An Xbox Conspiracy?

After a title like that you're probably hoping for some real dirt. Alas, I'm going to give you only rank speculation. My own rank speculation. Take it for just that. (And note, it's not the first time I've indulged. In fact, the last time was a year ago to the day. Spooky.)

To begin, today, my colleague Rick Munarriz took one of his always interesting and entertaining peeks at a consumer-culture phenomenon that could be good news, or bad news, for dear old Microsoft (Nasdaq: MSFT  ) . According to increasing reports, the next generation Xbox 360 is already in short supply. Yup, before it even hits the streets.

Maybe I shouldn't have had the double jalapeno pizza for dinner, but after an entire night of thought, here's my unsubstantiated conspiracy theory: Mr. Softy is sandbagging.

You heard me. Mr. Softy is behind the demand curve precisely so that people will notice, the buzz will start, and the press will amplify the story, and therefore the demand.

Think that's impossible? Think again. It's exactly the strategy some think Apple (Nasdaq: AAPL  ) has employed to generate a sense of urgency among prospective buyers of its new computers and especially its iPods. And Fool Tim Beyers, who has worked in the PR field, assures me that leaks, buzz-building, and other phenomena are often much more orchestrated than we might ever imagine.

There are other reasons I think a policy of generating media attention -- were it actually a policy and not an artifact of bad planning -- would make sense:

  1. Microsoft can't get a break with the news anyway. If Bill Gates promised to come to our homes and give each and every Windows user a compensatory backrub, the managing editors out there would be asking their pork-pie scribblers for stories about the impending invasion of privacy.
  2. I sincerely doubt that Mr. Softy would have undershot the demand -- by such a degree -- for the console that will anchor its computer entertainment initiative for the next half decade.
  3. I think if Mr. Softy made a few calls, Far East electronics assemblers would start pumping out Xboxes like rabbits making baby bunnies.

No matter what the truth is, I think the "demand" news is good for shareholders. The new Xbox, along with increased opportunities for revenue streams, is among the reasons I added Microsoft to my own portfolio. Those looking for a smaller stock play in the Xbox arena might want to take a look at turnaround -- I hope -- ATITechnologies (Nasdaq: ATYT  ) or game makers like Electronic Arts (Nasdaq: ERTS  ) and Activision (Nasdaq: ATVI  ) .

For related Foolishness:

Activision and Electronic Arts were recommended in theMotley Fool Stock Advisorpremium research newsletter.

Seth Jayson is always cooking up a new conspiracy theory from his clapboard shack. At the time of publication, he had shares of Microsoft and ATI, but no positions in any other firm mentioned. View his stock holdings and Fool profile here. Fool rules are here.


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