Microsoft takes Xbox 360 on a fast boat to China

Stan Beer
Tuesday, 16 January 2007 06:34

Your IT - Home IT

Microsoft is setting Xbox 360 to crack the toughest games market in Asia. According to a Reuters report, Microsoft plans to launch its fast selling games console in China within months. However, nobody is under any illusions that it is going to be easy.

China, which now has estimated foreign reserves of US$1.3 trillion, has a growing middle class and, according to Reuters, more than 120 million Internet users. However, games consoles are a high priced luxury that few can afford. That goes double for the latest generation of consoles.

A problem for Microsoft, which has not quite reached break-even on its initial Xbox gaming investment seven years ago, is that China is rife with software piracy. Like all console manufacturers, Microsoft wears a loss on its consoles and recoups the loss on games software.

In China, Microsoft will be forced to sell consoles cheaper than in fully developed economies, so the loss on hardware will be greater. Recouping that loss on games software in a market where consumers are used to buying software on the cheap will be a challenge.

Regardless of the problem of recouping its investment, Microsoft cannot afford to be a late mover in the booming Chinese market, where Sony is already market leader with PS2. With the deepest pockets of any of the players in the games space, Microsoft can afford to sustain losses while it establishes the Xbox brand in the Chinese psyche.