CASE ANALYSIS: EVOLUTION OF THE XBOX Case Solution
Case Analysis: Evolution of the X-Box Supply Chain
Reasons Behind the Microsoft move towards the Game Console Industry
The reason behind the entry of Microsoft towards an entirely new and complexed market was that, the company was observing that Sony was dominating the market with its PlayStation 1 (PS1) gaming console and Sony also developed a game designer base which was allowing it to enjoy huge profits as well as offer a wide range of games to gamers.
Moreover, Sony was going to launch its 2nd generation gaming console which was PlayStation 2 (PS2), which was also threatening the core business of Microsoft since, Microsoft was offering pc based games and at that time, gamers were focusing to enjoy games on gaming console because of the complexed structure of pc and windows application.However, gamers also pushed Microsoft to launch gaming console which offers high quality graphics and quality gaming experience.(Marshall, 2013)
Furthermore, the game console market was extremely challenging and dominated by some key players such as Sony, Nintendo and Sega. The competition between these key players was extremely high since, Nintendo was playing with its Nintendo Wii, Sony was the market leader and dominated the market by its PlayStation however, Sega was playing well but recent failure of its newly launched gaming console forced it to exit the market. Afterwards Microsoft was another potential player trying to enter the same market in order to ensure the survival of its core business and to fulfil the demand of gamers as they were expecting something unique and innovative from the company.(Marshall, 2013)
In addition, it was also noted that the global market size for the video game industry was almost $27 billion in which the major share was held by Sony just because of its most successful gaming console PlayStation. The market was consisting of almost 7 billion of console sales and 20 billion of software (games), in this huge market Sony was enjoying over 100 million of console sales of PS 1 and almost 89 million of PS2, however Sony also had a strong software base of games which also giving it a competitive edge over its rivals.
Microsoft entered in to that completely new market to ensure it core business’ survival and to grab a suitable revenue while using its high brand recognition and market visibility. Microsoft integrated with key market players as its supply chain partners such as Intel, Nvidia and Flextronics in order to make a high quality product and to successfully achieve supply chain efficiencies. Microsoft didn’t worry about the cost but it focused on quality and applied Just in Time Concept among all of its supply chain partners, as it was noted that Sony faced many delays in its international deliveries just because of its lack in supply chain management. These were the basic concepts which were discussed by the Darwin Approach of Supply Chain.
Supply Chain Implications for the Original Xbox
There were some issues which the company was facing in order successfully implement the supply chain strategy for the Xbox but there were two major issues which have been discussed below..................
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