Sales of Microsoft's X360 will fall towards the end of this year as gamers wait for the release of competing products from Sony and Nintendo, according to one of the principal manufacturers of the Microsoft game console.
Confidential documents seen by vnunet.com reveal that Taiwan-based Wistron, one of three primary X360 manufacturers under contract to Microsoft, expects its shipments of the console to slow in the third quarter and adversely affect revenues.
Wistron privately expressed its concerns over an X360 sales dip to financial analysts in Taipei, who have disseminated them in briefings to their clients.
The size of the potential shortfall was not disclosed, but the manufacturer still expects its overall sales revenue to rise thanks to product lines other than the Xbox.
As a storm of marketing hype builds up prior to the release of Sony's PS3 and Nintendo's Wii, consumers will begin delaying console purchases to compare the competing products.
Simultaneously, the same sources have suggested that Microsoft is planning X360 price cuts to undercut the newcomers.But Microsoft have already stated that there will be no price cuts.
Even committed Xbox buyers are likely to delay purchases if they believe price cuts are imminent. Sony's PS3 will be considerably more expensive than the X360, analysts say, while Nintendo claims that the Wii will be significantly cheaper.
In addition, more knowledgeable gamers are awaiting a revision of the X360, including a CPU upgrade which is expected to resolve overheating issues and help Microsoft cut costs.
Singapore-based Chartered Semiconductor, which makes the X360 CPU, announced in April that consoles using the new CPUs would be ready by early 2007.
Despite the expected dip in X360 sales, Wistron is positive about its prospects for the third quarter.
Executives are looking for an increase in sales of close to 15 per cent over the previous quarter, in which Wistron generated almost $1.5bn. Analysts generally agree with these guidelines.
The giant contract manufacturer, which is affiliated with Taiwan's Acer Group, builds a wide range of computing and consumer electronics products for brand name vendors at a network of factories and assembly plants worldwide.
Wistron rarely comments publicly on details of its relationships with specific clients. The company did not reply to a request for comment on its X360 sales forecasts.