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Microsoft Band customers get scrooged even before holidays start

Matt Hamblen | Nov. 26, 2014
Microsoft's email says no more Band sales online, but the situation is -- apparently -- fluid.

Schliebe is a solid Microsoft customer and owns three Surface RT tablets that he and his two sons use. "This [complaint] comes from someone [who] really wants a Band," he said.

While Microsoft's shortage of Band inventory won't affect large numbers of customers, analyst Patrick Moorhead of Moor Insights & Strategy called it a bad business move. He said Microsoft didn't want to produce too much Band inventory after losing nearly $1 billion on unsold inventory of the original Surface tablets.

"Business-wise, running out of inventory is always better than having to write-off millions or billions of inventory, but running out before the holidays just isn't good business management," Moorhead said.

In one example of too much inventory, Samsung reportedly ordered production of far too many its Galaxy S5 smartphones that haven't sold well globally, contributing to a number of changes at Samsung, including in upper management.

Microsoft's primary objective with the Band was to be able to "check the box that they did a wearable in 2014 and provide a development vehicle for Microsoft Health," Moorhead said. "They were burned on Surface inventory from being very bullish and now it appears they went the no-risk inventory path. To sell out online before the holiday season starts clearly demonstrates this."

A Microsoft spokeswoman last Friday sent Computerworld an email saying the company was "excited by the response... to Microsoft Band." She said that Microsoft would not comment on how many were made, but that sales went "well beyond" the 5,000 that many reports said were initially produced.

She concluded: "We will continue to replenish inventory throughout the holiday season."

It appears that was still the case as of late Tuesday, despite the Monday email to customers. For Schliebe, he said he's given up ordering a Band online after his experience.

Carolina Milanesi, chief of research at Kantar WorldPanel, said Microsoft might not have planned well for the demand, but predicted the problem with Band inventory will blow over. "In the big scheme of things, I do not think this really matters," she said.


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