Despite an uncertain economy, both Nintendo USA and its game rival Microsoft Corp report nearly selling out initial shipments of their new gaming consoles.
"We've been surprised at how well they've been selling," analyst Brendan Barnicle of Pacific Crest Securities in Seattle said Wednesday. "We have had some skepticism, given the macro economy, but they both appear to be off to a very strong start."
Nintendo expects to be completely sold out of its initial shipment of 700,000 GameCube consoles today, said George Harrison, senior vice president for marketing at Nintendo USA, headquartered, as is Microsoft, in a suburb east of Seattle. It has added 200,000 consoles to the 1.1 million it planned to ship to US stores for the holiday shopping season.
Just down the road in Redmond, Microsoft reports that its initial shipment of Xbox, believed by analysts to be around 300,000 consoles, was selling out at retailers nationwide.
Microsoft won't release specific sales or shipment figures, but the company expects to ship about 1.5 million Xbox consoles to retailers for the holiday season, said John O'Rourke, director of Xbox sales and marketing.
Xbox is Microsoft's first foray into gaming hardware. Game offerings such as the intergalactic first-person shooter "Halo" are targeted at men ages 18-30.
Both companies boasted that early sales of consoles and games topped the US$93.5 million opening-weekend gross of the film Harry Potter and the Sorcerer's Stone.
"The sales of Xbox are definitely blowing away our expectations," O'Rourke said Wednesday, adding that a number of retailers already had received multiple shipments.
Barnicle said the success of the two new consoles could explain why personal computer sales have been relatively sluggish, and why Microsoft's new Windows XP operating system has not sold more briskly.
"They have a lot of competition for the consumer dollar this Christmas," he said. "Clearly the game consoles are still able to maintain their share."
Microsoft has said that early sales of Windows XP are meeting its expectations.
Nintendo on Wednesday forecast a 26 percent increase in revenue for its full fiscal year ending March next year, in part because of expected strong sales of the GameCube.
The Kyoto, Japan-based parent company reported earnings up 14 percent for the first half of its fiscal year, compared to a year ago, on strong sales of video games for the portable Game Boy and the revamped Game Boy Advance.
Nintendo holds a virtual monopoly on the handheld video game market, and analysts said a strong selling point for GameCube is that users will be able to use handheld Game Boys with the console. At US$199, GameCube also sells for about US$100 less than Xbox and Sony's Play-station2, which was released last year and has sold about 20 million consoles. Playstation2 has a library of more than 175 games, compared to 15 for Xbox and five to seven for GameCube.
Xbox tops GameCube in additional capabilities, including high-speed Internet connectivity and the ability to play DVDs. By mid-2002, Xbox users should be able to play head-to-head over high-speed Web connections, O'Rourke said.
The GameCube, which plays proprietary mini-discs rather than DVDs, can be equipped with a 56K Internet modem. But Nintendo will remain focused on games, Harrison said.
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