Microsoft may lose $1 bn on Xbox by 2004, says analyst

LOS ANGELES: Microsoft Corp. could lose as much as $1 billion on its new Xbox

video game console before breaking even in fiscal 2004, an influential Wall

Street analyst said on Monday.

Morgan Stanley analyst Mary Meeker said the console faced competition in the

short term but had long-term opportunity. "We believe that Xbox could lose

around ($1 billion) ... before breaking even in (fiscal 2004) if the product is

reasonably successful," she said in a note to clients.

The Xbox launches in the US on Nov. 15, in Japan in February and in Europe in

March. Three days after the Xbox's US launch, Nintendo Co. Ltd. will launch its

new console, the GameCube, in the US. Those two new consoles will compete with

the already established PlayStation 2 from Sony Corp., unit analysts and

industry observers expect to dominate the market this holiday season.

Microsoft has said it will spend as much as $500 million on the initial

marketing for Xbox, which will retail for $299, the same price as PlayStation 2

and $100 more than the GameCube.

Microsoft had said it would have between 600,000 and 800,000 units available

at launch, but later said it could not be sure. Most industry executives now

expect them to ship 300,000 units at launch and 1 million to 1.5 million by

year's end.