Microsoft revels in early Xbox success

Microsoft announces that it sold 1.5 million Xbox consoles in 2001. We talk to company VP Ed Fries to get further perspective on the announcement and other Xbox-related issues.

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At the ongoing Consumer Electronics Show, Microsoft's Robbie Bach provided what was essentially a state of the Xbox address, revealing console sales numbers and briefly recapping the company's online strategy. During his presentation, Bach revealed that Microsoft sold 1.5 million units of the Xbox console between its November 15 launch and the end of the calendar year 2001. The company had originally forecasted that it would ship 1 million to 1.5 million units by the end of 2001. Microsoft's sales numbers seem to be in line with recent estimates released in a CSFB report, which stated that consumers had bought 1.3 million units of the Xbox console as of December 22.

Bach also reiterated the basics behind the company's online initiative, which is set to launch this summer in North America. Although he didn't discuss any specific game releases, Bach said that currently there are 27 publishers developing online games for the Xbox. "Online console gaming will play a significant role in the future of video games," he said. "Gamers will be able to compete against one another online, play games that evolve over the course of months, and download new levels, weapons, and characters. The Xbox is clearly positioned to lead the way in the online gaming revolution."

To get further perspective on Microsoft's announcements, GameSpot spoke with Ed Fries, vice president of Microsoft Game Studios. Fries spoke further about the North American sales numbers, online gaming via the Xbox, and the impending Japanese and European launches. GameSpot's brief Q&A with Ed Fries follows.

GameSpot: It seems that you've met your forecast of shipping 1.5 million units by the end of 2001. You must be excited about the sell-through numbers.

Ed Fries: Yes, we're really excited about it. In a way, the holiday couldn't have gone better for us. It was a great holiday for us and for Xbox owners. The great thing is that it's not like the competitors tripped and screwed up in some way, allowing us to do well. All three consoles sold well during the holidays, and it only shows that we can grow the market and it can support three platforms. Also, just looking at the 1.5 million units sold, that's great, but I'm more proud of the attach rate. We sold three games for each Xbox sold, which is a record of the launch period.

GS: At launch, there were a lot of Xboxes sold in bundles. What about now? Are most places selling stand-alone Xbox units?

EF: Yes, most places are now selling stand-alone Xbox consoles. So, while you can walk into your local retailer and pick up the unit alone, most buyers are picking up some of the great games available as well.

GS: So, where do you turn your attention in 2002?

EF: We have two big launches coming up, both in Japan and in Europe. There is a lot of excitement about those two launches, and we're preparing to deliver the best games for the respective markets.

GS: Do you have any type of sales forecasts for the Japanese and European markets?

EF: I can't talk about specific forecasts by territory, but for the end of our fiscal year [ending March 2002], we will have between 4.5 and 6 million Xbox units around the world. Now, given what we've been able to do in the North American market, we feel more comfortable about reaching those goals.

GS: Can you talk a bit about how you are approaching each market, in order to ensure that success?

EF: Well, let's take the Japanese market first. Obviously, it is very tough for us to come into that market as an American company, when for so many years it has been controlled by Japanese companies and console manufacturers. At the same time, we have found a lot of excitement among consumers in the Japanese market for the Xbox. Last fall, for example, during the Tokyo Game Show, people were asked, "Why did you come to the show?" Most people wanted to see the Xbox and it won by far. So, we're getting a very positive response from Japanese gamers and we have some great partners in that region. Sega is a huge partner and they will have Jet Set Radio Future for the Japanese launch. And Tecmo is also a big partner with Dead or Alive 3. Then you'll start seeing games from many of the major publishers in the area--companies like Capcom, Konami, Koei, and Namco.

Going into Europe, we're pretty confident that Europe is very ready for the Xbox. In that market, we have a lot of great games--games like Rallisport Challenge. We're proud that we can bring that out for launch. Project Gotham has been a fantastic success for us. In fact, it has been a number-two seller on the platform in North America. People are kind of moving from a Halo addiction to a Project Gotham addiction now. Of course, the game was made in Europe.

GS: Can you address the upcoming launch of the Xbox online network? We've been hearing that some of the bigger games, like Unreal Championship, won't be available at launch.

EF: We're really not saying what is going to be available at launch and what isn't. I can say that we're going to launch online this summer and it will grow in time. We're going to have some interesting content at launch, and it's going to grow and get bigger. Online is one of the reasons why you bought the Xbox in the first place, right? It's the only console that has a hard drive and an Ethernet adapter out of the box.

GS: Will the voice communicator launch with the online service this summer?

EF: Yes, it is a critical part of our online strategy.

GS: Any parting words?

EF: Well, for us, it's just a really fun time. We are enjoying the success we have had in the fall, and we're cranking up for the new year. Over the course of this year, we're going to be announcing game after game. So, we'll be keeping you guys quite busy with new game announcements. [laughs]

GS: We look forward to it. Thanks for your time, Ed.

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