Microsoft Sees 15M Xbox 360 Sales By Mid-'07

Microsoft Thursday forecast its Xbox 360 game console sales will total as many as 15 million by the end of its fiscal 2007, which ends June 30 of next year.

The company expects to have shipped more than 10 million consoles by the end of this year. By the end of June 2007, the company expects its sales to total between 13 million and 15 million units since the launch.

The bullish forecast could help give the company an edge in the game console wars against its main rivals, Sony Computer Entertainment and Nintendo. Microsoft faces a tough fight against the two Japanese companies, particularly since its first Xbox never fared as well as the PlayStation 2, and because Sony will launch its next generation console, PlayStation 3, later this year. But an early launch for the Xbox 360 should help the company both in gaining users who want a next generation console immediately and in giving it time to figure out ways to lower production costs.

Capturing a portion of the Japanese market will be particularly tough.

"We always knew in Sony’s and Nintendo’s home ground it was going to be a tough market," said Alan Bowman, general manager of Xbox Asia for Microsoft. He said the key to increasing market share in Japan is working with top game developers there to get their titles out for the Xbox 360.

Price could help determine the winner of the console wars globally. The full version of the PlayStation 3, when it launches in November, will be priced around US$600 in North America, compared to $400 for an Xbox 360. Microsoft might also be able to lower Xbox 360 prices. The company is able to drive down component and production costs for the console as it ramps up volumes, making the unit cost cheaper. But Bowman said the company does not foresee lowering its prices.

The company has strong momentum for the Xbox 360. In its fiscal fourth quarter, which ended June 30, Microsoft sold a quarterly record high 1.8 million game consoles, raising its total sales to 5 million globally.

Microsoft has sold 3.3 million of the popular game machines in the United States, 1.3 million in Europe and 400,000 in the rest of the world since its Nov. 22 launch last year.

During the holiday quarter last year, Microsoft sold 1.5 million Xbox 360s, increasing sales to 1.7 million during the first three months of this year.

Microsoft also met its sales forecast for the game machines. Last year, the company forecast it would sell between 4.5 million and 5.5 million consoles by the end of June 2006, and it succeeded despite some early component shortages that hampered sales.

The company’s online gaming club, Xbox Live, is also thriving, with a community now numbering more than 3 million members worldwide, it said. About 60 percent of all installed Xbox 360 consoles are connected to Xbox Live, and users are downloading a lot of free and fee material from the site.

Gamers have already snapped up 18 million downloads from Xbox Live Marketplace, including the latest games, demos, trailers, content packs and themes. At Xbox Live Arcade, where the company offers smaller games, users have downloaded 5 million titles, the company said.

By the time the Western holiday season rolls around in December, Microsoft expects to have 160 high-definition games available on Xbox Live.

Revenue at the company’s Home & Entertainment division rose to US$1.14 billion during its fourth quarter, up 94 percent from $587 million during the same time last year. It also beat its $1.06 billion performance from the first three months of this year.

-Dan Nystedt, IDG News Service (Taipei Bureau)

This article is posted on our Microsoft Informer page. For more news on the Redmond, Wash.-based powerhouse, keep checking in.

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