Xbox's aren't selling as well as Microsoft hoped it would have sold

Microsoft has announced that it now expects to sell 3.5 million to 4 million units for its 2002 fiscal year, which ends June 30 instead of the said forecast of 4.5 million to 6 million units during the period.

The sales in Japan, where the Xbox launched in February, have been low, with sales of a few thousand units a week in recent weeks. Sales in Europe, where the console launched last month, have also been low, due partly to a selling price considerably above the Xbox's main competition, Sony's PlayStation 2. Microsoft responded by announcing a price cut of almost 40 percent early Thursday for the European Xbox. The console will now sell for for $266 in mainland Europe and $288 in Britain, compared with initial price tags of $419 and $434.

Analysts expect Microsoft to cut Xbox prices in North America as well if Sony follows through with a rumored price cut for the PlayStation 2. But Microsoft has no plans in dropping the price in Japan as the price is already competitively priced to the PS2.

Sony has stated it has no immediate plans to cut the American price of the PS2, but anaylsts believe Sony will change their tune. Analysts also expect Sony to cut the American PS2 price by the time of the Electronic Entertainment Expo (E3), the game industry's main trade show, which begins May 22.