Humm...
Albeit available in Japan for less than a month, Microsoft\'s Xbox has been besieged with negative press. More unfortunate however, much of the criticism has resulted from a misunderstanding regarding hardware defects affecting less than 1 percent of all Japanese consoles. Painted into a proverbial corner, Microsoft\'s Japanese director Hirohisa Oura has taken the offensive. Specifically, he recently agreed to answer some daunting questions regarding Microsoft\'s strategy for the Japanese market and the Xbox overall.
Question: What\'s Microsoft\'s strategy for the Japanese market? What are the strengths of the Xbox console, and how will they lead to success?
Oura-san: First, the system excels in terms of graphics and sound. It\'s like upgrading to an HDTV to watch sporting events such as the World Cup - the difference is readily apparent. As for audio capabilities, the Xbox takes full advantage of home theater equipment with 5.1 channel encoding. Secondly, the built-in hard-drive serves as the main storage medium. This can be used to drastically reduce loading times and also store your favorite music tracks. It\'s an invaluable development tool. On the PlayStation 2, if a developer wants to change something at the last minute everything has to be redone. On the Xbox, simple updates can be done through the hard-drive. Also, the hard-drive allows developers to recall sequences during a game. For example, a movie scene can be kept in the memory and quickly accessed later. On the PlayStation 2, once you click through a sequence it needs to be completely reloaded.
Question: The initial Xbox software lineup has appealed to hardcore players, how do you plan to bridge the gap to casual players?
Oura-san: Our software schedule will continue to grow. Our goal is to deliver titles that appeal to all players on a monthly basis. So far, 22 titles have been released domestically in Japan, and that number will grow to over 100 by the end of the calendar year. There are more than 90 Japanese companies working on Xbox software now and we\'re attracting even more. For example, look at Bunkasha Games and their recently released title \'Double Steal.\' They were inexperienced in console game development but very strong in Windows, and they created an excellent first title. Amongst developers there\'s a tendency to avoid a platform if you assume the development cost will be too high. On the Xbox we\'ve shown highly creative titles can be brought to the market for minimal cost, and that\'s attracting bigger companies like Capcom and Konami. In the larger sense, this will lead to more activity in the market.
Question: Can you give us a sales update concerning the American market?
Oura-san: As we announced previously, more than 1.5 million consoles were sold in America by the end of December. More importantly, 3.2 pieces of software sold per console. Based on our sales figures from January, that has increased to 3.5 pieces of software sold per console. Our sales projections haven\'t changed, we anticipated sales of 4.5 to 6 million units by June.
Question: Of that figure, what do you anticipate in the Japanese market? One million units, more?
Oura-san: I can\'t comment on our sales projections for the Japanese market specifically.
Question: The Japanese market has become a battleground between Sony and Nintendo recently. In order to remain competitive, undoubtedly Microsoft will need to sell five million units or more in the Japanese region, right?
Oura-san: We\'re not as focused on specific figures - three million, five million, whatever. We\'re concentrating on selling as many as possible.
Question: Do you think you can sell five million units in Japan?
Oura-san: That depends on the time period you\'re talking about, but I have to defer to my previous answer regarding Japanese sales targets. We\'re trying to ensure hardware supply capabilities for the Japanese market long-term. We\'re examining a new production base for the Xbox in Asia now, which will be announced in the next two months. Once that\'s operational, I\'ll be in a better position to answer shipment and sales projection questions.
Question: Fair enough. On another subject, how does you feel the Xbox compares to other consoles in terms of Microsoft\'s business model and promotion?
Oura-san: There are significant differences between Microsoft\'s approach to the console market and other platform providers. We realize software sells hardware, and that\'s why Microsoft aggressively aids in the promotion of key titles. In talks with our software partners, many have expressed that the cost of advertising is considerably less on Xbox than other consoles.
Question: How will Microsoft succeed in implementing an online strategy for the Xbox compared to PlayStation 2?
Oura-san: Our full online plans will be made clear this spring. However, there are some areas we\'re focusing our developmental efforts upon. For example, we want to ensure players have a pleasant online experience, so security is a prime concern. If you look at Sony\'s approach, they\'ve made entertainment and server maintenance the focus of their online plans. We\'re confident in our network structure, especially considering Microsoft\'s experience in the PC market. Unlike Sony, we have no plans to stray from the focus of our network: games.
Question: The PC software market has reached maturity in America in some respects. For example, all of Microsoft\'s software is built with Internet related features. Is the Xbox an extension of this strategy or a new direction?
Oura-san: The Xbox is positioned as the key entertainment component in the family living room. Sure, it will connect to the Internet like the PlayStation 2, but our goal isn\'t to create an Internet terminal for the living room. Just because the Xbox will be Internet compatible doesn\'t mean people will stop buying PC\'s either, the markets are completely different. On the contrary, I think the spread of the PC market and the continued expansion of the Internet will fuel the desire for more standalone Internet terminals.
Question: There have been reports for months suggesting Microsoft is working on a so-called \'E-Home\' device, or \'Home Station.\' Will it utilize any aspects of the Xbox architecture?
Oura-san: There is no relation whatsoever between the Xbox and any other \'home\' devices. The fact that Microsoft is pursuing development of other home terminals with Internet compatibility is where most people made the connection to Xbox, but there\'s no relation. Specifically regarding the \'Home Station,\' I\'ve heard only rumors and don\'t believe it exists. In a larger sense, Microsoft is expanding into a new era of software development. Outside the PC market, we\'re partnering with hardware manufacturers to develop operating systems for their devices.
Question: Couldn\'t Microsoft turn around and market the Xbox as a low-cost PC alternative?
Oura-san: It will never be a PC. It\'s a game console with Internet capability, plain and simple. Honestly, we\'ve done focus group testing and people weren\'t interested in utilizing a game console strictly for the Internet. People aren\'t satisfied with using a controller and a television to browse the Web, they prefer PC\'s for that. Unless there\'s overwhelming demand for those types of applications, we\'ll continue to focus on the games.
http://www.xengamers.com/sections/news/6734/
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