The Xbox 360 made it on MTV, where Elijah Wood and other celebrities gushed. Its name is on the tips of gamers' tongues across the country...
The Xbox 360 made it on MTV, where Elijah Wood and other celebrities gushed. Its name is on the tips of gamers’ tongues across the country. Its debut — set for midnight at many stores — has had buyers saving up for weeks.
Get ready for the launch of Microsoft’s most important consumer product of the year, one that’s expected to sell out quickly. The much-awaited video-game console is being groomed as the bulwark of one of Microsoft’s three divisions, with a chunk of the company’s fortunes riding on it.
But unlike other Microsoft products, the Xbox 360 brings something the company otherwise lacks: a distinct cool factor, a must-have buzz that places it close to the upper echelons of hipness. And therein lies the console’s added significance. Its considerably geeky parent — one who never ran with the “in” crowd — is hoping some of the cachet rubs off.
Microsoft has been on the sidelines of cool for years, watching Apple Computer, Google and other rivals vault to most-worshipped status with seemingly little effort. Even its own offspring — the original Xbox — acted like the teen who wanted to be dropped off a few blocks from school, playing down the Microsoft name in marketing and promotional materials.
Now the Xbox has been established as an entertainment brand, and Microsoft is revving its marketing machine to build a frenzy over the new console. And while doing so, it will begin to inject the Microsoft corporate name more into the mix.
“Microsoft has finally built something cool,” said David Reid, director of platform marketing for the console. “That’s exactly what people are saying about the Xbox.”
In some circles, perhaps. What’s more striking about the Xbox 360 is the lack of criticism out there right now for a Microsoft product, say some industry watchers.
Xbox 360: The Launch
What is it? Microsoft’s new video-game console, successor to the original Xbox
How much does it cost? Basic system runs for $300; one in a bundled package including extra gear costs $400.
Where can I buy it? An estimated 15,000 stores nationwide will be selling it. Some have taken pre-orders, but others will sell first come, first served.
Midnight madness: About 4,500 stores will open at midnight around the country to sell the console. Microsoft Chairman Bill Gates is scheduled to appear at a launch event, set for 10:30 p.m. to midnight today, at the Best Buy in Bellevue.
“You’re not really hearing a lot of bashing,” said Brian Crecente, editor of gaming site Kotaku.com. “I think everybody is taking this wait-and-see approach, which is sort of amazing when you compare it to how it was when the first Xbox came out.”
The 1.0 blues
Microsoft tends to run into problems with its Version 1.0s — the initial, often buggy product releases — and the original Xbox was no exception. The console’s design was big and boxy, its controller was uncomfortable to use, and customers weren’t sure why this software giant was poking around in video games anyway.
“People sort of saw Microsoft as this outsider that was trying to intrude into this market for years, and still some people feel this way,” Crecente said. “Some people felt like Microsoft was this big faceless corporation that was only interested in money.”
Add the fact that Sony was first to market with its PlayStation 2, which went on sale in North America in late October 2000. Microsoft wouldn’t debut the Xbox for a full year.
The PlayStation 2 trounced the Xbox, particularly in Sony’s backyard of Japan. Worldwide, Sony has shipped 96 million PlayStation 2 consoles compared with 21.9 million Xboxes for Microsoft. Those were hard lessons for a company used to having a monopoly position.
So when the Xbox team ramped up its planning for a successor in 2003, it was determined to avoid its first-generation mistakes. The marketing and design teams took lead roles early on, shaping the console along with the hardware and software groups.
The original Xbox “hadn’t broken out to that mass-market phenomenon that you really look for in the console gaming space,” platform-marketing director Reid said. “At a very early stage here with Xbox 360, we knew we were going to do something different.”
The new console would be more powerful than some personal computers. (For a breakdown of the Xbox 360, see today’s Business and Technology section). The company’s vast marketing army decided to sell it to a broad audience, not just the hardcore gamers who were the biggest fans of the original Xbox.
Selling a system
The massive promotional campaign has begun for the Xbox 360. One television commercial doesn’t show the console at all, only people jumping rope on a city street.
Girls who like to jump rope probably won’t be lining up tonight to buy the system, but they might be interested in two or three years. Microsoft is targeting those buyers now, though it’s hard to measure if the efforts will work.
“I’m sure that there’s like a grand scheme behind it, but I didn’t quite understand how watching people play jump-rope in an urban environment made me want to go out and play an Xbox 360,” said Schelley Olhava, a video-game analyst with IDC, a market-research company based in Framingham, Mass.
The commercial doesn’t show Microsoft’s name at all. It directs people to the Xbox.com Web site, which mentions Microsoft at the very bottom. Microsoft will have a bigger presence in the future, Reid said.
The Microsoft name “certainly will increase from the footnote that it has been at times in the original Xbox-marketing campaign,” he said.
“You typically think of Microsoft as a company that has classically built great products that you need,” he added. “Xbox 360 is the product of Microsoft’s that people want. They lust for it.”
Microsoft wanted to fuel that lust among gamers with a special launch event, and looked to the annual Burning Man festival as a model. From Sunday through the end of today, the company is holding a round-the-clock party for 3,000 invitees in an airplane hanger in Palmdale, a city in California’s Mojave Desert.
They are inviting notable gamers, particularly the ones who have Web logs and are sure to post impressions of the event online. It’s a kind of marketing a company can’t buy.
Microsoft also will hold midnight sales events tonight at stores across the country, including a launch tonight with Chairman Bill Gates at the Best Buy in Bellevue.
And for the children and teens who seem most at home at video-game stores, Microsoft has placed Xbox 360 kiosks there for weeks so people can test out the system. In a small but significant marketing move, the kiosks exclusively use high-definition TVs so the games look as striking as possible.
The company isn’t giving holiday sales estimates, but has forecast selling 2.75 million to 3 million units worldwide in the first 90 days. Michael Pachter, a financial analyst at Wedbush Morgan Securities tracking the industry, has estimated that 750,000 to 900,000 units are ready for launch.
That doesn’t mean the company will push it all to stores, Pachter said. Microsoft could hoard them to engineer a sellout on the first day, hoping “sold-out” signs drive a must-have-it furor among buyers.
“Every single day there’s going to be national media talking about shortages,” he said. “What they’re turning this thing into is something that is highly sought after and is unobtainable, which is going to make these idiot hardware guys that want the box want it more.”
A Microsoft spokesman said Pachter’s theory is not true, and that the company has been doing everything it can to get units to stores by launch. Two manufacturers are producing units, and a third is slated to begin next year. The consoles are all being made in the Pearl River Delta region in Southern China.
Xbox Chief Robbie Bach said the company will have a hard time meeting all the demand.
“These are complicated devices,” he said. “Think about the power that’s being packed into a very small package. It’s very hard to take a manufacturing facility from zero to 60 in 10 seconds.”
Kim Peterson: 206-464-2360 or email@example.com