Published on April 11th, 2007 | by Daniel David
Microsoft stuffing the channel with Xbox 360's
First and foremost before I continue with this article this is not an article bashing Xbox 360 as a console, this is more of an article of on how Microsoft has been lying to boost its sales numbers.
I read on article on this blog today and it had mostly was talking about Microsoft stuffing the channel to make it seem that the Xbox 360 been selling more then it really is. I would post the article here but it’s to long so click here for the whole article but below is what channel stuffing is according to wikipedia.
Channel stuffing is the business practice where a company or a sales force within a company inflates its sales figures by forcing more products through a distribution channel than the channel is capable of selling to the world at large. This can be the result of a company attempting to inflate its sales figures. Alternatively, it can be a consequence of a poorly managed sales force attempting to meet short term objectives and quotas in a way that is detrimental to the company in the long term. Many managers will engage in channel stuffing to increase annual/quarterly sales. Even though this would hurt the company because the distributors would have to return any unsold goods back to the company, it would help the manager if his earnings was based on a sales quota.
Occasionally, distribution channels such as large retailers have been known to identify the practice of channel stuffing in their suppliers, and use the phenomenon to their advantage. This is done by holding back on orders until the end of the suppliers’ quota period. The suppliers’ sales force then panics, and sells a large amount of the product under more favorable terms than they would under ordinary circumstances. At the beginning of the next period, no new orders are placed and barring any action, the cycle then repeats.
Corporations have been known to engage in channel stuffing and hide such activities from their investors. In the United States, the U.S. Securities and Exchange Commission has in some cases litigated against such corporations.
This is an interesting article and I hope you take the time to read it, this guy really did his research and provided a lot of evidence to back up his claim. If this is true, then the Xbox 360 isn’t doing as good as it would have seem from a sales point of view. I still think the Xbox 360 is a great video game console but this certainly isn’t good for Microsoft in the long run.