Xbox hoping to lure moms to gaming

Microsoft has won over 20-year-old gamers, who spend hours a day launching rockets and firing plasma guns on the company's Xbox 360. Now it wants their moms.

To lure them, the world's largest software maker says it plans to add more family games and redo retail displays to make the children's titles easier to find. It also may cut the Xbox price, which is as high as $399, analysts say.

Microsoft is emulating rival Nintendo. The Japanese company's Wii console outsells the Xbox 360 in the U.S. by appealing to women, children and the elderly, a strategy Microsoft says it needs to adopt to win a broader audience than the first Xbox attracted.

"If we don't make that move, make it early and expand our demographic, we will wind up in the same place as with Xbox 1, a solid business with 25 million people," said Peter Moore, a vice president who oversees the Xbox. "What I need is a solid business with 90 million people."

Microsoft loses money on every Xbox it sells, said UBS analyst Heather Bellini in New York. In the fiscal year that ended June 30, the unit that sells the console lost $1.26 billion on sales of $4.26 billion. Microsoft says the division, which accounted for 9.6 percent of total sales last year, will be profitable in the year that starts July 1.

That may mean a price cut heading into the holiday season to spur sales of games, which do make a profit, Bellini said.

"If they really are going to have a good Christmas games lineup, then they just have to have the largest number of boxes out there so that they sell the largest number of games," said Bellini, Institutional Investor's top-ranked software analyst. She expects a price cut as early as September.

"We are well aware that the sweet spot of the market is really 199 bucks," said David Hufford, a director of Xbox product management. Sony sold 75 million PlayStation 2s at or below that price.

Wii costs $250 and makes a "strong value proposition," Hufford said. "When mom walks into the store and sees she can get a console with a game for $250, she sees it as a $300 value. They've done a good job."

He declined to say whether Microsoft will reduce the Xbox's price.

Research firm IDC estimates that Nintendo will sell almost 16.1 million consoles in 2007, about 60 percent more than the 9.87 million estimated for PlayStation 3 and 9.69 million for Xbox 360.

Microsoft's initial attempts to target children didn't live up to the company's expectations. A November game called "Viva Piñata," in which kids build a garden and raise animals that look like piñatas brought to life, didn't make it into the top 20, even with a Saturday morning cartoon created to promote the game.

Microsoft says it's winning female users with "Guitar Hero 2," the No. 3 selling console game in the U.S. in March.