Almost immediately after Microsoft's Xbox 360 video game console hit stores late last month, gaming Web sites were inundated with reports the machines were crashing, freezing up and simply not working.
Microsoft responded by saying only a small percentage of 360s had problems and that the company was more than happy to quickly replace or repair any defective units. But in the weeks since the Xbox 360 was launched, the buzz surrounding the units' problems hasn't subsided and a new, possibly bigger problem has arisen -- a lack of inventory.
With time ticking away before the holidays, many would-be givers and receivers of one of the hottest high-tech gifts of the season may be left with wrapping paper and nothing to wrap.
"They [Microsoft] keep saying, 'We're sending them as soon as we get them -- we've got planes loaded,'" said Brian Crecente, editor in chief of the video and computer gaming Web site www.kotaku.com and video game editor for the Rocky Mountain News in Colorado. "Yet I am getting e-mails everyday from people saying, 'Where's the 360 that I pre-ordered?'"
Crecente says that the issue of defects is still a potentially big one, but that the shortage of Xbox 360s is much more serious.
Even more serious, Crecente says, are some of the rumors floating around the Internet that -- if true -- could explain the delay in filling some pre-orders.
"The … rumor is that some of the stores … that their employees are actually personally buying up 360s -- buying up a lot of the pre-orders and then selling them on eBay."
Representatives from two large chains, Gamestop and EB Games, refused to comment on the rumor, saying that such claims were unsubstantiated.
When pressed on whether Gamestop is receiving the anticipated shipments from Microsoft, spokesman Chris Olivera gave this cryptic answer: "The communication has been two-way regarding our allocation, they are in contact with us and we are in contact with them."
He went on to say that Gamestop has communicated with all of the customers who placed pre-orders to alert them as to when their 360s would arrive -- whether it would be on time or not.
But customers must be proactive if they want to keep track of their orders as the holidays approach.
Analysts say Microsoft, which announced a goal of selling up to 3 million Xbox 360s by year's end, may have missed a big marketing opportunity.
"On one hand, this was Microsoft's opportunity to really take advantage of having the next-generation market all to themselves and not having enough product is a squandered opportunity," said Ross Rubin, director of industry analysis for the NPD Group, which tracks the gaming industry. Rubin says that with Sony's new Playstation 3 not scheduled to come out until spring, the extremely competitive console market was primed for the Xbox 360 to make a big splash.
But not having enough units to fill pre-orders, and lacking the consoles to stock stores in time for the holidays, may mean that when the PS3 is released, the 360's head start is rendered moot.
"Most estimates are under 400,000 units sold … and also consider that they'll sell some units in the first quarter of 2006," he said, "so let's say they get up to 500,000 by the time the Playstation 3 launches. I don't think that's going to be an insurmountable lead in a battle where the winner is going to be selling 20 million or 40 million units worldwide."