The Xbox key sales target
Needs to drop price
This morning we reported on market analysis which showed that Microsoft was likely to miss this sales target by a significant margin - with a realistic estimate of worldwide sales for the console sitting at between 6.5 and 6.6 million units. However, these figures are for the fiscal year, and Microsoft has since clarified that its June targets are for the entire lifespan of the console.
As such, the 6.5 million forecasted by Wedbrush Morgan analyst Michael Pachter for fiscal 2003 should be combined with the 3.9 million units sold in the previous year - leaving Microsoft with a healthy lead over its own overall sales estimates.
Ironically, however, if the Xbox were to miss its sales targets, this would actually help Microsoft's bottom line financially. The company is still losing a vast amount of money on sales of the Xbox hardware - at least $100 on each unit, and quite probably more - in contrast to Nintendo and Sony, both of whom are thought to be making profits on their hardware thanks to cheaper manufacturing costs and, in Sony's case, the age of many components.
Microsoft will announce its quarterly results tomorrow, and although the company is expected to post a significant profit as usual, all eyes in the games industry will be on the results from the Home and Entertainment Division, which houses the Xbox project. These results continue to reveal the true cost to Microsoft of maintaining its assault on the games market and, more importantly, on consumer living rooms - a battle which many commentators believe Microsoft cannot afford to lose in the long run.