In: Business and Management

Submitted By dbhangre
Words 1343
Pages 6
Challenges with Original Xbox
Microsoft encountered many challenges when launching the original Xbox in 2001. To better understand these challenges, we adopt the SOSTACTM (Situation analysis, Objective Setting,
Strategy, Tactics, Actions and Control) framework developed by Paul Smith to summarize the
Supply Chain Management (SCM) strategy.
Microsoft did not have a presence in the gaming console market and was up against strong competitors which already had established markets such as Sony (Playstation) and Nintendo
(GameCube). This competitive landscape put them in a position wherein the company needed to develop a product which offered features that were comparable to existing products in the market place and priced perfectly so that they can establish the Xbox in the market. Moreover, it was critical to launch in time for the 2001 holiday season to allow Xbox to have a presence in the marketplace before it became up against the “next-generation product”. Thus, Microsoft’s early challenges came at a price of high production ramp up costs because it needed to produce
100,000 consoles in a week in order to launch the new Xbox in time for Christmas.
For Microsoft, the original Xbox was primarily aimed at entering the gaming console market, learning from the experience and paving the way for the next generation of products.
Microsoft adopted a push supply chain strategy using an extended supply chain. It developed its products based on existing game consoles with added features, most of which were built to compete against Sony PS2. In addition to having features similar to other gaming consoles available in the market, the Xbox also had other features such as allowing Xbox to play DVDs, and a built-in modem which in 2002 was used to launch Xbox live.
Microsoft lacked the competency in building…...

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