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Xbox 360 stages great disappearing act

Despite soaring demand, many big-box stores say they haven't gotten any new Xbox 360 gaming  consoles since the product's Nov. 22 launch, and some have gotten just one or two. What’s behind the Xbox’s disappearing act?
Microsoft's new game console \"Xbox 360\" is displayed in Tokyo
Microsoft's new "Xbox 360" game console is displayed in Tokyo in May. The company shipped about 400,000 units before the product's Nov. 22 release, but has shipped few units since.Toru Hanai / Reuters
/ Source: a href="http://www.washingtonpost.com/wp-srv/front.htm" linktype="External" resizable="true" status="true" scrollbars="true">The Washington Post</a

Are they trying to taunt us? Every other commercial on TV these days seems to be for some Xbox 360 video game. At local electronics retail stores, displays for the new Xbox are taking up premium front-and-center floor space, complete with kiosks offering a hands-on look at the product. There's only one problem -- nobody has the thing in stock.

Many local big-box stores say they haven't gotten any new consoles since the product's Nov. 22 launch, and some have gotten just one or two. The Target in Germantown got four units Monday night and sold them almost immediately. As of yesterday afternoon, Web stores Amazon.com, ToysRUs.com, EBGames.com, CircuitCity.com and WalMart.com were all sold out, with no indication of when the new game console would be available again.

Microsoft won't pin the shortage on any one part or manufacturer, so game fans and Wall Street analysts don't really know if this is planned hype or a major screw-up or what. This is what is known: The company shipped 300,000 to 400,000 units Nov. 22 -- and after that, very few. The company says more are coming, but nobody knows for sure.

Hunting for the ‘it’ gift
With hot items such as new Apple iPods or game consoles, the hunt for scarce products has become part of tradition. So ingrained is it that when a new Sony handheld game gadget didn't instantly sell out or spark riots in electronics stores this past spring, some pundits took it as a sign that the company was taking a step in the wrong direction.

No such problem for the Xbox 360. Over on Craigslist and eBay, opportunists are auctioning off the $400 device for $800 or more. College student Chris Lambert built an easy-reference tool for savvy Web surfers by combining leaked Best Buy supply information with a mapping program from Google. Enter your Zip code, and the site pulls up a map showing Best Buys in the area and their alleged Xbox 360 inventory. His site also has a service that automatically pings online stores every few minutes to see if the device is in stock.

A potential problem for Microsoft is that the holiday season is prime selling time for consoles and games. Fed-up customers who don't score an Xbox 360 now might not be in the market for a system again until next year, when arch-rival Sony will have the PlayStation 3 for sale. The new Xbox has not received the sort of rave reviews to give it a clear leg up on the competition in the way that, for example, the iPod has regularly batted down would-be competitors in the marketplace. (MSNBC is a joint venture between Microsoft and NBC.)

Shortages fuel hype, analysts say
For retailers, there's real money at stake. No one wants the old Xbox now that the Xbox 360 is here, so game fans appear to be saving their money for the hot-hot console they can't get. Retail sales of video games fell 18 percent, to $696 million, in the four weeks ended Nov. 26, according to research firm NPD Group Inc., a decline the firm attributed largely to consumers waiting to buy the new console. Retailer Best Buy missed Wall Street estimates this past quarter, partly, it said, because game sales were down in anticipation of the utterly unavailable device.

Still, many analysts, such as Michael Goodman, media and entertainment strategy analyst at Yankee Group Research Inc., play down the effects of the current Xbox 360 shortage on the console's long-term success. "There is some benefit to not meeting demand," he said. "It creates hype, and hype is not a bad thing."

Molly O'Donnell, a spokeswoman for Microsoft, said the company had forecast that it would sell 3 million Xbox 360s in the first 90 days and is still on track to hit that target. Meanwhile, she's dealing with a barrage of requests for the console from friends and family. "Everyone thinks I have a personal supply cabinet full of these things," she said. "I was lucky to get one."

Company denies glitches delaying production
O'Donnell said there is no connection between the shortage and recent reports of glitches with the device, such as units locking up or overheating. "Absolutely not. There is no systemic issue with Xbox 360," she said in an e-mail. "Our manufacturers have been working around the clock to produce as many consoles as possible in order to satisfy world-wide demand. The few isolated incidents of the consoles not working as expected in no way [affects] our rate of manufacture. We are well below the 3-5% return rate that is expected with consumer electronics launches of this magnitude."

There have been other bumps in the road. This week, BBC Online reported that game publisher Ubisoft Entertainment SA's chief executive, Yves Guillemot, said that its new King Kong game is too dark for Xbox 360 owners to play on some sets; its developers tested the game on high-definition sets, the report said, and evidently forgot to plug the game console into a more common tube set. The report said he recommended that consumers buy Kong versions made for other systems instead. Ubisoft later released a statement saying that the executive's comments were taken out of context.

Gamers giddy over shipment rumors
At several big-box retailers, workers seem a little weary of the question of Xbox 360 supply; kids playing games at kiosks to promote the console all say they want the device but don't think mommy and daddy will be able to pull off the feat of getting the new Xbox.

"We've been told we would get some shipments in December, they would not be dependable, and that in January we would get all we need," said Wal-Mart spokesman Marty Heires.

There might be hope in sight, for some. Lambert's site -- which he said gets about 100,000 hits a day -- is now abuzz with a story that Best Buy is getting a fresh batch of Xbox 360s that will go on sale Sunday.

Best Buy corporate headquarters would not confirm the story, but at least one local store said it is expecting a shipment along those lines. One worker in the video game section of the Tenleytown Best Buy said the store is getting 50 Xbox 360s to sell that day.

On the other hand, Lambert's Web site reports the store is getting 36. Either way, you might want to get there early.

Staff writer Margaret Webb Pressler contributed to this report.