Microsoft announced today that its struggling video game system, the Xbox, experienced better than expected sales in January, cementing its number two position in the market, ahead of Nintendo GameCube, but still significantly behind market leader Sony PlayStation 2 (PS2). The company noted that Xbox sales in North America were especially strong, giving the company 24 percent of the market, double that of Nintendo. But put another way, that's only about one third of Sony's market share in North America.
"It's always nice to know that gamers agree with us in thinking that Xbox is a fabulous machine and a great entertainment value," says Robbie Bach, the senior vice president and chief Xbox officer at Microsoft. "After 15 months on the market, we're right on target with our business plan and will continue to provide the best interactive experiences possible."
Xbox continues to rack up more software sales per video game unit than the competition--an average of 4.9 titles per console--which has always been a highlight for the system. And sales of the system's online package, Xbox Live, have been strong as well, with the company claiming to have sold 44 percent more Xbox Live starter kits than Sony has sold of its PS2 network adapters during their first three months in the market.
Despite Microsoft's positive stance, the Xbox can hardly be called successful. Microsoft has twice reduced sales expectations, and the company now expects to sell as many as 10 million Xbox units by mid-2003, about a year later than originally projected. However, the system's sales failings weren't necessarily avoidable, due to the overwhelming success of the PS2, which is the fastest selling video game console of all time.
From a technical standpoint, the Xbox is superior to the competition, but both Xbox and the GameCube suffer from smaller developer bases than the PS2. The big question going forward regards how long the company will float its money-losing video game console. In the hotly contested video game market, there have never been more than two major players, and its uncertain how long the two stragglers of the current three--Microsoft and Nintendo--can continue to grasp at an ever-decreasing share of the market.