Xbox continues to bomb

Sales at the low-end of expectations as suppliers are left twiddling their thumbs...

Sales at the low-end of expectations as suppliers are left twiddling their thumbs...

Sales of Microsoft's Xbox video game console are likely to scrape the low end of current company forecasts, based on recent reports involving key component suppliers. US chipmaker Focus Enhancements, which last year signed a contract with Microsoft to become a secondary component supplier for the Xbox, said in a financial update statement released late last week that Microsoft has yet to order any chips. The Xbox is to use Focus' FS454 chip, which decodes video signals so they can be displayed on a TV screen. In the statement, Brett Moyer, CEO of Focus, said: "Microsoft has informed us that although Xbox met its holiday season sales estimates, the unit sales were on the low end of Microsoft's forecasted range, reducing Microsoft's component procurement requirements in the first half of 2003. As a result, Focus Enhancements has been told by Microsoft not to anticipate purchases of the FS454 chips for Xbox in the first half of 2003." Focus said it would provide further details on the Microsoft contract in its fourth-quarter earnings report in early March. A Microsoft representative said information provided to Focus was consistent with earlier Xbox forecasts. Nvidia, which supplies the main graphics processor for the Xbox, is also expected to report lower Xbox-related business when it reports results for the fourth quarter and the fiscal year on 13 February. Microsoft executives said earlier this month that the company is on track to bring total Xbox shipments to about nine million by the end of the company's fiscal year, 30 June. That would bring sales in at the low end of the nine million to 11 million units the company had forecasted at the beginning of the year, after the console made a slower than expected entry into the highly competitive video game market. By contrast, market leader Sony recently announced it has shipped more than 50 million units of its PlayStation2 console to date.