Xbox experiencing technical problems; experts say it is not a profit maker

Xbox experiencing technical problems; experts say it is not a profit maker

Microsoft Corp confirmed on Wednesday that it did get complaints regarding some technical glitches in the new Xbox 360 gaming console but they were hardly a handful.

The ones who purchased it are very infuriated though. Some have been experiencing system crashes while game is in progress while others are constantly irritated by error messages which keep popping up.

On the website www.xbox-scene.com, which is specifically for Xbox gaming, a player reported how he couldn't even complete the first lap of game Project Gotham Racing 3.

Playing down the problems, Molly O'Donnell, a spokeswoman for Microsoft's Xbox division, clarified there were only a few isolated cases of consoles not functioning properly which is not unexpected for a consumer electronics instrument of such complexity.

O'Donnell advised any Xbox owner having trouble with the system should call 1-800-4myXbox or log on to www.xbox.com. She also specified that in case the troubles still persist, Microsoft themselves will pay to ship the console immediately to a repair center and get the problem sorted out overnight or in extreme cases even ship for a replacement.

The gaming aficionados waited with bated breadth for hours on Monday to get hold of this much-hyped new generation system, which was in great demand but the supply fell short in spite of being priced at US$299.99.

Microsoft estimates it should be able to sell close to 3 million Xbox systems within the first month and a half itself.

On the other hand, iSuppli Corp analysts revealed on Wednesday that Microsoft Corporation is losing US$153 on every Xbox video-game console it sells as the charge of components and assembling is very high. The parts like processors and manufacturing costs US$552.27 for each machine minus the marketing and shipping charges, according to California-based iSuppli. 60 percent of the Xbox components are manufactured by IBM Corp.

However, Evan Wilson, an analyst at Pacific Crest Securities in Portland, Oregon, observes that in time the cost of the components will go down considerably. This is because the royalty fees Microsoft charges from the game publishers will go up as the installed base of Xboxes increases.

Portelligent Inc, an Texas-based market research company, also feels that since the machine has been designed to use components from more than one vendor, it could lead to cost reduction in a short amount of time.