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Microsoft Xbox 360 Aims at Sony's Hold on Japan

Yukari Iwatani Kane, Reuters

TOKYO/SAN FRANCISCO (Reuters)—Microsoft Corp. is making an unprecedented effort to woo Japanese gamers with its new Xbox 360 game console, but analysts say it will be lucky if it can put a dent in Sony Corp's PlayStation following.

Even before the release of the Xbox 360, Sony has created more market buzz in Japan for its next-generation PlayStation 3 console, due in the spring.

Microsoft Chief Xbox Officer Robbie Bach dismisses surveys showing interest in his new console is still low.

"None of that is worth anything," he said at the Reuters Technology and Telecoms Summit in Tokyo on Wednesday.

The lack of success in Japan with the first Xbox was due to lack of compelling games for Japanese, not relations with retailers or even the bulky design of the first Xbox.

"Ultimately if we had great games, people would have put a big, black Xbox in the living room," he said. This time, he says, Microsoft has laid the groundwork for just that.

Analysts expect the Xbox 360 to sell better than its previous version, but they don't expect it to seriously challenge Sony's dominance of the gaming market in Japan.

"There is no way it will come close to the PlayStation," said Tokyo-based Deutsche Securities analyst Takashi Oya. "Microsoft will have done well if it gets 10 percent market share in Japan."

U.S.-based research firm IDC estimates that Microsoft will sell 3.5 million Xbox 360 units in Japan by 2009, compared with 8 million PlayStation 3 units.

Microsoft and Sony dominate the $25 billion video game hardware and software market.

But while Xbox competes almost evenly with Sony's PlayStation 2 (PS2) in the United States, in Japan it runs a distant third behind Sony and Nintendo Co. Ltd.'s GameCube.

According to Famitsu, Japan's leading game magazine, Microsoft has sold 470,624 Xboxes in the country as of August. This compares with Sony's 18.14 million cumulative PS2 sales, and Nintendo's 3.8 million GameCube unit sales.

LEAVING NOTHING TO CHANCE

Microsoft readily admits that it made some mistakes in Japan with its first launch in February 2002, two years after Sony launched PlayStation 2 and cemented its grip on the market.

"We learned a lot from the first launch of Xbox in Japan," said Bach. "People didn't get excited about the games."

This time it is better prepared.

Microsoft plans to launch Xbox 360 in the United States, Japan and Europe ahead of the year-end holiday season and, more importantly, ahead of Sony's PlayStation 3 launch next spring.

The sleek white-and-silver concave console, which will have advanced graphics and high-speed Internet connections, was designed in consultation with a Japanese design firm.

Microsoft also convinced some of Japan's hottest creators, animators and musicians to create games for the new Xbox, including Final Fantasy's original producer, Hironobu Sakaguchi, and publisher Square Enix Co. Ltd.

"Whether Microsoft launches on November 20 or December 5, we expect they will sell through every unit they can deliver before New Year's," said Richard Doherty, research director at New York-based Envisioneering Group.

Not everyone is as optimistic, but some say it may be enough for now that Japanese gamers are curious about Xbox 360.

It will be "a job well done" if Microsoft can get equal market share with Nintendo in the next-generation battle, said KBC Securities analyst Hiroshi Kamide. "It's not going to be possible to be number one," he said.

Copyright © 2005 Ziff Davis Media Inc. All Rights Reserved. Originally appearing in PC Magazine.





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