Evolution of the XBox Supply Chain
Global Supply Chain Design
Evolution of the Xbox Supply Chain
Management Summary
Contents
Evolution of the Xbox Supply Chain
1 - Introduction
It was in 1999 when the initial proposal to Bill Gates was made to create a game console. Long before the legitimization of this project, Microsoft was not only encouraged by the gamer’s scene to enter this market, but the main driver was to secure shares in the console market. This was, to protect the home PC business, which they expected to be threatened by Sony’s ambitions of providing high-performance consoles for a low price. At that time, Sony was present on the market for already five years with its PS1, therefore having an existing customer basis, good market information and experience as well as a base of games. Especially the existing base of games was an essential advantage for Sony, as profit is mainly made through the games and not through selling consoles, which is usually a loss business.
Within two years Microsoft managed to introduce the Xbox in November 2001 and was able to gain market share of 17 % already at the end of 2004 (Figure 1). This was the initial situation for Microsoft to introduce the 3rd-generation Xbox 360 in November 2005, which eventually happened to be one year prior to the launch of the PS3.
There are distinctive approaches regarding the supply chain design as well as the launch applied for the Xbox and the Xbox 360. This management summary is aiming at discussing these two approaches and its success factors in detail as well as the reasons for Microsoft to apply them.
2 - Supply chain changes between Xbox and Xbox 360 and the motivation behind these changes for Microsoft
While designing the Xbox, the main goal of the Microsoft development team was to introduce a console with superior performance compared to the PS2 in order to gain market share. This would be achieved by a built
Evolution of the Xbox Supply Chain
Management Summary
Contents
Evolution of the Xbox Supply Chain
1 - Introduction
It was in 1999 when the initial proposal to Bill Gates was made to create a game console. Long before the legitimization of this project, Microsoft was not only encouraged by the gamer’s scene to enter this market, but the main driver was to secure shares in the console market. This was, to protect the home PC business, which they expected to be threatened by Sony’s ambitions of providing high-performance consoles for a low price. At that time, Sony was present on the market for already five years with its PS1, therefore having an existing customer basis, good market information and experience as well as a base of games. Especially the existing base of games was an essential advantage for Sony, as profit is mainly made through the games and not through selling consoles, which is usually a loss business.
Within two years Microsoft managed to introduce the Xbox in November 2001 and was able to gain market share of 17 % already at the end of 2004 (Figure 1). This was the initial situation for Microsoft to introduce the 3rd-generation Xbox 360 in November 2005, which eventually happened to be one year prior to the launch of the PS3.
There are distinctive approaches regarding the supply chain design as well as the launch applied for the Xbox and the Xbox 360. This management summary is aiming at discussing these two approaches and its success factors in detail as well as the reasons for Microsoft to apply them.
2 - Supply chain changes between Xbox and Xbox 360 and the motivation behind these changes for Microsoft
While designing the Xbox, the main goal of the Microsoft development team was to introduce a console with superior performance compared to the PS2 in order to gain market share. This would be achieved by a built