Microsoft to sell 3 million 360s in three months?

CFO Bryan Lee tells investors that the next-gen console is going to do gangbusters business after it launches on November 22.

As the Xbox 360 launch draws agonizingly close (games are already appearing in retail) the game industry is aquiver with anticipation. However, given that Microsoft has not yet announced a final launch lineup for the console, some industry-watchers are wondering if the next-generation console will stumble in its mad dash to be first out of the gate. Recently, UBS analyst Mike Wallace lowered his 2005 360 sales projections from 2.5 to 1.5 million units.

Unsurprisingly, Microsoft is optimistic about the Xbox 360's prospects. In fact, in public, executives for the Washington-based software colossus are downright gung ho, talking up the platform at virtually every high-profile game-industry event since the console was unveiled on May 12.

The latest example of salesmanship came today, courtesy of Bryan Lee, the chief financial officer of Microsoft's newly established Entertainment and Devices subdivision. In a presentation to the Harris Nesbitt Media & Entertainment Conference, the executive gave a very rosy forecast for the console. "I'm very proud to announce that we think through the first 90 days of launch...we expect to have sold 2.75 to 3 million consoles worldwide," said Lee.

While selling a lot of Xbox 360 hardware will help the platform get adopted, it will also cost Microsoft a bundle of money. Though the company won't discuss manufacturing costs, analysts estimate it is losing around $75 on each console sold. And while Lee didn't address the subject of the 360 being a loss-leader, he did talk about where Microsoft will make money off of the consoles.

"When you think about what consumers are going to be spending on consoles, and then you think about the games that they're going to buy along with them, you think about the peripherals, the accessories they're going to want, you think about the Live subscriptions they're going to want," said Lee.

Lee pegged total revenue generated by all Xbox 360 hardware and software at "well over" $1.5 billion in the console's first three months on the market. "I can't think of many other, if any other, products that have had an initial launch that have sold $1 1/2 billion to consumers in their first 90 days," he boasted.

The executive also paid the requisite lip service to the "HD Era," the coming mass adoption of high-definition televisions. "It is really the future of displays," he chimed. "There are millions out there and projections are that by 2008 there will be over 100 million high-def displays out in the world."

Lee also spoke about how Microsoft is already experimenting with a potentially massive future driver of Xbox 360 revenue--in-game advertising. "We've actually got a couple of games out in the market now on the Xbox platform where we're trialing some ads and we've been working with Massive on those couple of games. ... We feel very excited about advertising as a potential growth opportunity for the business."

Interestingly, Lee also raised the possibility of ad revenues defraying the cost of a 360 in other countries. "[In] markets outside of North America, the fundamentals of our business may not hold," he said. "Consumers may not be accustomed to paying $50 for software and buying a $200, $300, or $400 device, an ad model may be a way to augment to kind of make the economics work for everyone."

Speaking of advertising, Lee also said a major Xbox 360 ad would run during tomorrow night's episode of Lost on ABC.

9 Comments

  • mickel_darmawan

    Posted Mar 3, 2006 8:04 pm PT

    who want to buy that 'box' anyway, ha ha ha!!

  • mickel_darmawan

    Posted Feb 23, 2006 10:59 am PT

    BS!! It will never going to be like that!! BS!! BS!!

  • Kfoss

    Posted Feb 11, 2006 10:51 am PT

    uMM yeaa right....sure that might happen next year...and in game ad's-- i dont think thats going to work....LOL hey LOOK A COKE MACHINE...in ......halo 3?..WTF or better yet LOOK THE GOLDEN ARCH'S!!!...in splinter cell 4?!?!?! ....LOL the new thing!!!! SAM FISHER GOES TO Mcdonalds! and eats a happy meal!!! LOLOLOLOL

  • FFman

    Posted Feb 10, 2006 1:16 pm PT

    ADs in games are annoying but in the next gen developers may need the extra money for making their games.

  • jimmy9

    Posted Feb 3, 2006 12:25 pm PT

    that probably not going to work

  • ufopuller

    Posted Feb 1, 2006 5:59 am PT

    One would think my Microsoft stock would go up, BUT NO!!! Where's the money goin'?

  • Thanos_of_MW

    Posted Jan 23, 2006 6:07 am PT

    "Interestingly, Lee also raised the possibility of ad revenues defraying the cost of a 360 in other countries. "[In] markets outside of North America, the fundamentals of our business may not hold," he said. "Consumers may not be accustomed to paying $50 for software and buying a $200, $300, or $400 device, an ad model may be a way to augment to kind of make the economics work for everyone."

    So we are going to subsidize gaming for 3d world coutries? Sorry, but I won't be buying any games that have in-game ads. It is not like they are subsidizing food for poor coutries.

  • ZEELIX

    Posted Jan 13, 2006 9:16 am PT

    how they gonna do it?
    pull a rabbit out of a hat.

  • makka8787

    Posted Jan 12, 2006 12:20 pm PT

    That would be hard!

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