No Xbox for Europe in 2001

Microsoft has admitted that its next generation games console Xbox will not be launched in Europe before 2002.

The delay is being blamed on revised production targets, which require Microsoft to build a separate factory for the European version of the console in order to meet anticipated demand. The firm still expects to launch Xbox in the US and Japan in 2001.

Microsoft is to construct a new production centre in Hungary to supply Europe. It is expected to be up and running by next summer, but this will not give the factory enough time to make sufficient machines to launch in Europe before 2002.

Sandy Duncan, European boss for Xbox, told video games trade paper MCV: "The demand for Xbox is so high that we have revised our forecasts and we feel that we can ship many more units this way.

"The downside is that the launch will miss 2001 in Europe. But this is not a problem."

However, the delay may be more of a problem for Xbox's prospects in Europe than Microsoft cares to admit.

It will give Sony's PlayStation 2 rival console two Christmas peak sales periods unchallenged by a machine which can argue it has superior technology.

This gives Sony a clear opportunity to create the kind of buzz behind the PlayStation 2 that it managed so succesfully with the original PlayStation. That console has now sold well over five million units in the UK alone.

Also, traditionally, video games consoles are round £100-£150 cheaper than their launch price (£299 for PlayStation 2) after they have been on sale for more than a year.

If this pattern is repeated, the Xbox (expected price £249-£299) will be at a price disadvantage of £50-£150 when it is finally launched in Europe.