Microsoft Corp's bid to unseat Sony Corp as Japan's No. 1 video-game console maker is a flop, forcing the company to consider cutting the price of its Xbox machine just six weeks after its debut, investors said.
Since the Xbox's release on Feb. 22, Microsoft has sold about 165,000 units, falling one third short of its goal to sell out of its 250,000 initial shipment by now, Media Create Co, a Japanese research company, said. The sales figures are based on a nationwide survey of retailers and video-rental stores.
Microsoft's attempt to topple Sony in Japan was hampered after the company was forced to repair or replace defective versions of the Xbox when customers complained the machine damaged some game disks. Xbox is part of Microsoft's attempt to extend its dominance of computer operating systems to the livingroom where consumer-electronics makers like Sony hold sway.
"Investors already think Xbox is irrelevant in the Japanese market," said Makoto Suzuki, who helps manage US$1.1 billion in Japanese equities at Chuo Mitsui Asset Management Co. "Sony is now the maker of choice among owners of home-use game consoles."
Microsoft continues to lose ground. In the week ended Sunday, it sold a little more than 4,300 Xboxes in Japan, while Sony's PlayStation2 sales topped 100,000 and Nintendo's GameCube sales reached almost 25,000, Media Create said.
Analysts and investors say Microsoft faces a tough sell in Japan, where the company counted on a successful debut to prove itself among game fans and win the support of game developers.
They add that a price cut is no assurance of higher sales.
The Xbox sells for Japanese yen 5,000 more than Sony's PlayStation2 console and Japanese yen 10,000 more than Nintendo's GameCube.
Hirohisa Ohura, managing director of Microsoft's Japan unit, Microsoft Co, said last month that the pace of Xbox sales in Japan is slower than they expected.
Weekly sales of the Japanese yen 34,800 (US$260) machine may pressure Microsoft to shore up sales by slashing prices or bundling the game console with software to attract buyers, investors said.
"It's a certainty that the Xbox isn't a threat anymore to Sony's PlayStation2," said Toshiyuki Fukushima, who helps manage Japanese equities at Sumisei Global Investment Trust Management Co. "I'm interested in how this will affect the parts suppliers for the Xbox."
Japan, which accounts for about a quarter of all video-game sales, 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 Japan Inc's Hideo Kojima, designer of the "Metal Gear Solid" series of espionage games.
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