The sales may help Microsoft's Xbox unit turn a profit by March 2007, Sherlund, the top-ranked software analyst by Institutional Investor, said today in a research note. He assumes Microsoft, the No. 2 video-game console maker, will cut prices on the Xbox in a year's time.
The Xbox may outsell the PlayStation 3 because Microsoft's device is cheaper and the games are as good as those on Sony's console, Sherlund said. Losses on the Xbox will also decline as its components become cheaper to produce. Microsoft Chairman Bill Gates last week said he expects the Xbox to have a 10 million unit head start by the time the PlayStation 3 debuts in November.
Shares of Redmond, Washington-based Microsoft fell 2 cents to $23.15 at 4 p.m. New York time in Nasdaq Stock Market composite trading. They have fallen 11 percent this year.