Scarcity As A Buzz-Builder. Or Poor Planning

When the Nintendo Wii launch date approached, my then 16-year-old son announced that he would be camping out overnight at Best Buy with his gaming posse to make sure he obtained one. I wasn't sure the Wii campout was a great idea, or particularly necessary. Surely Nintendo wouldn't leave money on the table by running out of inventory for a hot product within hours? But the buyers who showed up at Best Buy in the morning expecting to find Wiis were met by empty shelves. By that time, we were home and my son was schooling me in Wii Baseball.

With gaming consoles, scarcity generates buzz. The product is so hot they just can't keep it on the shelves! It's a pattern we've seen repeatedly. If you launch a new console and everyone can get one, it's interpreted as slack demand, rather than good inventory management.

Does the same hold true for web site launches? For startups, it's almost become a badge of honor to have your server crash during launch, which is seen as an indication of Internet hotness. But what if you're Microsoft? Mike Arrington at TechCrunch raises the question in a post about yesterday's launch of Microsoft's Photosynth.

The Photosynth site crashed within hours of its launch. Microsoft responded with a blog item that the site had been "absolutely overwhelmed by demand," and that traffic "has far exceeded even our most optimistic expectations." Arrington's not buying. Here's his take, titled Microsoft Celebrates Photosynth Server Failure, Surprised People Like It:

There's definitely a disconnect between Microsoft's emphasis on massive new data centers and the Photosynth response. What are the new data centers for, if not to support this kind of online app? As for the blog from the Photosynth team, it was a classic Lemonade response. Once the damage is done, "we're really popular!" works better than "oops, we misjudged our launch traffic."