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Tuesday, November 22, 2005

Will the early launch of the Xbox 360 help Microsoft?

Will the early launch of the Xbox 360 help Microsoft?

"Xbox 360 is the first to store shelves. Will that make it first in gamers' hearts?

Free Image Hosting at www.ImageShack.usIn the first seconds of Tuesday morning, the Xbox 360 officially kicked off the next generation of video game machines. After being a year behind with the original Xbox, Microsoft is now a year ahead of its competitors. The big question is: Will this give it an advantage over Sony and Nintendo?

Publishers and analysts say yes, though no one's expecting the company to replace Sony as the overall market leader. By launching as much as a year before the PlayStation 3 comes to market, they say, Microsoft will have a firm opportunity to establish a large user base.

"Being first could be an advantage for Microsoft," said Brian Farrell, president and chief executive officer for THQ. "We're assuming it's going to be a neck-and-neck horse race."

Few others are willing to say it will be that close, but everyone's looking for a tighter fight this time. At present, there are roughly 90 million PlayStation 2 units in homes worldwide versus 20 million Xboxes. That distant second place finish has cost Microsoft roughly $4 billion.

Mike Wallace, an analyst with UBS Warburg, said he expects the market breakdown to be closer to 60 percent PlayStation 3 vs. 40 percent Xbox 360 in the next generation. That would be a significant jump – and Wallace said it's the headstart that should give Microsoft the opportunity to make up the ground.

"I think that by getting out early, [Microsoft] should have sold about 10 million machines worldwide by the time the PS3 launches..." [Mike Wallace]
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