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Christmas Gift Guide
Tech Industry

Sellers cash in on Xbox, GameCube demand

With inventories low on the popular game consoles, fans are turning to places like eBay. Don't expect to find a deal, however.

If you're looking for a Microsoft Xbox or a Nintendo GameCube online this holiday season, expect to pay a premium.

When they have the game systems in stock, online retailers such as Amazon.com, KBtoys.com and BlueLight.com are only offering them in bundles with games and extra controllers--and they're charging at least $100 over the prices for the consoles themselves. Consumers can find consoles without games and extras on auction sites such as eBay, but they should prepare for a bidding war.

"There definitely are some frustrations among consumers," said Greg Bottorff, who runs Allcube.com and Allxbox.com, Web sites that provide news and tips about the new game systems.

Consumers experienced similar frustrations last year when Sony released its PlayStation 2. With supplies short, consumers often bid at eBay double or triple the retail price of $299. Capitalizing on the demand, online retailers generally sell the game system only as part of a $499 bundle that includes games and accessories.

Microsoft and Nintendo released their rival next-generation game systems last month to similarly hot demand. Built largely from off-the-shelf components, the Xbox is Microsoft's first effort at a game system and touts fast processing and graphics rendering. The GameCube is a successor to the popular Nintendo 64 system.

Retailers online and offline are again requiring customers to buy the machines in bundles. Through their jointly operated store, Amazon and Toysrus.com, for instance, are offering four different Xbox bundles, three of which are out of stock, and four different GameCube bundles, all of which are out of stock. Each bundle includes three games and an additional controller, and costs $200 more than the retail price of the console alone.

Jupiter Media Metrix analyst Billy Pidgeon said the bundles are really all about retailers trying to cash in on demand.

see special report: Microsoft plays for keeps "They saw some of what was going on at eBay (last year), and they are thinking they can make some more money," Pidgeon said. "By bundling in a couple of games, a controller and a memory card, they are getting away with padding the prices by hundreds of dollars."

But some online retailers say the bundles have more to do with catering to consumers than cashing in. Consumers often buy consoles with all the extras anyway, and the bundles help Toysrus.com and Amazon speed up the shipping process, said Jeanne Meyer, a spokeswoman for Toysrus.com. The bundles are actually cheaper for the consumer because they don't have to pay for separately shipping each item, she said.

"Our general practice is to sell them as a package with accessories and games," Meyer said. "That's the way most people buy them. A console is only as good as games you get to play on it."

Some consumers say they want to be able to buy just the consoles. Jason Giambrone, a computer technician in Highlands Ranch, Colo., said he started shopping for an Xbox online after being unable to find one at local retailers. But he's unwilling to buy a bundled system so has instead started shopping on eBay.

With the bundles, "you end up getting games that you don't really want and paying for stuff that you don't really need or want," Giambrone said. "There's a couple games I'd like to get, but none of them are in the bundles. If I can just get the console and the games I want, I'd be happy with that."

While Giambrone said he doesn't plan to bid more than the retail price for an Xbox, many other consumers are willing to pay much more than that for the new game systems.

Miami resident Al Diaz said he's sold four Xboxes on eBay so far. He's reaped about $450 for consoles by themselves--far above the $299 retail price--while those with games have sold for about $545, he said. Diaz normally sells Cuban memorabilia through eBay and his own Web site, but remembering what happened with the PlayStation 2 last year, he bought up some Xboxes at a local store when he found them.

"You know the saying, 'when opportunity knocks, take advantage of it?' Well, opportunity knocked," Diaz said.

Network consultant Steve Smith of central Vermont sold an Xbox console on eBay earlier this month for $450. Bidding in another auction, he's listed for a GameCube console that has reached $250; the GameCube normally lists for $199.

While he was surprised at the price the Xbox fetched, Smith said he wasn't surprised by the demand for the consoles without the games.

"People don't want to pay a bundle price for them," he said.

David Lawrence had pretty much given up on buying a Microsoft Xbox for his son until he found a deal on eBay. He ended up buying the Xbox console sans games on Wednesday for $322. Although that's more than the retail price, Lawrence figures he got a bargain.

"If you go to Amazon, they've only got these super-duper kits, and you're into it for $600. That's too much money," he said.