Global 'flop' in sales of Microsoft Xbox console

Microsoft's Xbox games console is thought to have flopped around the world, with sales a poor second to its arch-rival, Sony's Playstation 2.

Analysts expect the sales slump will force a cut in the Xbox price ­ which at £299 in the UK is £100 higher than Playstation 2 ­ within the next couple of months.

But John Riccitiello, president of Electronic Arts, one of the biggest games companies in the world, was less generous: "Microsoft has had its teeth kicked in, in both Europe and Japan," he told Bloomberg financial news service.

Reports from Europe, Japan and the US all suggest the Xbox, launched with a huge marketing push last month, has so far failed to capture the imagination of the gaming public. Even Microsoft itself, while claiming there is "strong demand" in Europe, admitted there have been no stock shortages ­ which would be expected if there were feverish buying of the consoles. Microsoft claimed that was because its European factory in Poland can ship new consoles within three days of demand.

The Xbox is Microsoft's first move into the fiercely contested games hardware market, where Sony reigns supreme. It is initially expected to lose billions of pounds on subsidies for the console to pay for its manufacture and marketing, and to encourage games companies to write games for it.

A report by Takashi Oya, an analyst at Deutsche Bank, said: "While Xbox had been projected to struggle because of inadequate software and poor brand recognition, the setback is worse than imagined."