Evolution of the Xbox Supply Chain

CASE: GS-49

DATE 04/14/06

David Hoyt prepared this case under the supervision of Professors Charles Holloway and Hau Lee as the basis for

class discussion rather than to illustrate either effective or ineffective handling of an administrative situation.

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EVOLUTION OF THE XBOX SUPPLY CHAIN

With the first generation of Xbox, our ambition was to change the way people think about video

games. Starting today with Xbox 360, our ambition is to transform the way people play games

and have fun.

—Robbie Bach, President of the Microsoft Entertainment and Devices Division1

In November 2005, Microsoft prepared to launch its next-generation video game console, the

Xbox 360. A global release was scheduled, beginning on November 22 in North America,

followed shortly by Europe (December 2), and Japan (December 10). It had been four years

since Microsoft had introduced the original Xbox. The first Xbox had hit the U.S. market a year

behind Sony’s PlayStation2, but this time Microsoft expected to beat Sony’s next-generation

system to market by many months.

The Xbox 360 would provide a substantial increase in performance for gamers. Its processors

were so powerful that graphics would appear virtually lifelike, and would run on high definition

televisions. When used with Microsoft’s Xbox Live Web service, the Xbox 360 would enable

gamers to...