago

"There have been ZERO GT's"

Really big guy? What about the 5 million copies of GT5P sold?

Dlacy13g2181d ago

Many don't recognize the existence of GTP as it will upset them to know they paid $40 for a game that gave them 1/4 of what they will pay for GT5 proper.

GTP is a slap to the face when you compare what it offered fans versus the real deal.

But remember....GTP does not exist and therefore cannot be used against a fanboy argument.

Trebius2181d ago

It's not a full game, nor was it expected to be received as one, considering there was a GT3p years ago, which also sold millions, then the release of GT3 doubled it.

scofios2181d ago (Edited 2181d ago )

@Dlacy13g
halo odst that dlc that is sold for full retail price remember .
and cackdown 2 ?? . but he cannot be used against a fanboy argument.

Dlacy13g2181d ago

I will give you Crackdown 2 as I felt that game did very little to change anything from the first and very much felt like an add on.

Halo ODST I will argue. Yes it was a short campaign...but it was good, fire fight was such a tremendous addition to the series and game play that it really made it a real game to me.

Now...would I be upset if either of those two games had been priced at $40 instead of $60? Nope. I think especially for Crackdown 2 $40 was the right price not $60.

If GT5P was a demo as you say then it should have been priced like one. Not $40 like they did but at most $20 and even that is a stretch. I am sorry but no "demo" is worth $40.

Back on topic...the whole point of this is 5 million people did buy the GT5P "demo" and thus the thirst for a GT game on the PS3 has been addressed...albeit in demo form.

dragon822180d ago (Edited 2180d ago )

Well if a overpriced "DEMO" of GT5 sold over 5 million copies (PSN purchases are not added in to the sales figures). Imagine how many copies the "REAL" game will sell.

Can't we all just agree that GT5 and Halo Reach will both be sales juggernauts??

+ Show (3) more repliesLast reply 2180d ago
frankymv2181d ago (Edited 2181d ago )

the 360 is showing its age. tick tock.

memots2181d ago (Edited 2181d ago )

I was really suprise how quickly it started to show its age. I mean there hasn't been much evolution in the game that was released. It seems to have peaked out a while back now.

But i have high hope for Reach. I have a bunch of card for 1 free month of Xbl Gold that will get used when this comes out.

DigitalRaptor2181d ago

The golden age of the 360 has been. It's gone!

Now only Halo and Gears fans should see the need to buy one.

Reach is the last quality Halo from Bungie, and Gears of War 3 is the last in the series as far as I know. Kinect is epic fail for the core 360 supporters and there's been very few signs of Microsoft's interest in the hardcore, especially regarding exclusives.

There's so much vitality left in the Playstation brand currently, especially if you looks ahead at all the exclusive new IPs, promising sequels and the fresh way in which publishers and developers now see the PS3 as a completely viable platform:

Valve, EA, Capcom, Bungie and many more.

2009 was a major turning point, if not 2008 (with MGS4 and LBP). And now all I can see is great things ahead!

This comment will probably get many disagrees, and I can't help those of you 360 fans who might get a butthurt reaction from it, but it's Microsoft's fault, not yours - remember that!

lokiroo4202181d ago

Greenturd cant spin this into an NPD victory.