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Wednesday, December 28, 2005

Nissan to Debut Xbox Car

In a move that could steer some attention away from the lack of Xbox 360 game consoles available in stores, Microsoft said Wednesday it helped develop a concept car created by Nissan that would include the software giant’s console in its design.

The concept car allows a driver to play Microsoft’s driving game Project Gotham Racing 3 on an embedded Xbox 360 while the car is in park mode, using the car’s steering wheel, the gas and brake pedals, and a flip-down screen.

The car was developed by Nissan Design America and will debut at the North American International Auto Show on January 9.

Shares of Microsoft dropped $0.04 to $26.42 in recent trading.

In Short Supply

Microsoft’s latest marketing move could help provide a temporary distraction from the fact that Microsoft has produced far fewer Xbox 360s than the world market currently demands.

The Redmond-based company boosted its marketing to create buzz for a consecutive worldwide launch in November that delivered long lines and completely sold-out retail outlets (see Xbox 360 Invades Europe).

But Microsoft only made about an estimated 300,000 Xbox 360 units available in the United States, and roughly the same amount available in Europe. Japan likely saw less than half of that figure.

Microsoft made fewer consoles than the expected demand because the company is also losing money on each unit, which costs the company from $525 to over $700 to make, according to varying estimates (see Xbox Loses Money).

The console is still sold out in pre-orders to retail outlets and on various web sites (see Xbox 360 Sold Out Online). On Internet auction sites, the price is as high as $1,000.

The lack of supply has meant the company could fail to meet analysts’ former estimates of 1.5 million consoles sold by the end of the year (see Xbox Losing Japan Game).

The company could barely meet the 1-million mark by the end of the year, if more supplies don’t reach stores soon.

Analysts think that Microsoft could meet the 3-million console mark by February but will need to ramp up supply to make the deadline.

The milestones are important in that Microsoft’s Xbox 360 has a head start of several months in the console war against Sony’s PlayStation 3, due out sometime next year (see Xbox 360 Starts Console War).

Weak Game Sales

Microsoft’s attention to its driving game, Project Gotham Racing 3, also signals the company’s attempts to boost individual game sales.

Microsoft was criticized for not developing any blockbuster games for its console launch. Critics say that beyond the supply chain issues, the company has few “winning” games on the market for its new console (see 18 Games Launch for Xbox 360).

Analysts say PGR3 is a solid title, but not the kind of title that moves an industry like a Halo 2 or a Grand Theft Auto.

In addition the game industry took a hit this Christmas after consumers failed to buy enough game titles. And the industry saw a 20 percent drop from the previous year’s holiday season game sales (see Holiday Game Sales Freeze).

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