In preparation for the Japanese launch of Xbox, Microsoft shipped in 250,000 consoles and Bill Gates, its chief software architect. Among the initial shipment of consoles were 50,000 limited-edition machines, but today stocks of the limited-edition machines remain in stores, including the store where Gates launched the console. The company also saw a fall off in sales in Europe in the weeks after launch, and in mid-April slashed around 35 per cent off the European and Australian prices to boost demand. The company has yet to announce any plans for price cuts in Japan, but Bach says he knows the company has to crack the Japan market if the Xbox is going to be successful. "Japan is going to be a long-term investment," he said. "Japan is clearly going to be our toughest market. We've known that for a long time. We're certainly not selling as much as we'd like there." Playing games
Japan is key not just because it is a major consumer game market, but because it is the home country to many of the world's top game writers. A poor showing in Japan could make it difficult to attract Japanese software makers to the platform, and software, rather than hardware, is what usually sells consoles. Gates underlined the importance of software when he launched the console in Japan. He claims: "The key is what people experience playing the games. It all comes down to game playing." To this end, Microsoft is both working on games itself and with software companies, and Bach predicted somewhere between 15 and 25 exclusive titles on the platform this year. Looking ahead, Bach says the company forecasts cumulative shipments to reach between 9 million and 11 million units by June 2003, which will mark 20 months of sales for the console since it first hit the shelves in the US in November 2001. In contrast, the PS2 shipments hit 10.6 million units at the end of March 2001, after 13 months on sale, and totalled 19.6 million after 19 months, the closest figure available from Sony with which to compare against Microsoft's forecast. Total PS2 shipments in the year to the end of March 2002 totalled 18.1 million units - just under double the previous year's total shipments of 9.2 million units. Sony's latest forecast shows the market is still growing, but at a much-reduced pace. The company expects to see the strongest growth in the North American market in the coming year.