Microsoft Xbox has lost the console war already – Sony exec

Microsoft's Xbox console is "finished before it even got started". So says Sony's PlayStation supremo, Ken Kutaragi, in an interview with the Financial Times today.

Not that he's biased in any way, you understand. Our Ken's simply telling it like it is.

Yeah, right. We've always said that the early 21st Century's big battle will be between Microsoft and Sony, and it looks like the combat is just starting to get a little rougher.

Kutaragi's claim is based on two factors. First, the Xbox hardware isn't anywhere near as good as everyone thought it would be, and second, that Microsoft just doesn't fully understand the console business and certainly not the Japanese side of it.

The problems Microsoft may have winning over Japanese consumers and games developers has been signalled before. Earlier this year, rumours sprang up suggesting Microsoft would delay Xbox's Japanese launch to give it more time to address the needs of that market, which is very different from the US or Europe. Japanese gamers favour different game styles and need to be addressed with different flavours of marketing and advertising.

At the time, even Electronic Arts CFO Stan McKee said he doesn't expect Xbox to launch in Japan before 2002. EA had already announced its intention to offer Xbox software.

Since then, Bill Gates has gone on record to say that Xbox will ship in Japan at the same time that its ships in the US. And a handful of big-name Japanese developers have signed up to produce Xbox games. Among them is Sega, but since it's so desperate for software revenue it will code for almost anything, it's support is hardly a strong indicator of Xbox's Japanese credibility.

As for the Xbox hardware, Kutaragi dismisses it as "disappointing". The console isn't fast enough and its graphics are "rough". The demo machine's crash at the E3 show last week suggests he may have a point. Xbox certainly sounds like a PC engineered down to a console, rather than a piece of consumer electronics kit engineered up.

Incidentally, Kutaragi's comments about Xbox's graphics will annoy Nvidia, which designed the chip that powers them and is relying on the console to generate it significant revenues - up to $50 per box, reckons one analyst - going forward.

Xbox's PC heritage may prove a problem. The FT quotes Japanese Société Générale analyst Shunji Yamashina as saying Xbox's E3 demo games were "just extensions of PC games".

That's almost certainly true, but then so were almost all the major PlayStation sellers, and we suspect Yamashina's quote says as much about the differences between the Japanese market and the Western one. Over here, we like PC games, and that may be enough to carve Xbox a good share of the market. Microsoft might simply choose to focus on the West, where it will be up against less entrenched competitors.

However, Japan accounts for between a quarter and a third of the console arena, and Microsoft will need to make a good go of there if it's not to harm its credibility as a console market player.

And it may not, in any case, be able to rely on strong support in the US. Kutaragi claims that US retailers have said that 70 per cent of their sales will come from PlayStation, the rest from Nintendo and Microsoft - and "almost all of that will be from Nintendo".

Microsoft will, of course, dismiss such claims. Indeed, we're sure retailers will be saying much the same thing to Microsoft, just swapping some of the names around.

Microsoft should at least be able to keep them stocked with consoles, unlike Sony's hashed PlayStation 2 launch. It promises to have 600,000-800,000 console warehoused and ready for the launch. Between 15 and 20 games will ship when Xbox does come to market, on 8 November - three days after sneaky old Nintendo ships GameCube. With prices closely matched, sales will depend largely on potential buyers' in-store experiences and how much money the players will chuck at advertising.

It's going to be a fun Christmas. We don't side with Mr Kutaragi on this one, but we're not putting any money on Microsoft either. ®

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