Chatterboxes and video game boxes were passing ships that were fit to be featured this past week. Let's take a closer look.
Tickle Me Xbox
If you didn't manage to land Microsoft's (NASDAQ:MSFT) next-generation gaming system on Tuesday, you either didn't care about the Xbox 360 or you're scratching your head at why bids on eBay (NASDAQ:EBAY) are going for roughly twice the new machine's $299 to $399 retail price.
The new system packs a drool-inspiring spec sheet, and Microsoft is only expecting to produce 3 million units over the next three months. That will always lead one to wonder if Microsoft could have either raised its asking price for the early adopters with open wallets or found a way to ramp up production.
The perpetually jaded will argue that companies tighten up the supply on purpose. It creates a favorable buzz that drives even more sales down the road. Then again, recall some of the seasonal hits over the past few years. Tickle Me Elmo, Cabbage Patch, and Buzz Lightyear may have been in short supply one year, but they were often clearance-bin fodder the following year. Microsoft can't afford to take that kind of chance, especially with Nintendo (NASDAQ:NTDOY) and Sony (NYSE:SNE) putting the finishing touches on their next-generation devices.
Bargain hunter extraordinaire Philip Durell likes Microsoft. He even recommended the stock to his Motley Fool Inside Value subscribers last month. No, Microsoft isn't going to get rich selling Xbox systems. The unattractive margins on the hardware side are no match for the company's wide-margin selling productivity and operating system software. However, the Xbox 360 is geared toward the digital delivery of games and updates, and that's where it can be far more lucrative to Microsoft than the original Xbox. That's why Microsoft better make sure it doesn't turn away too many avid gamers -- or they'll wind up saving their pennies for next year's rival debuts.
If your AIM is true
I think Time Warner's (NYSE:TWX) America Online division deserves far more credit than it's getting these days. Even with defections at its flagship online service, you still have a company with more than 20 million well-heeled customers. Its interactive advertising business has been providing the heady gains that the rest of Time Warner's old media empire just can't match. The company's reach was also good enough to account for 12% of Google's (NASDAQ:GOOG) revenues last year. That's why I'm excited about the welcome changes with AOL's popular instant messaging platform.
AIM Triton will capitalize on the software's widespread use to help further AOL's efforts in online advertising. It also helps play up many of the more interactive chat features (like voice chat) that made eBay (NASDAQ:EBAY) pay as much as $4.1 billion to purchase Skype.
There is a downside to all this. If the ads get too cumbersome, there are non-AOL alternatives out there. Google, Microsoft, and Yahoo! (NASDAQ:YHOO) would have no problem opening up their nets to catch the defectors. However, if AIM Triton pulls this off, it will have an even stickier audience and its interactive revenues will fly through the roof as sponsors angle their way to get into the sightlines of young online chatterboxes.
Time Warner has had it rough in recent years, even though the shares have beaten the market since being singled out in the Motley Fool Stock Advisor newsletter service. This move may help propel the shares higher once we see what AIM Triton is truly capable of doing. We'll see. We'll take it one week at a time.
The headlines behind this week's stories:
Until next week, I remain,
Longtime Fool contributor Rick Munarriz loves to look back, even if it means he falls on his face going forward. He does not own shares in any of the companies mentioned in this story. The Foo l 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.
