Evolution Of Xbox Supply Chain

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This case is about the supply chain issue for the launch of Microsoft’s new generation game sole, Xbox 360. The first generation product, Xbox was not regarded as a success based both on the product launch and the actual market performance. However, Microsoft had learnt a lot from the launch of Xbox and this help Microsoft to perform better in the new product launch. 1.the Supply Chain for Xbox and Xbox 360 outline: Xbox: 1.Microsoft designed the console in-house by its own engineer team and his partner Flextronics, which had poor appearance and large. 2.Microsoft outsourced all production to Flextronics in the early period of launch, and outsourced all components to other supplier including the critical chips, such as processor from Intel and graphic chip from Nvidia. For procurement, Flextronics purchased custom designed parts based on the MS’s contract. In addition, MS bought the critical parts and delivered to Flextronics. 3. At first, Flextronics produce Xbox in Mexico and Hungary to support North US and Europe market, and later move Hungary’s production to China to reduce the cost. And in 2002,the 2nd EMS, Wistron took part in the production of Xbox. Xbox 360: 1.Xbox 360 was designed by the WebTV team who had a solid console design experience, and outsource the designed to Astro Studios, developed a small, elegant machine. 2. Microsoft signed up IBM to design the processor chip and ATI to design a unique graphics chip instead of Intel and Nvidia. Because Microsoft prefer “own and control” rather than “pay and depend”. MS selected Flextronics, Wistron and Celestica as the manufacturer. 3. Microsoft determined to produce the Xbox 360 in China, Three EMS produced the consoles at the same time in order to prepare enough capacity to meet the demand. 2. Global Launch benefits and risks 1. Benefits: X360 was global launch in US, Europe and

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