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Tuesday, January 16, 2007
Xbox on a tough China trip
The Xbox is on a China trip. Software behemoth Microsoft is mulling over the launch of its fast selling games console Xbox 360 in China in a few months time.

It has been reported that though China boasts of an estimated foreign reserves of US$1.3 trillion, a growing middle class and more than 120 million Internet users, is not yet prepared to spend on luxury products. This revelation culd be a hassle for Microsoft to sell its Xbox 360 there.

So Microsoft does indeed have a problem on this front. And the company which has not quite reached break-even on its initial Xbox gaming investment seven years ago, should also worry about the fact that China is a land with an invasion of software piracy.

After it debuts 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.

Further, Microsoft could also not afford to be a late mover in the booming Chinese market, where Sony is already market leader with PS2.

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