Xbox sales 'sluggish'

An analyst says that November sales of Microsoft's console were slower than expected, casting doubts on its Christmas success

Microsoft's Xbox game console sold worse than expected in November, according to an analyst, in a research note that may not bode well for the console's sales over the Christmas shopping season. Banc of America Securities analyst Bob Austrian said in a research note to clients last week that he expected the console to sell 700,000 consoles in the US in November, while the actual sales figures from NPD Group amounted to only 468,000. Microsoft has been trying, with little success, to catch up to market leader Sony, whose PlayStation2 installed base is ten times larger than that of the Xbox. Austrian predicted that Xbox sales for the Christmas quarter would amount to $700m (£448), down from a previous forecast of $1.1bn. The slow sales will not impact Microsoft's bottom line, since the company loses money on each console sold, according to analysts. In fact, the machine's installed base is now large enough that lucrative software sales could soon begin making a positive impact on the company's balance sheet, according to a report last week. Microsoft's woes appear to be part of a wider sales slowdown in the console industry. Austrian said that growth rates for both consoles and games may be slowing or proving seasonally weaker than expected. Last week Goldman Sachs downgraded the sector, citing fears of a slowdown. NPD Group said last week that sales of gaming software for November rose only about 7 percent from the previous year, compared with a 74 percent rise in October. Microsoft was not immediately available for comment. Nvidia shifts to 0.13-micron
Nvidia, the chipmaker which supplies the Xbox's graphics processor, appears to be more optimistic about the device's future. The company on Monday said it was increasing orders with manufacturing partner Taiwan Semiconductor Manufacturing Co. (TSMC), according to newspaper reports from Taipei. Nvidia was compelled to cut third-quarter orders because of weaker-than-expected demand. Nvidia and TSMC held the joint press conference on Monday as an opportunity for TSMC to show off its new 0.13-micron manufacturing process. Difficulties in getting the new process on line have led to a delayed rollout of Nvidia's latest graphics chip, the GeForce FX.

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