Microsoft CEO Satya Nadella on Xbox supply chain “On the supply side we are getting back on rails, but demand is an issue." due to Covid-19

Proven · Mar 24, 2020

Microsoft CEO Satya Nadella said Tuesday that the hardware supply chain is coming back online as the coronavirus outbreak eases up in Asia, but said that the big question would be whether demand holds up in the U.S. and Europe.

"On the supply side we are getting back on rails," Nadella told CNBC's Jon Fortt when asked about whether Microsoft would be able to deliver later this year certain products it had promised before COVID-19 took hold, like new Surface devices and a revamped Xbox gaming console.

"We have a great balance sheet, we are a very diverse business, we have a mix of annuity, non-annuity, that is also stronger than even the last time we even went into the financial crisis," he said. "I feel confident we'll come out of this, frankly, pretty strong."
He said the company's cloud infrastructure and services have been holding up under increased demand.
"If this was a previous generation of data center architectures or software architectures, I don't think we would have been able to deal with this crisis as effectively as we have been able to," Nadella said.

Microsoft CEO Satya Nadella says hardware supply chain coming back online, but demand is the issue

Microsoft CEO Satya Nadella said the bigger concern is demand in developed markets, and he said he would favor economic stimulus from the U.S. government.

www.cnbc.com

Proven · Mar 24, 2020

Sorry it's supposed to say "demand is an issue". Getting that fixed now

Bundy · Mar 24, 2020

"..... is an"?

Rndom Grenadez · Mar 24, 2020

SMH, Scalpers foaming at the mouth.

Darryl M R · Mar 24, 2020

Selling my XSX for $1,500 and three soap bars. Serious buyers only.

It's going to be hard to justify a new and expensive console, or two, if things continue to head south well into the Fall.

darkside · Mar 24, 2020

Rndom Grenadez said:
SMH, Scalpers foaming at the mouth.

He's saying he thinks supply might actually be higher than demand though?

A lot of folks who might be interested in picking up their new devices simply won't be able given the current state of affairs.

Terbinator · Mar 24, 2020

"
He said the company's cloud infrastructure and services have been holding up under increased demand.
"

Eek. XBL had been up and down like a Yo-yo for weeks now.

Also, be interested to see how they're gauging demand for XSX as you can't even pre-order through the MS/Xbox site atm.

RedHeat · Mar 24, 2020

So no delay, but supply might see some scarcity. As expected.

Outrun · Mar 24, 2020

We are living in uncertain times now.

I wanted to buy both systems. Now I am planning on buying one. If I lose my job, videogaming will be the least of my issues....

Derktron · Mar 24, 2020

This is why I see the consoles are delayed till 2021 or 2022. Unless we see the new iPhones come out then I can see the consoles coming out.

____ · Mar 24, 2020

RedHeat said:
So no delay, but supply might see some scarcity. As expected.

Looks like he's saying the opposite. In that he's confident supply will be up to par but not so sure the demand in US and Europe will be there following the development of COVID-19.

defaltoption · Mar 24, 2020

Like I thought no delay, just a more limited launch

Komo · Mar 24, 2020

Terbinator said:
"
He said the company's cloud infrastructure and services have been holding up under increased demand.
"

Eek. XBL had been up and down like a Yo-yo for weeks now.

Also, be interested to see how they're gauging demand for XSX as you can't even pre-order through the MS/Xbox site atm.

I mean besides XBL I'd assume he means azures still good.

Dust · Mar 24, 2020

Launch of consoles is the last thing on my mind now, I don't care anymore.

Fisty · Mar 24, 2020

Something tells me this will be a common refrain throughout the rest of this year, across many industries

RedHeat · Mar 24, 2020

____ said:
Looks like he's saying the opposite. In that he's confident supply will be up to par but not so sure the demand in US and Europe will be there following the development of COVID-19.

Lets agree to disagree.

cw_sasuke · Mar 24, 2020

Xbox already has a uphill battle in every market outside of the US and UK - if XSX is the only next-gen system they launch and 500/600€ it's gonna have a very rough time in many markets. Especially if PS5 releases around the same time.

Yautja_Warrior · Mar 24, 2020

Hopefully the situation gets better soon or I can see this being a messy launch for both consoles, with lots of disappointed people, if they don't delay and launch with very limited stock.

Haribokart · Mar 24, 2020

Hasn't this always been the issue with Xbox? 😂

LumberPanda · Mar 24, 2020

Aaaaaand this is why the console manufacturers are moving away from hard generations and towards forward/backward compatibility, and why games like Ghost of Tsushima and Halo Infinite aren't next-gen exclusive.

Not COVID-19 specifically, but there's always been too much risk going all in on hard-generations. The current situation with COVID-19 highlights that risk. Both MS and Sony are lucky they planned the way they did.

StrikeFirst117 · Mar 24, 2020

Haribokart said:
Hasn't this always been the issue with Xbox? 😂

Have you ever thought that people affected by the lockdowns and covid19 have much more pressing concerns to be considering before buying a next generation console?
Bills, potential unemployment/laid off etc.

1.21Gigawatts · Mar 24, 2020

I guess going above 400$ won't be an option.

Zombine · Mar 24, 2020

Dust said:
Launch of consoles is the last thing on my mind now, I don't care anymore.

Genuinely, and currently I am one of the more fortunate individuals that will have work after this. To drop $500+ on new consoles does not seem right in this landscape—especially as an owner of a switch, Xbox One X, and PS4 Pro. You're going to see more and more people content with what they have in the coming year or so.

Principate · Mar 24, 2020

____ said:
Looks like he's saying the opposite. In that he's confident supply will be up to par but not so sure the demand in US and Europe will be there following the development of COVID-19.

I feel it shouldn't really be much of an issue, home entertainment usage has skyrocketed. There's been a great many industries negatively harmed by this virus but don't think home video game usage is actually one of them.

tapedeck · Mar 24, 2020

I think (hope) they're gonna cancel or delay Lockhart if there's supply issues.

Haribokart · Mar 24, 2020

StrikeFirst117 said:
Have you ever thought that people affected by the lockdowns and covid19 have much more pressing concerns to be considering before buying a next generation console?
Bills, potential unemployment/laid off etc.

Of course I have, hence the lighthearted joke.

TheZynster · Mar 24, 2020

Darryl M R said:
Selling my XSX or @$1,500 and three soap bars. Serious buyers only.

It's going to be hard to justify a new and expensive console, or two, if things continue to head south well into the Fall.

also especially when all the games launching are still playable on old consoles.......people will wait, its simple as that.

Timlot · Mar 24, 2020

I saw the interview and what he meant by demand was from an economy stand point. People having jobs and what not. Would demand for product be there is we don't get people back to work.

StrikeFirst117 · Mar 24, 2020

Haribokart said:
Of course I have, hence the lighthearted joke.

Fair enough then, hard to tell who is joking and who is serious these days.
Anyways I'm expecting both consoles to launch albeit a lower amount of stock paper launch.

Outrun · Mar 24, 2020

cw_sasuke said:
Xbox already has a uphill battle in every market outside of the US and UK - if XSX is the only next-gen system they launch and 500/600€ it's gonna have a very rough time in many markets. Especially if PS5 releases around the same time.

Phil Spencer said that the SX will not be out of position in terms of power and price. But you are right. The larger issue is consumer confidence. If people are worried about paying the electricity bill, things like consoles and such will have a hard time selling during that period.

darkside · Mar 24, 2020

1.21Gigawatts said:
I guess going above 400$ won't be an option.

I don't know how you reach that conclusion.

Honestly the folks who could afford to plop down $400 here given these times are probably the same folks who could spend $600.

Folks who are going to be without work for months and months aren't going to pay anything for these boxes.

cyrribrae · Mar 24, 2020

I read this quote as supply and demand may both be down, we just don't know. We can and are getting a handle on supply, and overall the company is strong enough to weather interruptions and changes in plan. But demand is tricky to predict.

Practically, I think this means that MS suspends some manufacturing, especially of XSX, for a leaner launch. But, I still think they launch in sufficient quantities - they have other uses for the hardware in their enterprise and cloud stacks. The real question is what we'll all be thinking about in fall. That's impossible to know right now.

tapedeck said:
I think (hope) they're gonna cancel or delay Lockhart if there's supply issues.

IMO, exactly the opposite. A cheap next gen box might be a better proposition than the super beast. But, if Lockhart gets pushed, I see no reason why Series X shouldn't as well.

The real answer is that this is when Xbox revives its $100 streaming stick console. If we're still in any amount of limbo in a few months, then cheap, stay-at-home entertainment will be worth a premium.

gofreak · Mar 24, 2020

Timlot said:
I saw the interview and what he meant by demand was from an economy stand point. People having jobs and what not. Would demand for product be there is we don't get people back to work.

My read too. There's a recession coming :/ Potentially one bigger than 2008.

____ · Mar 24, 2020

RedHeat said:
Lets agree to disagree.

LOL seriously? Not a single word of what you typed or I typed has any point to disagree on - it was merely a clarification.

But no need to respond - holy shit are people defensive these days lmao.

Famassu · Mar 24, 2020

Good thing they have those Uyghur slaves to pick up the slack that is left behind by other Chinese people getting sick or being under quarantine due to COVID-19. 🤷‍♂️

panda-zebra · Mar 24, 2020

How are people managing to read this so wrong? Just the title and not the article?

Getting the things out there is not the problem, finding people to buy them might be.

____ · Mar 24, 2020

Principate said:
I feel it shouldn't really be much of an issue, home entertainment usage has skyrocketed. There's been a great many industries negatively harmed by this virus but don't think home video game usage is actually one of them.

Yeah, I agree, I'd say he's just speaking to what he knows as of today.

It's tough to predict how this will impact homes come November so I'm guessing he'd rather not speculate just yet.

panda-zebra said:
How are people managing to read this so wrong? Just the title and not the article?

Getting the things out there is not the problem, finding people to buy them might be.

If there's something I've learned over the years it's that 1) people don't read articles before responding and 2) people interpret things exactly how they want to interpret them and respond accordingly. Comprehension be damned.

Tiago Rodrigues · Mar 24, 2020

1.21Gigawatts said:
I guess going above 400$ won't be an option.

They'd be losing way too much money releasing Series X at $400. I don't even think that makes sense for them.

At what price would lockhart be released? 200? For sure not $300 since it wouldn't make sense to release 2 different consoles for only $100 gap.

ShiftyHermit · Mar 24, 2020

A lot of people have lost employment because of the COVID-19 pandemic. It will go on for months because they are trying to get people to isolate which only further depends those people's financial issues. By the time the game consoles release a lot of people simply won't have the means to but one, at least for a while until they can get back on their feet.

I'm pretty sure that is what he is talking about in reference to demand issues.

Amauri14 · Mar 24, 2020

I mean based on the current situation it's not surprising that demand is an issue. And based on the specs the next-gen consoles, including the SSD, I don't expect then to cost less than $500.

tapedeck · Mar 24, 2020

cyrribrae said:
IMO, exactly the opposite. A cheap next gen box might be a better proposition than the super beast. But, if Lockhart gets pushed, I see no reason why Series X shouldn't as well.

The real answer is that this is when Xbox revives its $100 streaming stick console. If we're still in any amount of limbo in a few months, then cheap, stay-at-home entertainment will be worth a premium.

To clarify myself I don't really think supply will be an issue based on this article, but to respond to your point..they haven't even acknowledged Lockharts existence and have been marketing Series X pretty hard in both it's physical design and performance capabilities. There's ZERO chance they would only launch Lockhart.

Respawn · Mar 24, 2020

Darryl M R said:
Selling my XSX for $1,500 and three soap bars. Serious buyers only.

It's going to be hard to justify a new and expensive console, or two, if things continue to head south well into the Fall.

Same here. Gaming is going to take a seat way back. Health, rent and family first.

1.21Gigawatts · Mar 24, 2020

darkside said:
I don't know how you reach that conclusion.

Honestly the folks who could afford to plop down $400 here given these times are probably the same folks who could spend $600.

Folks who are going to be without work for months and months aren't going to pay anything for these boxes.

Well, this is a mass product so I am talking averages and the number of people who will have 600$ in disposable income by the end of the year will be significantly lower than the number of people who will have 400$ in disposable income by the end of the year.

Either way, the next-gen console will probably be off to a very slow start. Especially in countries that are currently fucking up their corona response, like the US.

aisback · Mar 24, 2020

If Sony manages to get something out this year and MS doesn't It might push towards Sony for Xmas.

I hope the supply Issue gets resolved

-Le Monde- · Mar 24, 2020

Eek! Might be hard to find a next gen system for a while.

cyrribrae · Mar 24, 2020

aisback said:
If Sony manages to get something out this year and MS doesn't It might push towards Sony for Xmas.

I hope the supply Issue gets resolved

I would be extremely surprised. Japan is less impacted overall at the moment, but we're not sure if that's because the curve was delayed and will explode or if it's that they actually never really got hit. As of now, there's no reason to think that either company has any sort of leg up in manufacturing. At this point, I think it will come down to messaging more than anything. And I could see either one falling hard on a sword and screwing up with high stakes.

Thera · Mar 24, 2020

LumberPanda said:
and why games like Ghost of Tsushima and Halo Infinite aren't next-gen exclusive.

Can't speak about Halo but why putting GOT here ? It was planned a long time ago it will be a PS4 game, like TLoU was a PS3 game the same year as the PS4 launch.
You don't have BIG new generation exclusives games at a console launch.

Proven · Mar 24, 2020

aisback said:
If Sony manages to get something out this year and MS doesn't It might push towards Sony for Xmas.

I hope the supply Issue gets resolved

He is saying the opposite, supply shouldn't be an issue but demand due to the economy might be an issue.

cw_sasuke · Mar 24, 2020

Outrun said:
Phil Spencer said that the SX will not be out of position in terms of power and price. But you are right. The larger issue is consumer confidence. If people are worried about paying the electricity bill, things like consoles and such will have a hard time selling during that period.

Phil can say what he wants the market realities are something different - the Xbox is still a after thought post One X and Game Pass in these markets.

It's a no brainer for most people here with massive PS4 libraries to upgrade to the PS5 - XSX would need to be much cheaper for that audience to Switch over.

It will be interesting to see how MS is gonna attract customers with such an expensive machine in these regions - not feeling confident about it based on what prices retailers had to offer to sell One X consoles in Germany.

Soundscream · Mar 24, 2020

-Le Monde- said:
Eek! Might be hard to find a next gen system for a while.

He is saying they will have units, but people might not buy them because they are broke and have no job.

Microsoft CEO Satya Nadella on Xbox supply chain “On the supply side we are getting back on rails, but demand is an issue." due to Covid-19

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