The surprise survivor of the console war has to be Nintendo's GameCube, although most who knew Nintendo and their past achievements, did expect this to happen. Now GameCube recieved its European launch amidst excitement but without the flamboyance associated with similar Microsoft events.
With a considerable marketing budget of US$90.7 million, and with 500,000 units already shipped, Nintendo's European launch seems to have gone well. The Japanese console veterans announced a surprise European price cut 2 weeks before the launch, 199 euros in Europe and 129 UK pounds (US$188.60) in Britain, can now say that their console is 100 euros cheaper than its main rivals Sony's PS2 and Microsoft's XBox.
According to Nintendo in the UK alone the company had received 50,000 confirmed pre-orders and in the same country 10,000 units were sold during the first two hours following Gamecube's launch.
However well sales may go Nintendo is really fighting for second place and its main rival is Microsoft's XBox rather than the PS2 simply because Sony's headstartmeans it has already sold, worldwide, 25 million units while Nintendo only 3 million. Sony released their DVD playing console at the right time capitalizing on the DVD craze which was at its peak then. Nintendo expect to sell 1 million GameCube's during the first 2 months of its release in Europe. GameCube launched in Europe with 20 game titles immediately available and a total of 50 expected by the summer.
It is extremely risky to attempt to estimate who will come out on top. Microsoft are having problems with their console but have reacted by reducing its European price and it is certain that they have the resources to withstand the economic loss of such a reduction. On the other hand the XBox is more powerful hardware wise and does offer a myriad of extra features not carried by GameCube. However, it is important to consider that Nintendo has a large, trusting fan base among gamers and most will settle for the less hardware - better price - better games promise that Nintendo are offering.
The hardware is somewhat irrelevant, said, rather conveniently, David Gosen, managing director of Nintendo Europe.
It's not what goes into the box that's important, it's the gaming experience that comes out of it.
Europe is a very important market for Nintendo and we are committed to making it a success, added Gosen. With European hardware and software sales accounting for 31 percent (US$7.5 billion )of global sales it is certain that the European front of the console war will be every bit as interesting as those in Japan and the US.
It takes quite a bit of failure for a father to forsake his son. It seems however, that the XBox did something wrong. In news lately, for all the wrong reasons, Microsoft are trying to save some face by coming out clean.
James Bernard, an Xbox spokesman at Microsoft announced "He (Seamus Blackley, the co-creator of the Xbox) has left Microsoft to pursue other opportunities, we value his contributions."
Although the statement was rather minimalistic in nature, the truth is that the XBox just lost its father. Blackley, who is a physicist, was initially employed creating video games for Hollywood movie studio DreamWorks. He later joined Microsoft and headed the company's Advanced Technology Group. He has been one of the Xbox's most prominent faces since launch.
In typical Microsoft fashion he even proposed to his fiance during the Xbox's launch on Nov. 15 in Times Square in New York.
We had reported rumours of a slowdown in XBox sales and production recently. Microsoft have made it official, claiming that they will miss their 2002 shipment targets by as much as 40 percent, largely due to low sales in Europe and Japan.
In numbers that means that MS expects to ship 3.5 million to 4 million Xbox consoles by the end of June, down from the initial estimates of 4.5 million to 6 million units.
This announcement clearly indicates that XBox sales are struggling and that the healthy sales figures displayed by Sony and Nintendo may be the culprits.
In a further effort to change the European view of the XBox Microsoft also announced that they will be reducing the price of the console to Euros 299/£199 in Europe and to A$399 in Australia. Although this may seem a reasonable move in order to better compete with the cheaper PS2 and GameCube consoles, many believe that Microsoft will have to fight hard to survive the losses which this reduction will create.
Although Nintendo had produced a modest net profit forecast of 80 billion Yen, early estimates indicate that they may by far exceed expectations.
According to the company for the year up to 31st March 2002, net profits had risen 14% to a record 110 billion Yen (US$841 million). According to Nintendo these figures are a direct result of the falling price of the Yen and surging sales of the new GameCube console.
Shipments of the GameCube were expected to jump to 12 million in 2002/03, 3 times the 4 million units, shipped in 2001, output is also expected to surge following the launch of production in China. The 10% drop of the price of the Yen against the US Dollar was also an important factor.
Nintendo are also expecting help from their upcoming game titles which allow a very comfortable profit margin and are bound to have a positive impact on the company's figures.
Such news rub salt in Microsoft's, recent XBox sales, wounds especially since with both Nintendo and Sony doing well in console sales, they seem to be the only hardware manufacturer lagging behind.
Microsoft faced gloomy reports of slow XBox sales in Europe and Japan by boasting of the success of their console in the U.S. Latest analyst reports however, suggest a U.S. sales
slowdown. The reports are based on an apparent slow-down on the production of the XBox by Flextronics. According to the same analysts, Microsoft could well fail to meet their shipping target of 4.5 - 6 million units worldwide by June 30.
The classic Microsoft approach of hyping a product upon its release may have failed in this case because they do not have the same stranglehold on the market as they do for operating systems.
European sales, according to most retailers and analysts, have been lower than expected largely due to the price. In Japan sales are also low, partly due to the fact that XBox is competing with local products and partly because of certain hardware problems which caused some units to scratch the game discs.
To top it all off, Goldman Sachs claimed last week that retailers in the U.S. prefer the PS2 to the XBox.
Following reports of low XBox hardware sales in Europe it seems that similar figures are coming in from Japan. Most analysts had predicted a hesitant uptake of Microsoft's new toy in Japan but now the company itself is confirming the news.
XBox director Robbie Bach said "Japan is going well on the software side and probably is a little behind where we want to be on the hardware side, But we always expected things would be tough. Microsoft has demonstrated patience and persistence there before and I think we will do very well."
Although Microsoft are not releasing any specific figures early reports indicate that the XBox has sold a little over 190,000 units since its launch in Japan on February 22. In order to better understand the numbers, consider that Sony's PlayStation 2 had sold 980,000 units in the first three days following its launch in March, 2000.
In an attempt to play down the importance of these figures, Microsoft continue the comparison between XBox and PS2 during its release and claim that software uptake has been better for them. The average of 1.6 games per Xbox so far, compares well to the PS2's one game per console figure back in 2000. It is however strange if you consider that these figures mean that now 304,000 games have been bought for the XBox while back then 980,000 titles had been purchased by the new PS2 owners.
Still high software sales are essential if XBox is to survive since that is the profitable side of the console market for Microsoft. According to them they lose money on every XBox they sell.
Bach believes that the low hardware sales in Japan may also have to do with the skepticism with which game developers view the foreign intrusion into their market. "We're seeing lot of strong support there. We expect our relationships there to grow. It's not something you can jump in, and in three weeks you have great relations with everyone. It takes three months, or three years," Bach said.
Elsewhere in the world, especially in the U.S., the XBox is fairing well. According to Bach in the U.S. an average of 3.8 games per console is purchased, while in Europe, where the console is only three weeks old, owners have bought 2.3 titles per console.
Microsoft's showcase title, "Halo", is reported to have sold 1 million copies worldwide, reaching that figure in half the time it took for the equivalent PS2 title to get there.
"Project Gotham" has sold 500,000 copies so far while "Dead or live 3" has reached the 400,000 mark.
So what is next for the XBox? In May Microsoft will preview many new titles for their console while according to Bach, "The critical next step for us is scaling the platform from being a successful launch to being a broad-based success with a big installed base... The second thing ... is our online plans. That should be very very infesting. We have some fun things to talk about, some fun things to show."
According to projections made by the research company MCV (Market for Computer and Videogames), XBox sales in Europe have not been as good as Microsoft had hoped.
The most worrying figures come from France and Germany while in the UK consumers seem more enthusiastic.
While Microsoft have been keeping quite about their European sales, MCV speculates that in Germany only 10,000 units were sold in the three days following the launch. The same figure, of 10,000 units sold in three days, also applies for France.
Sales in the UK tell a different story however, XBox sales for the first three days following its launch reached 48,000 units. MCV goes on to suggest that these high UK figures may include consoles bought by traders which have not yet made their way to the consumer.
MCV rounds off the report by comparing current XBox sales with November 2000 sales of the PS2. In the first two days after launch about 140.000 Playstation 2 units were sold by Sony in the UK and Germany.
Completing the third and final step of the Xbox launch, Microsoft launched the Xbox in Europe today. According to Microsoft, Europe accounts for 50% of the $20 billion video games market.
The Xbox will be sold for 300 pounds ($423) in Britain and 479 euros ($421) in other parts of Europe and Microsoft expects to sell 1.5 million units within the next three months.
Will Microsoft run into hardware issues with these units such as in Japan? Microsoft says "extremely unlikely". We will have to wait and see...
Microsoft have tried really hard to make their launch in Japan impressive. Recognizing the difficulties of competing in the country of origin of their competition, Microsoft have pulled all the stops in order to impress Japanese consumers. Much like in the US though, many Japanese customers have complained over scratched XBox discs. Recognizing the problem, Microsoft have issued a statement claiming that they will unconditionally replace any hardware or software found to be defective, since the cause of the scratching remains undetermined.
Initial reports suggest that the scratches are a result of improper disc placement in the tray or of contact of the disc with the tray itself.
Microsoft's commitment to achieving success in the Japanese market however, does not allow any room for hesitation. All XBox retailers in Japan are ready to react to any customer complaint and Microsoft seems confident the problems will be overcome, as they did in mid-November in the U.S.
The importance of the Japanese market has led to Microsoft releasing a specially designed controller as well as 50,000 (Japan only) limited edition consoles.
Although Microsoft will be replacing everything with a smile, the current problems only add to the financial vulnerability of the XBox. With an, as yet, undetermined cost, these replacements will further delay the XBox from making any money for Microsoft.
Unofficial figures claim that 125,000 Xbox consoles where shipped during the first three days after the console went on sale on February 22.
Console launch problems are not uncommon in Japan and Microsoft will be hoping to make as impressive a recovery as that made by Sony when their PS2 console faced DVD playback problems in March 2000.
GameCube on a Spending Spree
Nintendo announced that they will be spending approximately US$87 million on the European launch of the GameCube. The console, expected to launch in Europe in early May, will be cheaper than Microsoft's XBox and will be available in the UK for UKP 150 as opposed to the UKP 299 for the XBox.
In order to compensate for the late launch, compared to MS's mid-March launch, the money will be spent in order to better acquaint potential customers with GameCube's specifications and capabilities. Carrying an IBM G3 processor chip called the CXe which is roughly equivalent to the G4 powered Macs, Nintendo's baby carries a hefty punch.
The campaign will involve 17 countries and in-store events will begin mid-March, no prizes for guessing why. Officially the timing is explained as coinciding with CeBIT 2002.
The campaign Tag-Line is Life's a Game
XBox was launched, with typical Microsoft extravagance, in Japan on Friday. The software, and now hardware, giant entered the Japanese market which everyone considers to be the hardest to break. XBox faces stiff competition, from a vaiety of home grown and well established consoles like Playstation2 and GameCube.
To demonstrate the importance Microsoft assigns to the Japanese market William Gates himself showed up in order to introduce the product.
"Japanese gamers are among the most sophisticated in the world, and Xbox is the future-generation game system that matches their sophistication, fires their imagination and tests their skills," Gates said, as he greeted the first gamers in Japan to buy Xbox.
"Today's Xbox launch demonstrates our long-term commitment to Japanese video game players," said Robbie Bach, chief Xbox officer (CXO) at Microsoft. "Xbox is just getting started in Japan, and already the launch lineup of games is very strong. It's amazing to see what many of the legendary Japanese game designers have been able to accomplish on Xbox."
Xbox is on sale at thousands of Japanese retail outlets, and 12 titles are available. It will cost Yen 34,800 with a special limited, only for the Japanese market, edition costing Yen 39,800.
Launch Line-Up
The launch lineup includes great titles from the top names in video games, such as Sega Corp., Konami Corp., Capcom Co. Ltd., Tecmo Ltd. and Microsoft Corp. A total of 22 titles are scheduled to be available in Japan by the end of March. Many of these Japanese games have global appeal and may be localized in various markets around the world.
"This is just the beginning for Xbox in Japan," said Hirohisa Ohura, managing director and head of the Xbox Division at Microsoft Japan. "We are continuing to work with our incredible partners to develop unprecedented games that can only be created on Xbox."
The Japanese Xbox game lineup includes the following:
JSRF - Jet Set Radio Future (from Sega) - is a graphical street-skating action-adventure game with the unique visual style of Japanese manga comics.
Genma Onimusha (from Capcom) - is a new interpretation of the war survival action series that garnered worldwide acclaim.
Silent Hill 2: Saigo no Uta (from Konami Computer Entertainment Tokyo) - is the hit adventure game that shook the world with its spine-tingling horror and real-world environment as can only be presented on Xbox.
Double-S.T.E.A.L. (from Bunkasha) - is a car action game modeled after the thrilling trademark car stunt scenes of Hong Kong cinema. (This title is also referred to as WRECKLESS: The Yazuka Missions as published by Activision Inc. in North America and Europe.)
Air Force Delta II (from Konami) - is an incredibly realistic 3-D shooting game that incorporates amazingly intense air battles using real-world fighter planes.
Hyper Sports 2002 Winter (from Konami) - re-creates ten sporting events in a realistic, easy-to-control manner. Gamers will appreciate the beautiful winter atmosphere and the attention to graphics, such as the view from the slopes, snow-capped mountains and skating rinks complete with reflections on the ice.
ESPN Winter X Games Snowboarding 2002 (from Konami) - is a realistic snowboarding game modeled after the ESPN Winter X Games and based on comments and participation from world-class snowboarders.
Nobunaga's Ambition: Chronicles of Chaos (from Koei Corp.) - is a historical simulation game in which powerful leaders do battle to become the victorious feudal lord who can bring warring factions together.
Nezmix (from Microsoft) - is a comical adventure in which players take on the role of a mouse that must recruit and lead a team of its fellow mice to defend their town against a band of enemy invaders.
Tenku: Freestyle Snowboarding (from Microsoft) - is a snowboarding game that focuses on freestyle riding, rather than traditional race-based games. (This title is also known as Amped: Freestyle Snowboarding.)
Project Gotham Racing: World Street Racer (from Microsoft) - features a unique Kudos System in which players earn rewards not only for being first at the finish line, but also for displaying skill, style and daring while driving.
Dead or Alive 3 (from Tecmo) - is the third title in Tecmo's popular tournament fighting action game series.
In an attempt to gain European ground Nintendo decided to strike at Microsoft and SONY where it hurts and announced the launch date and price of the Gamecube's European campaign.
While the Console War rages in the US, all competitors are formulating their strategies for the new battlefields. Europe and Japan will offer the new markets where Microsoft, Nintendo and SONY will continue their fight for gaming supremacy.
In Europe, especially the UK, the announced European price of the XBox is already causing a consumer outcry. At least one online petition form. is available and has already been sent to Microsoft. Focusing on that, obvious weakness, Nintendo announced that its new console, The GameCube, will carry a US$216($250 Euro)European price tag. Compare that to the XBox's 490 Euro price for the UK (479 Euro for the rest of Europe)and SONY's 326 Euro price for the PS2 in the UK (307 Euro for the rest of Europe)and you can see that Nintendo will have a huge advantage over its competition.
"It is our basic policy to offer our game machines at a reasonable price for our customers even though it will result in a relatively low profit margin..." said Yoshihiro Mori, managing director of Nintendo.
GameCube is expected to launch in Europe on May 3rd, while XBox will hit European shelves on March 14th. Once Microsoft launches its console in Japan, a more complete overview of the war will be feasible since all systems will be available everywhere.
GBA Price to be Cut
Nintendo seem to be intent at bringing the rest of the console manufacturers to their knees. Aided by the current low price of the Yen, they decided to cut the price of the Game Boy Advance globally on February 1st.
The move was made to narrow the price gap between the GBA and its predecessor, the Game Boy Color, in Europe, which according to Nintendo was affecting GBA sales. "We figured that if we are going to cut the price of GBA in Europe, we'd better do it worldwide to prevent a potential increase in latent demand outside the region where a similar cut might be expected." said Yoshihiro Mori.
According to the company the new expected prices for the GBA will be:
Japan Former Price 9,800 Yen (US$75) New Price 8,800 Yen (US$65)
N. America Former Price US$ 99.95 New Price US$ 79.95
Europe Former Price 129 Euros (US$110) New Price 99 Euros (US$85)
Microsoft announced it has set a price for the sale of its XBox console in Japan. Upon its launch, February 22nd, the console will cost US$263. This move indicates that Microsoft will attempt to directly compete with SONY's PS2 console which costs US$225 and has, so far, been the undisputed sales champion in Japan. In order to understand how seriously Microsoft are considering the threat posed by PlayStation 2 it is important to know that each console costs the company up to US$375 to produce. With XBox selling for US$299 in the US, the same price as the PS2, Microsoft could lose up to US$ 1 billion by 2004 before breaking even. The company is however, planning on covering much of the loss through game sales, which do allow for a comfortable profit margin.
Whatever the intentions many traditional console manufacturers have found that the Japanese market can have a sobering effect. When the GameCube launched in Japan in September 2001, high hopes were soon grounded by a dissapointing sales performance, even though the console sells for a modest US$189. Microsoft have been watching and analysts expect that the US$ 500 million spent on worldwide marketing might just help the XBox to avoid the same fate.
Games
Another problem facing Microsoft is the apparent shortage of titles for their console, which might prove discouraging to consumers who will be asked to pay deerly for a console not yet fully supported by games. Twelve games will be available at the launch, and 22 will be available by March 31, the launch titles will include Sega's Jet Set Radio Future a highly anticipated game that will come to the United States later this year.
Limited Edition XBox
The importance assigned to the Japanese market by Microsoft is evident and promotion plans include the release of limited edition Xbox units with a translucent case, a silver-colored logo, high-definition TV and Dolby stereo expansion packs, and an engraved keychain with serial number.
Sony announced that sales of the PlayStation 2 more than doubled in December 2001 in the US and Japan, compared to the same month last year. Considering the fact that this holiday season saw the release of two rival products by Microsoft and Nintendo, any rise in sales of the PS2 seems like a major feat. During the past month 5 million PS2 units were sold all over the world. The fact that the PS2 is available worldwide however, does make it rather pointless to compare straight figures with the other two consoles which are not yet available outside the US (XBox) and the US and Japan (GameCube).
Sony made a point of claiming that sales were much bettet than their sales targets but went on to refuse to mention what those targets were.
In Japan, a decrease in the console price, it now sells for US$224, led to sales of 1.1 million units between the last week of November and the first week of January.
In the US the console sold 2.5 million PS2's between Thanksgiving week and the end of December. Although sales grew to 2.4 times those for the same time period last year, some consideration has to be given to the fact that Sony was plagued with supply problems all through the holiday period last year, so sales figures were not as high as they could have been.
Sony sold 1.68 million units in Europe during December. Worldwide shipments of the PS2 since the consoles' launch in March 2000, are expected to reach 30.6 million units in March 2002.
Sales figures for software titles for the PS2 were tripled for the same time periods with
combined PS2 and PS1 figures being 4,200 titles in Japan and 1,400 in North America.
XBox and GameCube
Microdoft said that a total of 1.5 million units of the Xbox had been shipped by the end of December. The target set by Microsoft is to ship 4.5 to 6 million boxes by June 2002.
These target figures include the rest of the world since Microsoft plans to release the console in Japan on February 22 and in Europe on March 14.
Nintendo has not yet released sales figures for its console which was released in Japan in September and in the US in November.
It seems that as the hype surrounding the two new consoles slowly dies down, one unexpected winner seems to be arising. Two weeks ago it was reported that PS2 console sales had risen by about 80%, due to the launch of the Microsoft and Nintendo systems. Now evidence, provided by the NPD group, suggests that PS2 games are also selling much better than their next generation rivals.
In the list of the top-20 video games for November, SONY's console had more Top 20 titles than its two newest rivals combined. The figures showed that 7 PS2 games made the Top 20 ncluding the two top games, Konami's "Metal Gear Solid 2" and Take-Two Interactive's "Grand Theft Auto 3".
The XBox had four Top 20 titles with Microsoft's "Halo" being the highest ranking of those. Gamecube had two Top 20 games with the highest ranking one being Nintendo's "Luigi's Mansion".
The remaining games in the Top 20 for November, included 3 PS1 titles, 3 GameBoy Color games and 1 GameBoy Advance game.
The top publisher for the same month was EA with 6 Top 20 titles, second came Activision with 3 games and third was THQ with 2 Top 20 titles. It is not that surprising that EA was at the top, considering they own the Harry Potter rights and 3, no less, Harry Potter games were in the Top 20.
Although these figures are impressive, we shouldn't be too fast to draw conclusions. For half of the month of November the XBox was not even available and the Gamecube has been around for even a shorter time. SONY's console has also been around for a year and its new competitors have not reached the market saturation levels of the PS2. It is therefore safe to assume that, for the time being at least, more people own a PS2 than an XBox or a GameCube.
These facts make the December Top 20 figures, which should be the highest in recorded history, seem much more interesting.
Nintendo have focused on producing a frequent and constant barrage of press releases explaining how well their sales have been doing and how delighted they are. Microsoft decided to reply, in kind, by letting us know that they have already shipped in excess of 1 million XBox units, pretty much meeting their set target of 1 to 1.5 million units by the end of 2001.
For comparison purposes it is interesting to know that Nintendo aims to ship 1.3 million GameCube units by the end of 2001 even though the console was released a week after the XBox.
In reply to Microsofts press release, Nintendo released new figures of their own raising the number of units they expect to sell by April 2002 by 12.5%. Nintendo had initially announced that they expected to sell 4 million consoles by that time, this figure has now been re-estimated at 4.5 million units.
Microsofts' press release also included details of the sales figures for XBox titles, which, at first glance, seem impressive. Although the two console giants have focused on flooding us with numbers in order to convince us of their success, we have been trained well by politicians, in the art of seeing beyond "manufactured figures". In order to see how Microsoft have succeeded in producing such impressive sales of games, follow the link below and to the right.
This war will also be waged for a long time...
It seems Microsoft,as we have come to expect, has manipulated the market in order to attain the impressive 2.4 games per console figure.
A brief search on the various online sites offering the XBox confirms that it is extremely difficult to find anyone selling the XBox on its own.
So here's a list of the various XBox "packages" offered by the most popular retailers.
Amazon offers three different packages, all cost $499.99 and offer three titles, an extra controller and a magazine subscription. The only difference is that the titles change.
Wal-Mart again offer 3 packages with 3, 6 and 9 games, priced at $519.59, $669.64 and $854.48 respectively.
In fact, a quick look at the XBox Recommended Retailers will convince you that something is not right. Of all the sites listed only CompUSA offers the choice of purchasing the console on its own.
While it is true that many such "packages are also available for the GameCube, it is easier by far to purchase Nintendo's console on its own.
Behind the parade of press releases, ads and full scale media induced brain - washing, lies the truth. Truth in our world is measured in money and sales figures. The X-Box is now officially the holder of the "Best Selling Launch in History" title. Another positive figure for the Microsoft console is the 2.4 games per box statistic. This means that SONY's PS2, 1.9 games sold along with each console record, is now well beaten. On average every XBox purchase is instantly followed by the sale of 2.4 games. Nintendo's GameCube equivalent figure is reported as ranging from 1.7 to 1.9 titles per console.
The XBox also leads the way in best selling game titles, since "Halo" outsold the GameCube's best selling title "Luigi's Mansion". XBox titles seem unstoppable and sales figures are strong for titles such as Microsoft's "Project Gotham Racing", "NFL Fever 2002" and third-party games such as "Dead or Alive 3" from Tecmo, "Madden NFL 2002" from Electronic Arts and "Tony Hawk's Pro Skater 2x" from Activision Inc.
Great expectations also follow LucasArts Entertainment's release of Star Wars Starfighter: Special Edition for Xbox, a reworking of the original PlayStation 2 game. The publisher indicated that the title has shipped and that the Xbox rendition contains five new bonus missions, additional two-player racing action, a new two-player Dog-Fight mode, expanded arenas for Capture-the-Flag and improved graphics.
The total sales figures so far are:
XBox : 556,000 units sold in 9 days.
GameCube : 469,000 units sold in 7 days.
One unexpected twist saw an incredible 83% increase in PS2 sales in one week, while in the same week sales of GameBoy Color increased by 331% and sales of GameBoy Advance increased by 157%.
SONY execs must be wearing a pretty content grin on their faces, from the free ride they are getting from Microsoft and Nintendo.
