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Microsoft announced that they shipped 3.9 million SKUs to retailers for the second quarter of 2014, which ended on December 31st 2013. The company also announced that they had a sell-through rate of 3 million Xbox One SKUs to customers. What happened to those other 900,000? Microsoft says they're working on it.
There's always been a big fuss over “sold” versus “shipped”. When a company ships an order of product to retail chains, they count that as sold... because, well, they sold them to the retail chains. When the retail chains sell those SKUs (stock keeping units) to customers, they count that as sold, too. However, when a retail chain sells an SKU we add this to another metric called the “install base”. An install base is how many people purchased the unit over its lifetime production run.
Now that we're all caught up on the manufacturing, supply and demand lesson, let's get to the nitty gritty.
Microsoft recently announced that they shipped 3.9 million SKUs to retailers throughout 13 different countries of the Xbox One, as part of their quarterly fiscal report. The fact that they reported they only had a sell-through rate of 3 million SKUs has left everyone wondering about the remaining 900,000... something Microsoft recently addressed.
According to GameSpot, Microsoft corporate PR representative David Dennis sent them the following quote...
"We sold through nearly every unit we could in the holiday period and pulled forward as many units as we could from Q3. However, only some of those shipments were sold into the channel in the final period of the quarter and so there was not time to sell the units through to customers," ... "These units are now being sold through to customers."
Well there you go. An honest response for once. Was that so hard, Microsoft? Was it really so bad to just let people know? To inform them of something important without spin, obfuscation or befuddlement? Did you not find that it was freeing like running in a field naked with the wind against your coconuts and your banana blowing in the spring breeze?
That latest statement actually sounds like it's coming from a company who understands that they need to play catch-up, and that's because they do.
If you check out the Now In Stock pages for the PlayStation 4 and Xbox One (as of the publishing of this article), you'll see that the PlayStation 4 is carried by more retailers and sold out at more retailers, fitting in with the trend that the PS4 is being sold out as soon as supply is provided.
The Xbox One is sold at fewer retailers but is in greater stock supply, fitting with the numerical value above that Microsoft shipped more units than they sold through at retailers. Check it out in the image below.
How well this bodes for Microsoft's performance throughout the early half of 2014 remains to be seen. I know for sure that the suits at Redmond probably can't wait for March to get here so they can attach a killer app to the console and start marketing Titanfall alongside the Xbox One.
Pro-Xbox One Advice: Microsoft actually handled this situation well. They were honest and simply said they would continue to work on selling through those SKUs. You can't really ask for much more than that. All they need to do now is not shoot themselves in the foot anymore like with the XB1M13 scandal to market the console.