Microsoft May Do Production in AsiaMicrosoft Corp. said on Tuesday it was looking for a production base in Asia to manufacture its Xbox (news - web sites) game console for the Japanese market.
Hirohisa Ohura, managing director of Microsoft Japan, told Reuters in an interview that the consoles will initially be shipped to Japan from Mexico, but that the company may need a production base in the region if demand picks up.
"We are looking for a production base in Asia. At some point, production in Hungary and Mexico would become insufficient," Ohura said.
Microsoft, which is scheduled to roll out the console in Japan on February 22, has outsourced Xbox production for the North America and European markets to Flextronics International Ltd. under a contract that analysts have said is worth $1 billion a year.
Microsoft has set a target of shipping 4.5 million to six million Xboxes worldwide by the end of the fiscal year in June.
Ohura was tight-lipped about Japan shipment targets and on how many consoles will be available on the launch day, but industry analysts expect initial shipments to be around 300,000 units. With a price tag of 34,800 yen ($264), steeper than its rivals, and a lack of attractive software titles, analysts said Xbox may face a hard time tapping into the Japanese market, the home ground of Sony Corp (news - web sites)s PlayStation 2 (news - web sites) and Nintendo (news - web sites) Co Ltd.s GameCube. The PlayStation 2 costs 29,800 yen after a 15 percent price cut in late November, while the GameCube, which debuted here in September, sells for 25,000 yen.
Microsoft has said that it will first target avid game users between 18 and 35 years old and then expand the user base.
Ohura stressed the importance of introducing exclusive software titles and also said that Microsoft may acquire small software development firms.
"If we could find small, good developers with talented people, we would like to purchase them," he said.
In June last year, Microsoft bought Chicago-based Bungie Software Products Corp, an independent developer of computer and video games.