Microsoft's Xbox One Is Selling So Poorly Retailers Are Getting Desperate

Things aren't looking good for Microsoft's Xbox One. After what was admittedly a very strong debut, sales of the console have slowed to a crawl. Last month, according to research firm NPD, rival Sony's PlayStation 4 outsold Microsoft's console in the U.S. by a ratio of 2 to 1.

Is the runaway success of the PlayStation 4 simply overshadowing Microsoft's latest console, or is the Xbox One not doing as well as Redmond expected? The latter is looking increasingly likely, as retailers such as Target, Wal-Mart, and GameStop have begun to offer heavy incentives on the Microsoft console.

Pushing the Xbox One
If you're in the market for the Xbox One, I'd suggest purchasing it from Wal-Mart or Target. If you buy Microsoft's machine from Wal-Mart, the big-box retailer will throw in a free game worth $50. If you'd prefer to spend the money on something else, Target will give you a gift card for the same amount.


In addition to offering $10 off the purchase of a second wireless controller, GameStop is letting cash-strapped customers reserve the console on layaway.

Good luck finding a PlayStation 4
In stark contrast, Sony's rival PlayStation 4 is virtually impossible to find. Of the six GameStops I called in my area, not a single one had the machine in stock, and none of GameStop's employees could tell me when their next shipment would arrive.

They did, however, offer to ship a PlayStation 4 directly to my house when it turned up -- assuming that I was willing to purchase a nearly $700 bundle that comes with games and an extra controller.

Too expensive and too weak
I had no interest in purchasing that bundle, and I doubt many gamers would. Indeed, the PlayStation 4's greatest selling point remains its price advantage: At just $400, it's a full $100 cheaper than Microsoft's Xbox One.

The PlayStation 4 is also slightly more powerful. Metal Gear Solid V, a game coming to both Sony's and Microsoft's next-generation consoles, will look better when played on Sony's machine.

To many gamers, a minor difference in graphics quality might not matter much -- but combined with the $100 price difference, it may be too much for Microsoft's console to overcome.

Price cut coming?
The Target and Wal-Mart initiatives basically amount to an unofficial $50 price cut, suggesting that Microsoft may need to reduce the Xbox One's MSRP. There are rumors that Microsoft is working on a cheaper version of the console; if recent sales trends are any indication, that cheaper Xbox One can't come fast enough.

On equal footing, Microsoft's console might hold its own against Sony's system, but at what expense? Microsoft could sacrifice its controversial Kinect add-on, or, as has been rumored, roll out a version of the console that does not include a disc drive.

Although cutting out the disc drive would not, by itself, reduce the manufacturing cost by $100, Microsoft would ultimately see more revenue in the long run. Gamers who purchased a digitally dependent Xbox One would have no choice but to buy their games directly from Microsoft's online store, cutting GameStop and other retailers out of the equation.

But Microsoft had better do something. With excess Xbox One inventory driving retailers to drastic action, the company is far behind Sony in the current console war.

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The article Microsoft's Xbox One Is Selling So Poorly Retailers Are Getting Desperate originally appeared on Fool.com.

Sam Mattera is short shares of GameStop. The Motley Fool owns shares of GameStop and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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David Murphy

I have owned an original xbox and several 360s and have had XBL for most of those years. I will be getting a PS4 after they go through a few series of manufacturing models and drop the price. The main reason is because of the power difference that is already showing up. Graphics and processing power should be much closer than they are currently. This gap in hardware shouldn't have be occurring for a few more series of games, once devs learn to more efficiently program for each console. The fact that the differences are already substantial is scary and not good. As a soon-to-be PS4 owner this saddens me. It just means Sony will be less driven to advance from a lack of competition.

You are ignorant if you buy a console for 1 game when the titles will go wherever they will sell. What happens when you're tired of playing Titanfall? I'm personally only looking forward to Elder Scrolls online(which doesn't require PS+) but I will be buying based on how the future looks and what direction the companies appear to be heading. With that in mind, I'm going with the gaming console. I have a computer that does the other stuff that Microsoft is now pushing with the XB1. I'm not going to pay a $100 more to save myself a few button presses with a kinect. I could get another game and some PS+ sub time WHEN I CAN AFFORD IT with that $100 rather than paying that for just the console. It seems like they did very little research with all of the backlash and 180s they pulled. Then it appears they rushed the launch when they reallocated some of the memory devoted to the kinect in order to try and shore up the performance deficiencies. I am glad they have continued support for the 360. The media features are great while maintaining a amazing platform for gaming.

February 22 2014 at 11:42 AM Report abuse rate up rate down Reply
Milt

I will admit it has been awfully lonely gaming on my Xbox One for the last three months. I got my console on Launch Day and for the first time this week I played a multiplayer COD match with people on my friends list. None of the core people I game with made the jump. Close to a dozen of my friends have made the jump the last two weeks. I have asked many of them why they grabbed up a XOne. I originally thought it was because of tax refunds, but they all have said they upgraded now because of Titanfall. I was surprised. Just from me looking at the the microcosm that is my friendslist, Titanfall is going to sell Xbox One consoles in a way that Microsoft hasn't seen in a long time. Now, because of Titanfall's multiplayer reliance this is not going to lure offline gamers, but you are going to see some transition over from the 360 to the XOne even though it is coming to the 360.

February 20 2014 at 12:24 PM Report abuse rate up rate down Reply
1 reply to Milt's comment
hjhj

I don't know about titanfall selling Xboxones like hot cakes. I'm not saying it's not good, I personally loved it on my PC but one of xb1's major problems is that their not just competing against ps4 but also the 360. With the game coming out also on the 360. You'll have a lot of people torn between paying 60$ or 560$. I think the game will sell some consoles but not as many as Microsoft wanted and payed for. (I'm thinking they paid a pretty penny for this IP). I think the only way that Microsoft can stop the xb1's bleeding is ditching the kinect and come out with a kinectless version of the xb1 with a lower price tag.

February 21 2014 at 1:24 PM Report abuse rate up rate down Reply
Nick Olivera

Removing the disk drive is console suicide; Microsoft's Xbox live store's prices are completely outrageous, and without the ability to buy a game cheaper elsewhere, they'll completely control prices, and the consumers won't be able to do anything about it. The Kinect is the first step in redeeming this console; Microsoft needs to admit it is an unnecessary peripheral, make it optional, and drop the console's price by a minimum of $100. If they want to bring the sales back, they're going to need to take a bit of a hit, because even with the above solutions made, the consumers still don't want to buy an underpowered machine that focuses more on gimmicks, and less on games. Should MS make some sort of bundle that would be beneficial to the consumer, such as a console including Titanfall for a limited time, at $399, MS would see HUGE numbers. While yes, the original sales would be at a loss, with all the sales made, Xbox Live subscriptions paid, and other Xbox transactions, the benefit would FAR make up the loss. At this point, it's really up to them. They need to show the consumers they care, or Sony is going to pile-drive the Xbox out of existence.

February 19 2014 at 10:08 PM Report abuse rate up rate down Reply