Xbox Launches Overseas

Several months after its successful North American launch, Microsoft released its Xbox gaming console in Japan, Europe, and Australia. Initial Japanese sales were affected by reports of a flaw in the units, but that market is less important to Microsoft than Europe, which is expected to account for about one-third of overall Xbox unit sales.

Japan: More Difficult Market

The Xbox went on sale in Japan on Feb. 22 at a retail price of ¥34,800 (US$260), which is less than the North American price of US$300. Microsoft will have to sell more games per unit to make up for the loss on each unit sold in Japan (the units are estimated to cost between US$320 and US$380 to manufacture). In spite of this lower price, the Japanese Xbox is expensive when compared with the local competition: it is approximately US$37 more than the Sony PlayStation 2, and US$73 more than the Nintendo GameCube.

Microsoft has not released sales expectations for Japan, which is likely to be the Xbox’s most difficult market. Japanese companies Sony and Nintendo have more experience catering to Japanese consumers, who favor different types of games than American and European gamers (for example, shooting games are not as popular in Japan). The poor state of the Japanese economy, which has been in recession for much of the last decade, could also limit sales.