Is Microsoft panicking?

And you know nothing about logistics, do you?

High-volume customers get large discounts. It is well-documented that MS believed Xbone will sell 1 billion units.

https://www.vg247.com/2013/05/24/xbox-one-microsoft-aims-for-1-billion-lifetime-sales-100-million-xbox-360-units/

Microsoft pitched 1 billion sales to their component suppliers and placed a very large initial order giving them great component prices.

As warehouses began to fill up, Microsoft had to cut down on sales and the component makers had to increase prices or they would go belly-up.

These contracts are renewed every year based on performance.

And you know nothing about logistics, do you?

High-volume customers get large discounts. It is well-documented that MS believed Xbone will sell 1 billion units.

https://www.vg247.com/2013/05/24/xbox-one-microsoft-aims-for-1-billion-lifetime-sales-100-million-xbox-360-units/

Microsoft pitched 1 billion sales to their component suppliers and placed a very large initial order giving them great component prices.

As warehouses began to fill up, Microsoft had to cut down on sales and the component makers had to increase prices or they would go belly-up.

These contracts are renewed every year based on performance.

Brah, all I'm seeing is you pulling some random factoid out of your ass and then running with it.

Brah, all I'm seeing is you pulling some random factoid out of your ass and then running with it.

Dude, you don't fucking go "1 BILLION SALES LTD, FRIENDS!!! I'LL BUY TONS OF COMPONENTS FIRST YEAR!!! GIVE ME BEST DEALS!!!"

to:

"Alright. Well, we're obviously not selling 1 billion LTD. We think it'll sell 30 million LTD, so we're cutting orders by 90% next year. Can we keep the same price as this year? Ok, thanks, friend!".

Component suppliers definitely increased component prices significantly. You don't cut down on 90% of your projected orders without getting large price increases.

I would say Google/Android more so...

I always theorized that the death of MS would come through mobile devices. You cant beat MS head on they'll just crush you(see Linux and Apple computers). But if you dont go at them head on you can chip away at the giant. That's what Google and Apple are doing with the mobile market. MS has still not capitalized on the mobile market. Their Windows Phone SUCK ASS and will continue to. As for their tablets like the Surface, its doing decent, but decent is nowhere enough with tablets from Google and Apple.

Hell I think(dont know if true) Google and Apple are now richer than MS.

Dude, you don't fucking go "1 BILLION SALES LTD, FRIENDS!!! I'LL BUY TONS OF COMPONENTS FIRST YEAR!!! GIVE ME BEST DEALS!!!"

to:

"Alright. Well, we're obviously not selling 1 billion LTD. We think it'll sell 30 million LTD, so we're cutting orders by 90% next year. Can we keep the same price as this year? Ok, thanks, friend!".

Component suppliers definitely increased component prices significantly. You don't cut down on 90% of your projected orders without getting large price increases.

And you know nothing about logistics, do you?

High-volume customers get large discounts. It is well-documented that MS believed Xbone will sell 1 billion units.

https://www.vg247.com/2013/05/24/xbox-one-microsoft-aims-for-1-billion-lifetime-sales-100-million-xbox-360-units/

Microsoft pitched 1 billion sales to their component suppliers and placed a very large initial order giving them great component prices.

As warehouses began to fill up, Microsoft had to cut down on sales and the component makers had to increase prices or they would go belly-up.

These contracts are renewed every year based on performance.

But you don't have any sources on the actual prices or deals it got for the components.

They are highly accurate educated guesses based on my experience in logistics.

I've worked as an import coordinator and run an independent customs brokerage firm. I've also helped several component suppliers/buyers hedge their orders in case of unexpected price drops/increases as an actuary for a large consulting firm. I've seen their financial statements and deals for high-volume accounts.

Wheres your source for all this?

1) Neogaf insiders have put Xbone sales at 248k last month.

http://gamrconnect.vgchartz.com/thread.php?id=214538&page=1#

Xbone sold 276k Feb 2015.

http://gamrconnect.vgchartz.com/thread.php?id=199566

2) SONY is UP YoY by 20%.

They are highly accurate educated guesses based on my experience in logistics.

I've worked as an import coordinator and run an independent customs brokerage firm. I've also helped several component suppliers/buyers hedge their orders in case of unexpected price drops/increases as an actuary for a large consulting firm. I've seen their financial statements and deals for high-volume accounts.

10/10 would totally believe.

They are highly accurate educated guesses based on my experience in logistics.

I've worked as an import coordinator and run an independent customs brokerage firm. I've also helped several component suppliers/buyers hedge their orders in case of unexpected price drops/increases as an actuary for a large consulting firm. I've seen their financial statements and deals for high-volume accounts.

Initial component prices are based on projected lifetime sales and amount of sales in the first year. There is a contract for 1 year usually keeping the buyer responsible for buying a set amount of components for the first year.

After the first year is over, the buyer assesses if their initial lifetime sales assessment is correct. If it's within an acceptable margin, the contract is renewed for another year unless they find another supplier.

If the initial assessment is incorrect and lower than predicted, the buyer reduces their component orders and the supplier increases their prices due to low lower economies of scale.

I've had 2 specific cases where the buyer reduced their orders by 95+% in the following year following disastrous sales and the supplier increased component prices by 4.5+x what they charged the first year.

@clyde46:

Agreed for the most part. This is why I forever will prefer PC's and Andriod phones/tablets over Apple products. Heck the Surface tablets seem much more interesting than Apple tablets as of now. Steve Jobs definitely was the genius behind Apple and it is showing more so now,

But I wouldn't say Apple has an iron grip on the mobile market, iirc Android phones hold most of the market share with smart phones.

Together, maybe but if you break it down Android is very fractured thanks to the way its updates are done. Unless you are using a Nexus device then you're reliant on the network operator to bring out the updates. Apple has one OS for all its mobile devices, yes there are different versions but the base is all the same. Everyone is using iOS so making apps and things for it is super easy, plus its Apple who pushes updates rather than network operators. Thats even before we start talking about the Apple ecosystem where I can have all my Apple devices on the same wavelength so to speak.

As for the latest in Apple stuff, its just more of the same. Slightly bigger, slightly faster, slightly more experience. They really missed a trick with the Apple watch. They had the chance to dominate the wearable tech market but Apple being Apple the price is stupidly high. Many who could of been interested were turned off by the price.

So you work as the cleaner then for a logistics company... Right on. I really don't care if you work for the US government buying and selling weapons. You haven't posted anything to back up your statements and yet here we are with you posting them as facts.

Addressing the first paragraph I was mostly talking in terms of sales, but in terms of quality definitely agree that Apple OS is much better than Androids. I think MS is trying ti imitate the Apple ecosystem with their Windows 10/Xbox thing they got going.

As for your second paragraph again agreed. Especially on the Apple watch. Apples problem is that it is starting to have the mentality of an high end fashion company instead of a tech company. If they continue down that route It wont be good for them. They dropped the ball something HUGE with the Apple Watch...

Together, maybe but if you break it down Android is very fractured thanks to the way its updates are done. Unless you are using a Nexus device then you're reliant on the network operator to bring out the updates. Apple has one OS for all its mobile devices, yes there are different versions but the base is all the same. Everyone is using iOS so making apps and things for it is super easy, plus its Apple who pushes updates rather than network operators. Thats even before we start talking about the Apple ecosystem where I can have all my Apple devices on the same wavelength so to speak.

As for the latest in Apple stuff, its just more of the same. Slightly bigger, slightly faster, slightly more experience. They really missed a trick with the Apple watch. They had the chance to dominate the wearable tech market but Apple being Apple the price is stupidly high. Many who could of been interested were turned off by the price.

Cleaner? What are you talking about?

You want proof? Here's my AMS report with sensitive information removed.

I operate a very profitable customs brokerage firm with many high-volume customers. I see their commercial invoice and packing list whenever I customs clear their shipments. I know exactly what they're paying for and how much they're paying when they place an order.

Apple has always, well in the last 10 or so years been a "brand". You didn't buy an MP3 player, you bought an iPod. You didn't buy a laptop, you bought a Macbook Pro. That was why they had such a high price tag compared to the rest of the market considering some of the competitors had superior products. You bought into the fact that Apple was somehow different from everything else. Its still the same way now. Apple wrapped up everything in a convenient ecosystem where all the devices they sell connect to each other. People are lazy and want to do things with the least amount of effort so having ecosystem where you can pass what your doing from device to device is a big selling point. Plus average Joe falls for buzzwords and Apple looooves buzzwords.

See, I can post stuff that has little meaning to the topic at hand. I don't care what you do for a living, you haven't posted any links to any evidence so as far as I'm concerned, you're making this up as you go along.

LMFAO... Little meaning? You're a trucker. You don't know anything about how a shipment gets freight released or customs released except that it's okay to pick-up the CNTRs from the terminal or LCL from the CFS once those holds are removed. I deal with that crap every day. I see the H B/L, commercial invoice and packing list every day to clear my shipments.

Also, ISF softwares charge for every AMS# you submit. You really think I just made an account and wasted money filing 2 pages worth of AMS just to prove you wrong on system wars? LOL... Not everyone on the internet is lying.

LMFAO... Little meaning? You're a trucker. You don't know anything about how a shipment gets freight released or customs released except that it's okay to pick-up the CNTRs from the terminal or LCL from the CFS once those holds are removed. I deal with that crap every day. I see the H B/L, commercial invoice and packing list every day to clear my shipments.

Also, ISF softwares charge for every AMS# you submit. You really think I just made an account and wasted money filing 2 pages worth of AMS just to prove you wrong on system wars? LOL... Not everyone on the internet is lying.

You work in logistics, want a medal? I'll freely admit I have no clue how logistics works, I just pick up what I'm told to pick up and deliver it. Thats my job. What you're doing is making assumptions without any shred of evidence.

No, I'm making highly accurate and educated assumptions based on my experience and keen business acumen.

You don't just go from 1 billion LTD sales to 30 million LTD sales without incurring hefty component price hikes.

Which is fancy talk for making it up based on assumptions. None of us know what prices MS pays for components, we don't know what deals they have in place and any clauses in those deals. You're looking at the NPD numbers and suddenly proclaiming that MS is panicking.

Which is fancy talk for making it up based on assumptions. None of us know what prices MS pays for components, we don't know what deals they have in place and any clauses in those deals. You're looking at the NPD numbers and suddenly proclaiming that MS is panicking.

Dude. Initial prices are based on Microsoft marketing their console as the "1 billion LTD sales machine, so you better damn give us great prices or we'll use other suppliers". You really think Microsoft wouldn't take advantage of "1 billion LTD sales" to get razor-thin profit margin components? That is obvious.

As Microsoft is significantly lowering buying components, Microsoft must pay higher component prices or the manufacturers would go belly-up. You can't expect suppliers to take razor-thin margins if they're not producing much. That will financially kill them.

Pretty sure none of that ever happened

Did you not read this thread? It is well-documented that Microsoft expected the Xbone to sell 1 billion units LTD. That was the position they took when developing the machine as well as negotiating deals on components.

No it isn't

Please tell me you are trolling.

If you think your product will sell well, the only logical choice is to negotiate lower pricing with your suppliers.

Why?

If you sell below expectations, you order less the following year but you still had the advantage of lower prices for the first year. If you meet expectations, you keep the same contract. If you sell more, you can negotiate even better pricing.

In any situation, it is always best to negotiate lower pricing because the worst that can happen is you still receiving a discount for the first year, whereas not negotiating a lower price would mean you having to pay a higher price no matter how bad or well your product sold.

Dude. Initial prices are based on Microsoft marketing their console as the "1 billion LTD sales machine, so you better damn give us great prices or we'll use other suppliers". You really think Microsoft wouldn't take advantage of "1 billion LTD sales" to get razor-thin profit margin components? That is obvious.

As Microsoft is significantly lowering buying components, Microsoft must pay higher component prices or the manufacturers would go belly-up. You can't expect suppliers to take razor-thin margins if they're not producing much. That will financially kill them.

It's funny how TC is riding this one billion LTD, when it was referencing next-gen consoles in general, with a potential market, due to the broadening to more than just gaming consoles (multimedia devices).

I mean, all you have to do is read a short-ass fucking quote.

And all you had to do was read the first sentence.

"Microsoft’s senior vice president of Interactive Entertainment Business Yusuf Mehdi has stated that given the broad multimedia focus of Xbox One, there’s no reason why it can’t shift between 400 million and 1 billion consoles in its lifetime."

And all you had to do was read the first sentence.

"Microsoft’s senior vice president of Interactive Entertainment Business Yusuf Mehdi has stated that given the broad multimedia focus of Xbox One, there’s no reason why it can’t shift between 400 million and 1 billion consoles in its lifetime."

And all you had to do was read the first sentence.

"Microsoft’s senior vice president of Interactive Entertainment Business Yusuf Mehdi has stated that given the broad multimedia focus of Xbox One, there’s no reason why it can’t shift between 400 million and 1 billion consoles in its lifetime."

except that's not what he said

it helps to actually read things for yourself

"'We think you can go broader than a game console, that’s our aim, and you can go from 400 million to potentially upwards of a billion units. That’s how we’re thinking of the Xbox opportunity as we go forward.'"

Yep, proves you wrong