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Microsoft Australia is looking at new initiatives to stimulate flagging sales of their Xbox 360 console, games and accessories. Among those initiatives is a new distribution strategy aimed at improving sales outside of some of the mass retailers, new in-store merchandising and new bundling deals for retailers.
According to insiders Microsoft Australia is not performing as well as their US or European operations. In Europe sales of Xbox have more than doubled with Microsoft claiming that the Xbox 360 is officially the number one next-gen console in Europe, with 42 percent of the market.
In the US Xbox 360 games console beat those of Sony’s PlayStation 3 in March after Microsoft addressed earlier supply problems. Microsoft sold 262,000 units of the Xbox 360 in March, according to figures from research firm NPD. Sony sold 257,000 units of the PlayStation 3 console. However both the Xbox 360 and the PlayStation were significantly outsold by Nintendo’s Wii console, which sold 721,000 units in March 2008.
Earlier this month Microsoft Australia dumped long time distributor Ingram Micro who only weeks ago set up a brand new division to distribute consumer electronic products such as the Xbox 360.
Ingram Micro who has been left with $30 million dollars worth of Xbox stock to get rid of is also facing the possibility that they will lose the distribution rights for other Microsoft consumer products including keyboards, mouse and accessories.
Instead Microsoft has turned to Synnex to distribute their struggling Xbox console, software and accessories with the distributor expected to take over the $30 million worth of stock in Ingram’s warehouse.
Synnex who has been a distribution partner for Microsoft for the past nine years is also setting up a consumer products division. Guy Freeland the Managing Director of Ingram Micro in Australia said that life had been difficult for Microsoft in the Xbox 360 market and that Microsoft were looking to new initiatives including a new distribution partnership.
He told Channel Magazine ARN that he was disappointed by the decision. Ingram has had exclusive rights to the Xbox console since taking over the distribution agreement from Australia Post in 2005.
“The contract was put up for RFP and we submitted what we thought was a compelling, fresh proposition, but Microsoft has chosen to go with Synnex on that product set,” Freeland said.
“We have had a long and successful trading relationship with Microsoft and would have been their number one distributor in this country. I think this decision is unfortunate and a disappointment to us, but we still have a very strong partnership with Microsoft and they will continue to be an important vendor for us.”
Ingram currently has about $30 million worth of Xbox and related stock in its warehouses. Freeland said it was now negotiating with Microsoft to transfer the goods “lock, stock and barrel” to Synnex and hoped details would be finalised shortly.
