Sales of Microsoft Corp.'s Xbox system are beginning to slow down and might not make product forecasts the company announced at the launch, according to two Wall Street analysts keeping track of the system's manufacturing rate. However, say the analysts, Microsoft is not yet giving up on surpassing Nintendo and Sony in the video game marketplace.
Word of the US sales slowdown came after analysts noted that Flextronics Corp., an electronics manufacturer that makes Xbox systems for Microsoft, has recently scaled down production of the console. Microsoft's previously announced Xbox target--4.5 to 6 million systems shipped by the end of June--might be put into jeopardy as a result of this slowdown, the analysts said.
Microsoft spokesman James Bernard declined to discuss specific numbers as the company's earnings report is coming out next week, but was still upbeat about the Xbox's performance in the marketplace. "This time of year is historically a slower time for console and game sales," he said. "We're watching the market carefully and taking slight measures to best manage supply."
"Frankly I don't think investors are that concerned," said Prudential analyst John McPeake. "Most of the concern is around the Japanese market, and that was always going to be the toughest market. As the games come out, it will get more traction." Microsoft has admitted that hardware sales in Japan had fallen below expectations.