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Xbox sales seen missing target

Microsoft's sales expectations for the game machine are unlikely to be met, a new report shows. Will it fare any better in Europe than it did in Japan?

Microsoft is unlikely to meet current sales targets for its Xbox video game console, owing to weak sales in Japan and Europe, according to a report released Wednesday by investment bank SoundView Technology Group.

Analyst Mark Specker said that based on data from market researcher NPD Techworld, he now expects Microsoft to ship 4.35 million units of the game machine worldwide in the current fiscal year ending June 30, compared with his previous estimate of 4.6 million. Microsoft has set a sales target of 4.5 million to 6 million units for the year.

Specker wrote that Xbox sales during the current quarter have lagged, mainly because of international markets. The game machine's arrival in Japan was greeted with lackluster sales and reports of product defects. The Xbox is expected to fare better in Europe, where it went on sale this month, but the console's relatively high price may be dampening sales there.

"While we believe that Xbox prospects remain healthy long-term," Specker wrote, "short-term, we believe that our Xbox assumptions for (the 2002 fiscal year) are at risk.

"We believe a number of factors have hampered Xbox run rate in the March quarter, and we are looking for improvements in these areas in the June quarter, including improved supply in the U.S. market, acceleration from seasonally slow January and February months, as well as...momentum" from the E3 game trade show in May.

A Microsoft representative declined to comment on the report.