Microsoft Band customers get scrooged even before holidays start

Microsoft's email says no more Band sales online, but the situation is -- apparently -- fluid

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Three days after saying stock of its new Band smart wristband would be replenished throughout the coming holidays, Microsoft changed course.

In an email to potential Band customers sent late Monday, Microsoft said "we no longer have any [Bands] available for online sale" and urged customers to check local Microsoft stores that "may" have some in stock through the holidays.

Customers were given a one-time $10 promo code to use with a future online purchase of $50 or more to "make it right," according to the emailed letter.

After an inquiry by Computerworld on Tuesday, a Microsoft spokeswoman said via email that "there are indeed plans to replenish inventory through the holiday season and we're working first to fill back orders in [physical Microsoft] stores."

Inventory for Band has been on again and off again. After it first went on sale Oct. 30, online orders were suspended after about two weeks, then reinstituted Nov. 18, only to sell out in the next day or so.

Customers and analysts criticized Microsoft for its handling of the matter. Microsoft had clearly intended the $199.99 Band to "showcase the power of Microsoft Health" software for multiple smartphone platforms, but some said the company didn't give enough attention to Band stockpiles.

Microsoft Health is health and fitness-related software that can run on multiple smartphone operating systems — Windows Phone, Android and iOS. Microsoft also is making software tools available to developers to design wearables that can run Microsoft Health.

The Band has multiple sensors for detecting heart rate and other inputs. It includes a tiny microphone to take voice commands that can be relayed to a Windows Phone smartphone running the Cortana digital assistant. It also can be connected via Bluetooth to other smartphone platforms for various functions.

Interest in Band is partly due to a heightened interest in wearables generally, including smartwatches such as the Apple Watch, due to ship in early 2015.

Dan Schliebe, a potential Band customer who works at a health club in the Denver area, called Microsoft's email on Monday and decision to give a promo code for $10 a "bogus decision" and "unbelievable."

Schliebe went online to buy a Band on Nov. 18 when sales were restarted after the first stoppage. He also talked by phone that day with a Microsoft employee who assured him that his online purchase had been made. Later, he discovered it wasn't actually made.

Schliebe then sent an email to Microsoft which he copied to Computerworld on Tuesday calling the decision not to sell online "a poor one" adding he "wouldn't waste ... time waiting in line at a local store which is ... very crazy, especially during the holiday season."

Schliebe is a solid Microsoft customer and owns three Surface RT tablets that he and his two sons use. "This [complaint] comes from someone [who] really wants a Band," he said.

While Microsoft's shortage of Band inventory won't affect large numbers of customers, analyst Patrick Moorhead of Moor Insights & Strategy called it a bad business move. He said Microsoft didn't want to produce too much Band inventory after losing nearly $1 billion on unsold inventory of the original Surface tablets.

"Business-wise, running out of inventory is always better than having to write-off millions or billions of inventory, but running out before the holidays just isn't good business management," Moorhead said.

In one example of too much inventory, Samsung reportedly ordered production of far too many its Galaxy S5 smartphones that haven't sold well globally, contributing to a number of changes at Samsung, including in upper management.

Microsoft's primary objective with the Band was to be able to "check the box that they did a wearable in 2014 and provide a development vehicle for Microsoft Health," Moorhead said. "They were burned on Surface inventory from being very bullish and now it appears they went the no-risk inventory path. To sell out online before the holiday season starts clearly demonstrates this."

A Microsoft spokeswoman last Friday sent Computerworld an email saying the company was "excited by the response... to Microsoft Band." She said that Microsoft would not comment on how many were made, but that sales went "well beyond" the 5,000 that many reports said were initially produced.

She concluded: "We will continue to replenish inventory throughout the holiday season."

It appears that was still the case as of late Tuesday, despite the Monday email to customers. For Schliebe, he said he's given up ordering a Band online after his experience.

Carolina Milanesi, chief of research at Kantar WorldPanel, said Microsoft might not have planned well for the demand, but predicted the problem with Band inventory will blow over. "In the big scheme of things, I do not think this really matters," she said.

Copyright © 2014 IDG Communications, Inc.

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