Evolution of the Xbox Supply Chain

In November 2005, Microsoft prepared for a global launch of its next-generation game console, the Xbox 360. Microsoft’s original Xbox had been introduced a year behind Sony’s Playstation. The Xbox 360 would beat Sony’s next-generation system to market by a substantial amount. It would also play an important part in Microsoft’s future strategy, where the home entertainment system was seen a major growth opportunity. The case describes the evolution of the video game console business, and the evolution of the Xbox, both from a design and manufacturing perspective. Microsoft’s decisions for the original Xbox supply chain are described, together with the changes in the supply chain that were made for the Xbox 360. The case asks questions about the motivations for changes to the supply chain, the risks and benefits of global rather than regional launch, and the use of contract manufacturers. The case prepares students for discussion of how supply chains must evolve to support changing business strategy.