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Thursday, 4 April, 2002, 17:00 GMT 18:00 UK
Microsoft 'should cut Xbox price'
Chris Lewis of Microsoft (left) with Richard Branson and Scott Rawlins (right)
Richard Branson sold the first UK Xbox
Microsoft could be forced to cut the price of its Xbox games console just weeks after its debut in Europe and Japan, according to investment analysts.

Since the Xbox's release in February in Japan Microsoft has sold about 165,000 units, one third short of its goal to sell out of its 250,000 initial shipment, Media Create, a Japanese research company, said.


Investors already think Xbox is irrelevant in the Japanese market

Makoto Suzuki
The sales figures are based on a nationwide survey of retailers and video-rental stores.

Microsoft's launch was damaged after the company was forced to repair or replace Xbox consoles when customers complained the machine damaged some game disks.

'Choice'

"Investors already think Xbox is irrelevant in the Japanese market,'' said Makoto Suzuki, who helps manage Japanese equities at Chuo Mitsui Asset Management Company.

Sony's Playstation 2
Sony's Playstation 2 leads the market
"Sony is now the maker of choice among owners of home-use game consoles."

In the week until Sunday 31 March, Microsoft sold about 4,300 Xboxes in Japan, while Sony's PlayStation 2 sales topped 100,000 and Nintendo's GameCube sales reached almost 25,000, Media Create said.

Analysts and investors say a price cut is no assurance of higher sales.

The Xbox sells for 5,000 yen more than Sony's PlayStation 2 console and 10,000 yen more than Nintendo's GameCube.

'Threat'

Hirohisa Ohura, managing director of Microsoft's Japan unit, said last month that the pace of Xbox sales in Japan is slower than they expected.

"It's a certainty that the Xbox isn't a threat anymore to Sony's PlayStation 2,'' said Toshiyuki Fukushima, of Sumisei Global Investment Trust Management Co.

"I'm interested in how this will affect the parts suppliers for the Xbox.''

Japan accounts for about a quarter of all video-game sales globally and is crucial for Microsoft.

The country is home to some of the industry's best-known game designers such as Nintendo's Shigeru Miyamoto and Konami Computer Entertainment's Hideo Kojima, designer of the Metal Gear Solid games.

Microsoft risks losing potential game users and damaging its relationship with existing game software suppliers if it doesn't cut the Xbox's price, Deutsche Securities' Takashi Oya said.

"There's no point in discussing the issue,'' Mr Oya said.

"Microsoft should not be thinking about saving face, they should be thinking about how to minimize the damage."


In DepthIN DEPTH
Video games
Console wars, broadband and interactivity
See also:

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