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Xbox plugs into Japan

CNN's Kristie Lu Stout in Hong Kong

TOKYO, Japan (CNN) -- Microsoft is taking its video game foray into difficult territory with Friday's debut of the Xbox in Japan.

Not since the days of Atari has a major U.S. company attempted to defeat the Japanese game giants on their home turf.

Though Microsoft stunned analysts with an unexpectedly strong Xbox launch in the U.S. last November, it may be an uphill battle for the world's number-one software company in Japan.

'Challenging market'

"We understand that this is the most challenging market for the Xbox," Microsoft Japan Managing Director Hirohisa Ohura told CNN.

Click here  to see a 3D animation of the consoles.

But Ohura is certain that the Microsoft brand is strong enough to take on game machine heavyweights Nintendo and Sony.

"We are a company in Japan known by users for delivering our products with a great customer satisfaction level. People expect us to do that for the Xbox."

At its November 15 launch in the U.S., Microsoft shipped more than 600,000 Xbox machines. The company expects to ship up to 6 million units worldwide by June.

Sony Computer Entertainment sold one million PlayStation 2 game consoles in the first 10 days of its debut in March 2000.

By December 31, Sony had shipped 25 million PlayStation 2 machines worldwide, of which 8 million hit the Japan market.

Microsoft has yet to release estimates for sales in Japan, but analysts anticipate a moderately successful debut.

"There's no way we're going to see 1.5 million units, but we'll see some degree of success in the range of 300,000 units shipped and sold within the first few weeks," said WestLB game analyst Zachary Liggett.

"Obviously they face a tougher environment here than in the U.S. with a more expensive price point."

Price wars

At 34,800 yen ($262), the Xbox is pricier than Nintendo's GameCube at 25,000 yen ($188) and the PlayStation 2 at 29,800 ($225).

Sony Computer Entertainment slashed the price of its popular PlayStation 2 console from 35,000 yen -- a cost-cutting move that helped boost weekly sales dramatically .

But pricing may not be as critical as the line-up of games the Xbox has to offer to stimulate gamer appetite.

Microsoft's game console will be released in Japan with 12 game titles, a less competitive array than Sony's selection of about 400 Japanese titles.

"We have 12 launch titles," said Microsoft's Ohura. "One we believe can be a killer application is 'Dead or Alive 3' which did well in the U.S. and we believe will do well in Japan."

Ohura added that "a lot of momentum" is also behind titles like Jet Set Radio Future, Project Gotham, and Genma Onimusha.

Critics say that Microsoft needs to develop more hit titles to be on par with its Japanese rivals, but also concede that the Xbox is hands-down a technically superior machine.

Broadband battle

The Xbox wields a built-in hard disk, fast processor, and an Ethernet broadband connection to enable networked gaming.

Online, gamers can interact with other players as well as trade gaming data like character accessories.

In March, Microsoft allied with Japan's NTT Communication to offer online gaming using NTT's ADSL service.

ADSL facilitates a speedy transfer of data that can reach 10 to 100 times the speed of conventional lines.

"One of the promises implied in (Microsoft's) product is online service six months from now, which has been preempted by Sony last week saying they will launch their online service in April," said Liggett.

Last week, Sony announced its ambition to wire millions of its PlayStation 2 gamers by signing up four Japanese Internet Service Providers (ISPs) to provide online gaming.

"Sony has for a long time promised to deliver their broadband strategy, and they chose a pretty good time to do this," said Microsoft's Ohura.

"The Sony announcement is something they have created to match what we are already at."

Sony however insisted that its broadband announcement had nothing to do with the Xbox launch.

"We've been talking about our broadband strategy for a long time now," said Sony Computer Entertainment spokesperson Yoshiko Furusawa.

"Those announcements are now being brought into shape. This has fallen into the timing of the Xbox release, but we're following our own strategy and not doing this on purpose with the Xbox launch."

Moving on after Mario

Japanese rival Nintendo represents an additional challenge for the Xbox.

With its lower price and established brand appeal, the GameCube has won the hearts of young gamers.

But Microsoft is hopeful that it can wean children away from Nintendo's "Mario" game titles with its comparatively more "mature" gaming experience.

During the pre-launch events throughout, Ohura said he witnessed 12 year-olds punching the controller buttons at Xbox kiosks.

"This wasn't our initial target," he said. "We were targeting a higher-level people age-wise."

"Utilizing the GameCube they are looked at as kids. But using the Xbox they are entering adulthood."

Perhaps Microsoft's foray into Japan's game market is a rite of passage for both the manufacturer and the young gamer.


• Xbox Japan

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