January 4, 2006 6:30 PM PST

Microsoft exec lauds Xbox 360 sales

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A correction was made to this story. Read below for details.

LAS VEGAS--Microsoft's new video game console, the Xbox 360, is selling at least as well as the company predicted, the software giant said Wednesday.

In an informal meeting atop the Mandalay Bay resort with journalists here for the Consumer Electronics Show, Peter Moore, Microsoft's corporate vice president for interactive entertainment, said that the company is on track to sell between 4.5 million and 5.5 million of the consoles by the end of its fiscal year, June 30. The new Xbox was launched on Nov. 22, 2005.

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That number is on par with what the company predicted it would sell worldwide, Moore said, adding that Microsoft is addressing nagging concerns about its ability to stock retailers with consoles by using a third manufacturing plant. The factory will be run by Canadian company Celestica and should be turning out Xboxes any day, he said.

Meanwhile, Moore also admitted that the Xbox's Japanese launch, which has been panned for slow sales, was the result of there being only six launch titles and nothing that immediately excited consumers there. But he said that "Dead or Alive 4" shipped in Japan on Dec. 29 and that the new title would likely boost sales.

Further, he said, the console's Japanese fortunes are likely to lift with the forthcoming release of titles like "Blue Dragon" and "Lost Odyssey."

And while there have been widespread reports of masses of unsold Xboxes in Japan even as there are empty shelves in North America, Moore said Microsoft has no plans to reroute consoles from Japan.

"That would be a bad business move," Moore said. "It would be incredibly cost-ineffective."

He also said that reports of hundreds of thousands of Xboxes being shipped initially to Japan were "completely false."

Still, he acknowledged the shortages and said he had personally been trying to help dozens of consumers who had e-mailed him asking for assistance in buying an Xbox.

But Moore tried to deflect the blame for the shortages, suggesting that some retailers--he would not name names--had led consumers to think there would be higher availability than there turned out to be in the first weeks after the console's launch.

"Some retailers probably overstepped their numbers before they knew what distributions were," he said.

At the same time, he said that Microsoft would soon be able to catch up with demand and that it would then have to concentrate on moving the units fast enough to satisfy Wall Street.

"We're going to have inventory on shelves," Moore said. "And then our problem is going to change."

In any case, Moore, who is expected to join Microsoft Chairman Bill Gates for the initial CES keynote speech Wednesday night, said that the Xbox 360 has seen an attach rate--that is, the ratio of games sold to consoles sold--of 4-to-1, breaking what he said was the previous record of 2.4-to-1 for the same time frame. He did not say which console had the previous record.

He did add that he would be announcing a new poker game available for Xbox Live that will allow users to play poker against each other online. But he said the system will not specifically allow players to gamble with each other.

"We're not facilitating that arrangement," he said. "You can work that out with your friends."  

Correction: This article incorrectly reported Celestica's nationality. It is a Canadian company.

 

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