Gamers hoping to find an Xbox 360 under their Christmas tree this year better hope that Santa got his shopping done early. In spite of a successful product launch last month, sales of the Xbox 360 will not meet Microsoft’s Christmas sales targets, according to industry analysts, due to system shortages.

Initial sales targets of the Xbox 360 ranged from 1.5 to 1.8 million units by the end of 2005. Approximately 300,000 Xbox 360s are expected to be shipped to retailers next week, just in time for last minute Christmas shopping. But even with this new wave of available systems on the market, the total number of Xbox 360s available for purchase will still number under 1 million worldwide. This is just 55 – 67% of expected 2005 sales target.

Why the huge disparity between anticipated sales and the number of systems shipped to retailers? After all, it not as if sales are low because consumers are not interested in purchasing the Xbox 360. Sales are low because there are no Xbox 360’s in the stores to purchase.

Industry analyst P.J. McNealy of American Technology Research believes that the shortage of Xbox 360’s is due to a marketing plan backfire by Microsoft. By intentionally kept supply projections and shipments low, Microsoft could emerge the hero when they were able to overshoot their target come the end of the month. Additionally, the economics of a low supply work in Microsoft’s favor since the demand for the Xbox 360 is so high. With so many consumers looking to purchase so few units, there is little need for retailers (and Microsoft) to slash prices in order to move units.

The problem emerged because Microsoft waited too long to make a move for the end of 2005. Even with 300,000 new units hitting store next week, the company simply cannot produce and distribute new Xbox 360’s fast enough to meet their sales target. In an interview with Reuters, McNealy notes that Microsoft “has tried to keep expectations low for retailers this holiday with the hopes of over-delivering. We believe that over-delivering is unlikely at this point”.

This news, coupled with recent reports of lackluster sales in Japan, do not bode well for first next-generation console.

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