Microsoft's Xbox Sales Tough to Game

Updated from 10:54 a.m. EST

So, just how is Microsoft (MSFT - Cramer's Take - Stockpickr) doing with its Xbox 360 game console?

At first glance, the sales numbers the company released on Thursday with its earnings report appeared to be much better than expected.

Game publishers had complained last month that Microsoft was shipping far fewer Xbox 360s than expected, leading to much lower software sales. Market research group NPD seemed to confirm that assessment earlier this month when it estimated that the company had sold just 600,000 units in the U.S. from the Xbox 360's launch in November through the end of year.

According to the company, though, it sold 900,000 units in North America in that time frame -- or 50% better than NPD's estimates. While company officials acknowledge problems in meeting demand -- and reduced their projection for sales within the first 90 days after launch -- they predicted better times ahead, reiterating their forecast that Microsoft would sell 4.5 million to 5.5 million units worldwide by the end of its fiscal year in June.

What you've probably already inferred from the figures above, however, is that Microsoft's figures include sales into Canada, while NPD's are strictly U.S. data. But a Microsoft representative declined to say how many Xbox 360s were sold in Canada.

But that's the easy part. A less obvious distinction is that NPD's sales numbers represent devices actually sold to consumers. In contrast, Microsoft's represent numbers of devices that the company has shipped. In other words, those boxes may or may not have yet ended up in consumers' hands.

So when Microsoft says that it "sold" 900,000 Xbox 360s in North America -- and 1.5 million worldwide -- in 2005, some number less than that actually made it through to gamers' homes.

Given that retailers are still working through back orders on the device, that distinction may not seem very meaningful. For now, at least in the U.S., Microsoft is pretty much guaranteed to sell just about every Xbox 360 it can get out to retailers.