Analyst Wallace Lowers Xbox 360 Predictions

Following numerous hints from Xbox executives that stock of its next-gen hardware may initially be limited, UBS Securities analysts Mike Wallace has downgraded his estimate of how many Xbox 360 consoles will be available in stores worldwide in 2005 from 2.5 million units to 1.5 million. Wallace’s new estimates by region are for 350,000 to 400,000 consoles sales on the North American launch date of November 22nd, with a total of 800,000 to 1 million units available by the end of the year. Around 400,000 to 500,000 are expected to be available for the European launch on December 2nd, with no significant second wave of deliveries in 2005. Japan is also expected to get only one batch of stock, with no more than 100,000 to 200,000 units being delivered for its launch on December 10th. Wallace himself has been keen to point that “This is not surprising, nor out of the ordinary", adding: “Hardware launches are always tough and usually come in below initial expectations." In fact, his memo even goes so far as to paint the lower number of available units as positive news, suggesting that current hardware formats will benefit, and that so too will Microsoft’s profit margins, since the company is thought to lose $65 to $90 on every Xbox 360 sold. Wallace predicts that an additional 500,000 consoles will be made available for the North American market in the first quarter of 2006. He also estimated that with an assumed tie ratio of 2:1, around 2 million Xbox 360 games will be sold in 2005, generating $120 million in retail sales.