Competition on the video game market has escalated with the US launch of Microsoft's Xbox yesterday, marking the entry of the software giant into a sector dominated by Japanese firms Sony and Nintendo.
The Xbox is in direct rivalry with Sony's PlayStation 2, which has sold over 20 million units since its release in October last year, and, to a lesser degree, Nintendo's GameCube.
The Microsoft console, which will be marketed in February in Japan and in March in Europe, was on the shelves in over 15,000 US stores yesterday. Many have already sold out to avid customers who reserved their Xbox.
Microsoft, throwing itself into the hardware market for the first time, distributed 300,000 consoles yesterday. It expects to sell 1.5 million Xboxes before year's end, while analysts put the total at about one million.
Microsoft also chose New York for the October launch of its Windows XP operating system, showing its support for the city still under the shock of the September 11 terror attack on the World Trade Center.
The world's largest software maker hopes the Xbox will quickly make its mark on US households, and has not skimped in promoting it, committing $500 million to its advertising campaign. The rather heavy console, about the size of a video recorder, is aimed at gamers between the ages of 17 and 26, just like Sony's PlayStation 2. GameCube is targeted at children and adolescents.
The group will suffer losses at first from its Xbox launch, perhaps up to a $1 billion by 2004, according to investment bank Morgan Stanley Dean Witter. Microsoft can make up some of the losses incurred in the development and launch of the console through the sale of games at a higher profit margin.
Xbox also has Internet capability, with the firm hoping to make a dent in the online gaming market, which experts say could happen next year. There are 15 to 20 games now available for Xbox, as compared with about 10 for GameCube. Some 175 video games are available for PlayStation 2.
