You know you've got a smash holiday hit on your hands when it's only October and Amazon.com (NASDAQ:AMZN) has already stopped taking orders. That's the seemingly enviable position that the Xbox 360, the next-generation gaming device from Microsoft (NASDAQ:MSFT), finds itself in at the moment.
Just go on over to Wal-Mart's (NYSE:WMT) online site and try to preorder your Xbox system. Surely the world's leading retailer wouldn't turn down the chance at ringing up a beefy $299 plaything ticket. Right?
We're sorry, but we've SOLD OUT of our initial launch quantity of Xbox 360 hardware.
Next stop? GameStop (NYSE:GME). If the leading online retailer ran out and the world's biggest retailer came up short, then perhaps the largest video game specialty retailer can help you out. After completing its acquisition of Electronics Boutique, this 4,000-unit chain wouldn't dare be caught dead without new consoles to sell. Right?
Sorry. Only a $1,999 bundle or a $4,499 plasma television combo are available as a way to secure an Xbox before its official stateside debut next month.
To be fair, many retailers aren't even bothering with the preorders. They will just deal with diehard gamers -- or their desperate parents -- lining up outside their stores on the morning of Nov. 22 and dispense the 360s accordingly.
I had no problem securing a Sony (NYSE:SNE) PSP the day it came out back in March, but the hype behind the Xbox 360 and the staged rollout that is just three days from the start of the holiday shopping season is going to make this one a tough box to nab.
It's all about supply and The Man
The rush to get a new console to market is intense. It has often forced the three remaining video game hardware titans -- Sony, Microsoft, and Nintendo -- to produce only a limited number of systems in their initial launches.
That can create a problem if it dissuades too many early adopters who aren't able to land new consoles to turn to the competition. Sony and Nintendo both expect their new systems to hit stores next year. Delays are always possible, but there's a good chance that this is Microsoft's one shining moment to build an established base over the holidays before Sony and Nintendo storm the market.
That's important, because one of the reasons Sony's PlayStation 2 has sold five times as many units as Microsoft's original Xbox or Nintendo's GameCube is that it had a holiday shopping season advantage over the competition.
Granted, Sony also had the luxury of being the market leader in the previous generation of video game machines. Making the system backward-compatible was a slick move to motivate buyers before the "must-have" software titles that truly show off the new console hit the market.
Microsoft's eagerly anticipated Halo 3 won't be out until next year, and that creates an even higher level of urgency to make sure that supply is not a problem. If too many holiday shoppers looking for an Xbox walk away empty-handed, they may wind up wooed by a rival console if they don't have Halo 3 to keep them close.
The industry and that pesky "pause" button
Can this be a recipe for disaster? If there aren't enough Xbox 360 consoles to be had, and Sony and Nintendo loyalists hold back on adding to their software libraries until the next systems come out, you may be able to hear a pin drop at your local GameStop store.
There seems to be plenty of action in the handheld market, but will a console niche staging a changing of the guard rock patrons to sleep this holiday season? It may not matter a whole lot to general merchants like Amazon.com or Wal-Mart. They'll make up the difference elsewhere. But you can bet that GameStop may be left smarting if it happens. Software developers like Electronic Arts (NASDAQ:ERTS) and Take-Two Interactive (NASDAQ:TTWO) have to also feel a little vulnerable at this point.
A lukewarm holiday selling season on the console side would be tough all over, given the cheaper selling prices of the PSP and GameBoy titles. Some gamers would get turned on to building out their handheld options instead. Even worse for Microsoft, it's the one console company without an entry in that market segment.
So, yes, this could be the holiday season that finally catapults Microsoft beyond its rank as a distant second to Sony on the video game console front. It just has to make sure that store shelves don't go barren before demand has been satisfied.
Amazon.com and Electronic Arts were recommended in the Motley Fool Stock Advisor premium research newsletter.
Longtime Fool contributor Rick Munarriz is an equal-opportunity gamer. He has gaming consoles from all three companies in his home. He does not own shares in any of the companies mentioned in this story. The Fool has a disclosure policy. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.
