Microsoft may not break even on the Xbox gaming console until 2004, according to Morgan Stanley analyst Mary Meeker, quoted yesterday in an article at Reuters.

We believe that Xbox could lose around ($1 billion) ... before breaking even in (fiscal 2004) if the product is reasonably successful, she said in a note to clients.

Such a large shortfall is expected despite the fact that the Xbox will debut at a price $100 more than its nearest competitor; by far the most expensive console that will be available this holiday season.

In addition, the estimates on the number of units available at launch has dropped from the originally announced figure of 600,000 to about half that number.

The item was originally spotted by Byron Hinson at ActiveXbox.