It's that time of the year again. The perennial running of the consumer bulls known as the holiday shopping season is upon us. We all remember the special toys or gadgets each year that kids simply can't live without; Furbie, Nintendo Wii, and of course the iconic Tickle-Me Elmo. The hot toy for the holidays this year is the XBox Kinect, which offers an interactive controller-free gaming environment for the Xbox 360.

Securing these hot toys and gadgets can often be a serious challenge for Christmas shoppers, but the strain put on a manufacturer's supply chain to meet the holiday demand surge can be an even bigger challenge.

Last week, Microsoft head of gaming Don Mattrick warned consumers that they should buy their Kinect units by Thanksgiving. He also predicted that Microsoft would sell more than 5 million Kinect systems by the end of 2010. Microsoft has also begun expediting shipments via air cargo after the Kinect sold 1 million units in it's first 10 days of being on sale.

The cutting-edge technology that goes into the Xbox Kinect comes from a range of suppliers including Primesense, Marvell Technology, and Texas Instruments to name a few. They are all too happy to be working around the clock producing the chips and sensors that go into the Kinect. Holding a piece of Microsoft's supply chain as a supplier is a cash cow, so it makes you wonder what sort of bending-over-backwards the producers of these components do. These suppliers need to be able to crank up or slow down production on very short notice. Producing much more than the sales projections is risky and is about more than just cash flow; let's not forget that for every holiday hit there is a gigantic flop.(The Apple Newton, anyone?)

As the shopping madness commences, it will be interesting to follow the different steps that Microsoft takes to maximize supply chain efficiency for the Kinect. Now if you will excuse me, I have to go play Atari.
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Scott Decker

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