From BGR

Although the Xbox One’s success has been repeatedly overshadowed by the dominance of the PlayStation 4, Microsoft CFO Amy Hood hinted in a recent earnings call that market saturation for the new console might be approaching sooner than expected.Gamasutra reports that Microsoft shipped 1.2 million Xbox Ones in the third fiscal quarter (January 1st – March 31st), which contributed heavily to the 41% year-over-year increase in revenue for Microsoft’s Devices and Consumer Hardware division. Unfortunately, it appears that those millions of Xbox One consoles aren’t exactly flying off the shelves.

During the earnings call, Hood said that Microsoft “expect[s] to work through some inventory in Q4 [April 1st - June 30th],” mentioning “channel inventory drawdown for Xbox consoles.” From Gamasutra’s perspective, Hood’s statement implies that Microsoft may slow or even stop Xbox One production altogether until demand picks up. We know that the company has shipped 5 million consoles to retailers since launch, but Microsoft hasn’t been as forthcoming with actual end user sales data.

No, this doesn't mean that the Xbox One is being killed off. However it might be possible that MS looking at halting production on the machine until the excess stock clears before they start cranking out new ones.

That seems wise.

The following is Taken from this excellent post on Neogaf

Times are dire if they overflooded the market, I smell a price cut incoming at E3.

For everyone saying this is no big deal, you gravely do not understand modern manufacturing. Before I begin, I'm just talking about manufacturing realities, the console is probably going to be fine. I work in IT for a place that does manufacturing internal and external so I have some perspective on this.

Manufacturing plants aren't just some willy wonka magic fantasy place. Production lines have to be specced, assembled, staffed, and set in motion for a predetermined speed for a predetermined about of time. There isn't a speed adjustment. If you want to produce less of something, its a costly retooling of the entire line. Unless you can somehow fill production arms with similar product, say like Apple did with the Ipad 3 by fitting in the very similar Ipad 2, this is a worse case scenario. This is more costly oops than the red ring of death. Most of the time, when a product isn't selling at the rate it was expected, companies will just warehouse the extra. if they don't sell, then eventually they clearance the inventory out because even warehouses cost significant money over time. Another option is just destroy the extra inventory as it comes of the boat and hope demand picks up so you can stop doing that. Those options are still cheaper than going to the manufacture and asking for less product or even stopping production early.

When a company asks a manufacture to stop or reduce production two things are likely going to happen. The company will have to pay the manufacture for all unproduced units even though they weren't produced nor will be delivered. The manufacture will then charge significantly more to produce any future units at less quantity. They may even be an extra fee on top of that because why not? Also the manufacturer may refuse to work with you on future products.

@trafalgarlaw: I edited your post a bit...it was extremely confusing the way it was laid out without any italicized text and with the source just tacked on at the end like that.

As a mechanical engineer who has worked in a manufacturing plant for about 5 years, you can stop production lines anytime you want with little cost. They are called planned shutdowns. GM goes through it every year during the summer, most plant operations are shutdown and the employees are put on voluntary layoff until full production returns after a couple months. This is to stop overproduction which is much more costly than just shutting down operations for a while until inventory is reduced. No one can predict customer demand, so processes are built to be highly adaptable. This method of manufacturing has been used since Ford/Toyoda were alive, Lean/Kaizen/Six Sigma whatever you call it it's about being proactive instead of reactive and that is what MS is doing here by halting production.

Also times are far from dire at MS the company is doing better than ever since Satya took over. Xbox is just a small part of MS while unfortunately for Sony the Playstation is the only thing that is keeping that company afloat.

If anything else I'm now super interested in the actual units sold for the machine.

@zombie2011: I think you've completely ignored the last paragraph he's quoting.

I grew up with family and friends working at a car plant, so I'd agree that it's completely possible to halt production for a while or reduce the amount produced by reducing the number of shifts. I don't know if it's changed since then, but it still cost the car manufacturer something for producing nothing, or more than what they output.

That said, there is a difference between a car manufacturer reducing or stopping production at its own plants and a company asking their manufacturing and distribution partners to reduce or stop production. There are contracts in place, so if this is true, Microsoft would likely still be paying more per unit than what is actually produced. I don't think this will really affect Microsoft unless they had very terrible lawyers when drawing up these contracts, and I highly doubt that.

This is probably for the best, assuming the consoles aren't moving the numbers MS wants them to. The sales that MS has reported have all been the amount of consoles shipped to retailers, not the amount of units actually sold. News like this definitely makes me wonder how much they've sold through.

I have no witty comment or even insight on this. But it's interesting how the tides are shifting so rapidly this generation.

Ford/GM owns their own plants, console manufacturers always have an (at least) one-year contract with contracted manufacturing plants. Times are dire for the xbox (brand), not Microsoft as a whole. Latest reports are 5m shipped but only 4.2m sold. That means 800k unsold globally (though effectively in the states) with manufacturing plants pumping out 200k (by estimated of known XB1 plants) a month. Couple that with the recent fire sales with XB1 & Titanfall (+Forza) bundles and unofficial price cuts.

It's funny how they wind down XB1 manufacturing to stop flooding the U.S. market but still can't launch officially in (82% of) Europe yet. That is dire.

I didn't ignore the last paragraph, and i don't work for GM, i was using them as an example because their layoff also effects our plants but not in a negative way. I work for a tier 1 supplier who makes parts for pretty much every major car company. They do not pay more for parts when we stop producing parts for them then start back up production that is complete BS. Also "their is no speed adjustment" is the dumbest thing I've heard, the whole idea of modern manufacturing is being able to hit variable takt times due to customer demand. When they give us a contract we are expected to be able to adapt to their demand, MS is a better run company than Chrysler, GM and Ford so i'm 100% sure they also do not have a defined production quantity in their contracts. The guy he is quoting works in the IT department and he has "perspective on this" I on the other hand am the process engineer who designs the assembly process, so i think i know more than him.

After reading what i said i know i sound like a dick but it's saturday i'm drunk so i don't care, however, that doesn't mean what i wrote isn't correct.

I've heard a rumour that they dumped unsold stock in a New Mexico landfill. Worth investigating, I think.

Why is this even a thread? Cutting production to get rid of stock is a normal operation and happens to literally everything. It's not like the X1 is failing (fact: it's very successful) so it's not a sign of anything.

Who would we get to investigate it since Major Nelson is busy?

MS will be fine. In fact, they'll likely win this generation as if they want, they can throw money at people to make everything Xbox one exclusive. Sony can't afford to do that.

You have nearly 10,000 posts and this thread is the one that pushed you to the edge? "Why is this even a thread?" I have to believe you have seen worse :-p

Because historically there hasn't been any documented situation in which a new console was moved into halted production, at least not this quickly. There is clearly an over estimation for demand here on the company end.

You know I think the Xbox One not selling as much is not due to the PS4 so much but due to the Xbox360 and PC.

Think about it...

PS3:
Decent with some big hits but it cost to much to start with, did not sell as well as hoped with a few issues from controllers with no rumble to start with and the big success of the 360.

PC:
A lot of the big games are coming to PC and have a better framerate and look better then even the current consoles. It is easy to buy a game from steam and others and play it.

The 360:
Big success, I still got mine and games are still coming out on it. It has a massive install base ,online service and people have invested in it and a big library over along period.
The older consoles have had a longer life span then the ones before it and established themselves.

The Xbox one:
Now ignoring all the bad marketing etc that MS did , that will have course played some part to its sales BUT:

With all of the above in mind... Why do you need to get an xbox one? I don't. My Tv plays stuff and does heaps more then I need it to, I got a 360 but my PC is top end and I use a controller with it to play the top games on that.
And a lot of people will be in the same boat.. With the cost of the xbox one... Do you need to buy it yet?

No really.

Xbox live and features of the 360 were quite good and well polished already.

PS4:

Now of course people love their PS3 but even for me I seen people who have loved the PS3 jump on PS4. PS3 and Sony have fans, but even those fans, from what I can see have always wanted it to be better in many areas. Sony has finally hit those problem points with the PS4 from interface, online features and more with a great price.

A lot more new and existing Sony PS Fans are jumping on the upgrade to get better and more, especially when it comes to the online experience.

So for me, I do not think its a simple matter that more are turning to PS4 then Xbox one.

I think you probably find there is heaps more still actively on the 360.

"Ford/GM don't own their own plants" I stopped reading their you have no knowledge of the manufacturing world.

@zombie2011: The problem is that you are comparing this to the automobile industry that owns their assembly plants, as if it lines up perfectly with electronics manufacturing not owned by the company. This doesn't even equate to manufacturing parts like Mopar and other companies since there is still a needed parts market outside of what the car manufacturer requires.

It was the quote that talked about speed adjusting, not me. I know they don't do that at car plants. They have multiple shifts. When they lower production they may reduce the number of shifts or the number of days each shift works. Even then, there is a cost to doing this, but it's better than eating the cost of being in full production and making no sales. I'm focusing on that last paragraph. These manufacturers, that are not owned by Microsoft but contracted, are not going to sit idly by without making some money from Microsoft until any potential overstock has dwindled down, and Microsoft gives them the go ahead.

You're correct in what you wrote about American automobile manufacturers and parts distributors, but not about console manufacturing overseas.

I don't know the specifics about Ford/GM, but I do know the Chrysler Group owns some of their plants. There may be others where they lease the land and building, but they are still managed by Chrysler. While Ford/GM might not "own" their own plants, they are managing them. They determine which model is manufactured at each plant, and what shifts are working. These aren't fast food franchises not owned by McDonald's or manufacturers like Foxconn.

I still havent heard sales for Titanfall but they were expecting it to push 7-10 million copies. That was a dream from my pov, but if it didnt even break 2 million from all of the marketing and love it got that is an epic failure.

Just for a historical comparison the last Major machine that halted production was the Gamecube in 2003.

BBC Article

That production halt was 2 years into the lifespan of the machine.

In other news, amazon has fucking day one editions for the XBO in stock. What does that even mean? For one, it makes the concept of a day one edition meaningless, and 2 shouldn't that have sold out awhile ago?

GM does make some of their own parts but they also source some of their parts, depending on the vehicle. They do own parts factories and sell parts (under the ACDelco brand).

Is it Amazon that is selling them? Or is it other people/companies selling them through Amazon?

By Microsoft, ships and sold from Amazon

What I love about these stories is seeing a bunch if clearly uninformed people make very bold and sweeping proclamations based on a single news story they've read, and then have others who actually have experience in the topic at hand come in and discredit the lot of these very matter-of-fact statements.

Fronting like you know it all is what the internet is all about isn't it? :D

Completely false statement right there. Like i said i work for a tier one supplier for the automotive industry and we own all our plants. The only thing Ford/GM/Chrysler/Honda etc own are the shipping racks we send parts to them in. We have a several plants that supports the Chrysler plant in Toledo Ohio and we own the building and the several others surrounding it completely. This is my job, this is what i'm in charge of so i know what i'm talking about, who is talking about Mcdonalds and Foxconn except you? Also i've traveled around many plants that manufacture all types of products as part of best practices we have an electronics divsion that works the exact same way we do.

Since you mentioned it, can anyone explain why the XboX One is still not launching here (Scandi) before this fall ? I mean, I know stores here actually import and repackage with localized hardware so it can't be a production or manufacturing problem, right ?

The Kinect voice command integration means that launching in other markets is a very slow process.

Wrong! I'm not talking about suppliers. That's like talking about the fabs where these consoles are getting their processors. I'm talking about auto plants, and I know Chrysler owns the plant and not some supplier, regardless of what tier it is. And as I said, the ones they don't own, they still manage the production. So clinging to the "owning" part is ridiculous.

I don't know if you're good at your job, but that doesn't mean you know how other plants work or who owns them. At this point you just can't admit that you're wrong here, and will cling to the "it's my job to know" excuse.

The comparison to McDonald's and Foxconn went over your head completely.

@korwin: Guess that makes sense... That bet on Kinect sure seems to have payed off :P

If Microsoft could do that, they would've done it years ago.

excuse you...?

@mcfart:

Not going to happen. Xbox division is already being looked at by the new MS CEO as a division he possibly wants to get rid of. They have a budget and they won't be blowing all of that scooping exclusives when they are actively still eating losses on hardware that isnt selling as well as they anticipated. Titanfall helped but the gap now is 2 Million units in Sony's favor approximately and I seriously doubt Microsoft takes back the reigns of market leader this generation. That's even if Xbox remains an Microsoft property.

@demoskinos: Source?

Demoskinos is correct that before Balmer was given the boot, there was chatter that members of the board were commissioning analysis on the state of certain business units which normally doesn't happen unless they were thinking about downsizing or spinning off units. Microsoft Software Studio and XBox where both separate until recently and both look at. I suspect what was going on is that if Balmer was going to stick around his plan would have been something along the lines of spin off these things to be "wholly owned subsidiaries" to isolate them from the "mothership".

But with a new CEO, any plans like that were put on hold or even scrapped. The issue has always been that at its best XBox was never really close to their "core business" and it shows. It worked last gen because they were ahead of the direct competition where except for that big major huge "oops" it was fine. Now the market and the business is in a different place than they were 10 years ago and can't really let it go off and "do whatever" any more without answering for consequences when "do whatever" doesn't work out correctly because they have too many units doing that.

@rachelepithet: #breakingnews #gamechanger #jointheconversation

@me3639 said:

Are there even 10 million Xbones in the wild?

Ever since the DRM fiasco it seemed like Titanfall was doomed to be collateral damage from the fallout.

@oldirtybearon: There is nowhere close to even half that. Well if were talking shipped to retailers they are at 5 million. But that is just sold to merchants not sold through to customers. On the flip side Sony is at 7 million sold through to customers. Now it would be alarmist and stupid to say the Xbox One is done but it does show how impactful the initial impression of the console was. I work in retail and by my experience up until a few months ago I still had customers under the impression Xbox One was always online.

Although on the flip side sales on the PS4 in my store have started slowing down from the initial flurry.

All things considered the Titanfall launch seems to have underwhelmed from a sales standpoint. I honestly though Microsoft would shift at least 500000 consoles during the launch. The system was discounted and still sales didn't rise dramatically. That being said the XB1's sales in a vacuum are still pretty impressive.

@mikey87144: NPDs had the Xbone at 311,000 units sold, and Titanfall has been the top selling game in the UK, so if Titanfall moved Xbox Ones, then it is possible that they sold ~500,000 (but unlikely).

@me3639: I haven't seen anyone at EA or Microsoft say they expected 7-10 million units. That is an absolutely unreal expectation for them to have for sales of a game on a 4 month old system. Even if you factor in 2-3 million (which is beyond generous) on the PC, they would still be expecting almost a 1:1 attach rate between game and system. And that has literally never happened.

Maybe there also counting the 15 copies the 360 version sold as well?

In all seriousness, this is odd news, and given the back and forth here about what it may mean, I'm not sure what this says about it. I had a feeling the Xbox One was lagging behind the PS4 in sales due to poor response to it's unveiling and people still thinking the always online stuff was still there, but I didn't think it was possibly this bad.

Saw the same article on Yahoo by BGR. Any article that Yahoo posts on video games is click bait, purely speculation otr exaggeration of facts. Saw one today by the Motley Fool saying the PS4 will be Sony's last console. Should I make a thread and discuss that bullshit article as if it were fact like the OP has done with this bullshit article?

@ericsmith: In regards to the Titanfall numbers. If it was ground breaking, we would have seen the numbers by now. Hell, we even know infamous number by this point. My guess would be 2-3 million life time sales on 360+x1. I do not think it is close to that right now.

@eternalvigil: @mikey87144:

This is just one article with sources from the likes of the infamous genius Micheal Pachter proclaiming it would sell 8-10 million across all platforms. The source i recall however was directly from MS and EA on their expectations. http://tech.fortune.cnn.com/2014/03/10/titanfall-microsoft/. All i can say is there are games on steam right now that had ZERO.ZERO marketing and sold over a million copies and they arent even FINISHED. A lot of things have changed and no matter how good a game may be, that price tag for consoles + new games is becoming very unattractive to consumers. IMO Titanfall, based on market is at most $30 game. I have an unlimited budget and while it may be awesome there are dozens of games out there offering some pretty great experiences FTP, or for a lot cheaper. This is going to be the hurdle make no mistake for franchises that we have grown accustomed for the last 10 years and for some even longer. I bought DK 2 for $50 on Steam, and will probably be the only game i pay full price for a game this year. How will the publishers adapt? It was disappointing to hear MG sold 1 million copies for basically DLC content. That was a chance for the consumer to stand up, but lets face it, gamers are not the smartest people around.

So partner linking now means everything is bullshit? Way to over generalise there dude. All they've done here is report on information provided by the company in an earnings call.