| Video game guide 2005
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| Xbox? PlayStation? Nintendo? CNN/Money tells you the best choices for all the systems. (full story)
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| Prepare to die. Over and over and over.
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LOS ANGELES (Reuters) -
Microsoft Corp. has worked to keep retail supply expectations low for its new Xbox 360 video game console and is not likely to deliver more units than expected before Christmas, an analyst said Tuesday.
American Technology Research analyst Paul-Jon McNealy said in a research note that Microsoft Corp. faces a challenge in shipping 1.5 million to 1.8 million Xbox 360s worldwide by the end of December.
"We believe that [Microsoft] has tried to keep expectations low for retailers this holiday, with hopes of overdelivering. We believe that overdelivering is unlikely at this point," McNealy said.
The software company aims to sell 2.75 million to 3 million Xbox 360s in the first 90 days after its launch in late November. Microsoft spokeswoman Molly O'Donnell said the company is firmly on track to hit its 90-day target but declined to give a forecast for sales through the December holidays.
McNealy said he believed Microsoft had 300,000 to 400,000 units for the launch in North America, around 300,000 for Europe and 100,000 for Japan. He expects Microsoft to ship another 300,000 units in North America in the next week, which would put the total at about 1 million units. Additional shipments would be required at month's end to reach McNealy's 1.5 million to 1.8 million target.
But McNealy now expects shipments to be at the lower end of his goal.
The Xbox 360 made its debut in North America on Nov. 22 and in the following weeks in Europe and Japan -- the top three video game markets. The units briskly sold out in the United States and in Europe and remain in short supply, but Japanese sales proved tepid.
On the video game side, McNealy said checks of retail sales over the past week show ongoing weakness. He added that more price cuts or promotions are likely over the last 12 days of the holiday shopping season.
Video game publishers, such asElectronic Arts Inc. (Research) and Activision Inc. (Research) have been cutting prices or offering special discounts in an effort to move games.
The industry has been in flux as consumers save and wait for new gaming consoles such as the Xbox 360, as well as the upcoming PlayStation 3 from Sony Corp.and Nintendo Co. Ltd.'s Revolution.
"We continue to believe that the retail environment, which has been weak, may rebound to flat, but that overperformance in sales to make up for disappointing retail sales in November and early December in North America is unlikely," McNealy said.
Shares of Microsoft (Research) fell over 1 percent in regular trading to close at $27.13 on the Nasdaq.
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