Evolution of Xbox Suppy Chain and Competition Between Sega Sony and Nintendo

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Date Submitted: 08/19/2011 10:46 PM

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Answer the following questions in relation to Xbox1 case:

Lee, Hau; Hoyt David W. and Holloway, Chuck. (2006). “Evolution of the Xbox Supply Chain”,

Stanford Graduate School of Business.

• Who are the various stakeholders for Xbox that formed the Microsoft ecosystem while

developing the supply chain business strategy for Xbox?

• What were the challenges faced by Xbox when it first launched Xbox?

• How did this compare to the launch of Xbox 360?

• Did they consider any changes in the supply chain?

Xbox Stakeholders

In 1999, Microsoft believed that gaming consoles posed a threat to the performance of the home

PC market. In response to this threat, the Microsoft’s Xbox project was started by a group of

gamers. The Xbox project consisted of both internal stakeholders – which included the Microsoft

employees (e.g., Xbox project team, Microsoft executives) and shareholders – and external

stakeholders – among these were Microsoft’s suppliers (e.g., Intel, Nvidia), contract

manufacturers (i.e., Flextronics, Wistron Corp, Celestica), game developers, designers (i.e, Astro

Studios), distributors, broadband providers, retailers and customers. The external stakeholders

can also be visualized in terms of their position in Microsoft’s extended supply chain

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...