Enough Xboxes will be sold in the United States this year to supply one for every 150 households. But the demand is greater, so online entrepreneurs are snapping up all the Xboxes they can to turn a tidy profit on eBay, the online auction house.
Xbox is Microsoft’s premiere entry in to the competitive video gaming console market already dominated by Sony’s PlayStation 2.
While supplies of the gaming system are limited, Microsoft is paying for it — losing $125 on each unit sold, according to Merrill Lynch technology analyst Henry Blodget. Microsoft expects to recoup the losses on royalties for Xbox games.
In any case, Microsoft’s loss offers a gain for people like Jason Koteles of Grand Blanc.
“If you want a hard-to-find item and are not willing to get up early in the morning and wait in line for it, then you can pay us money to do it for you,” says Koteles, 24.
Koteles is just one of thousands of underground capitalists trafficking in Xboxes on eBay. If you’re shopping for an Xbox, he’s your competition.
“The store opened at 8 a.m., but I got there around 6:45 a.m.,” says Koteles. “There were about 15 people in line … At approximately 8:10 a.m. I was out the door with an Xbox. People were still driving up thinking that they, too, would get an Xbox, but they were wrong.”
Randy Sioson, 18, of Rochester Hills never used eBay to sell goods until the Xbox appeared on local store shelves.
“I had a friend who waited in line 12 hours in advance for the Xbox,” says Sioson. “I managed to get in the same line my friend was in just two hours before that store opened and still got an Xbox.”
So who are these cyber sales sentinels? Loner HTML wonks?
“I don’t fit that description at all,” says Koteles, noting that his wife helped with the acquisition and auction.
Sioson says, “I’m no hermit. I have a social life and I have a girlfriend.” But then he admits logging serious time online: “I am somewhat of a tech geek … I’m on the computer eight hours a day and I do try to get the latest gadgets.”
Koteles figures the typical eBay auctioneer was “a twentysomething-year-old young adult who is probably a yuppie.”
Yet not all eBay auctioneers sip cappuccino and nosh sushi. Some turn to eBay to make ends meet.
“We are a low-income family and it helps provide money for the holidays,” Heidi Sterling says. The 23-year-old Adrian resident says the buying and selling have “nothing to do with power, control or greed.” She and her husband, Brian, 29, have completed more than 75 auctions in the past six months, everything from collectibles to clothing.
“The Internet [and eBay] is full of many different people, but you won’t have to stand behind any of them in the checkout lines,” she says.
Sterling, Sioson and Koteles have been disappointed by the profits they have made per Xbox. Most have averaged $50 profit per unit. With a retail cost of just under $300, however, the return on investment averages 17 percent.
“I sold one Xbox for $375... I thought I would sell it for more, but that’s OK … when PlayStation 2s were on eBay last Christmas, people were making $200 to $300 profit,” Koteles says.
Sterling does not believe she is contributing to the scarcity of Xboxes.
“I don’t feel that online resellers are to blame for the shortage … I have heard Microsoft intended on having more Xboxes ready for Christmas than they were actually able to produce,” she says. “Did I buy the Xbox that was rightfully someone else’s? Did I steal from the poor to give to the rich? I don’t think so. We all do what we have to do to get by. The money I make from this will go toward a Christmas gift for my 3-year-old. Is she any less deserving?”
And what would Bill Gates think of the Xbox free-for-all online?
Sterling thinks the Internet pioneer would be “thrilled.”
Sioson believes Gates “would probably want the money I made … After all, he is the [ultimate] capitalist.”The Hot & the Bothered was written by Jeremy A. Ross. E-mail [email protected]