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Analyze This: Handicapping
the 2006 Holiday Gift-Buying Season
On the next-generation consoles: For Sony and Nintendo, it's just a question of how many they can push through the supply chain as they'll sell everything they can make, if for different reasons. The PS3 is still positioned to become the dominant platform of the next generation in our view, but its real test will come this time next year when sales will have to be well into the millions. Nintendo should have a great holiday season with the Wii in North America, Europe and Japan. The price point is going to tempt many gift buyers that might not even have considered a console purchase. Nintendo's longer term challenge, as in previous generations, is to sustain this momentum beyond the peak end-year season, and it has traditionally done a poor job in this respect. So we also reserve judgment on the Wii's longer term success until at least 12 months have passed.
Most attention will focus inevitably on the PS3 and the Wii, but our view is that we should be watching the 360's performance more than anything else. Microsoft has to sell 4 million 360s in the last quarter worldwide to meet its own target, and most of those will be bought in the next few weeks. It's a huge task, and we will be watching for any signs that retailers are under pressure to move 360s more quickly, such as price movements or offers. Other thoughts: In Europe we don't have the distraction of a PS3 launch, so it's a straight fight between the 360 and the Wii. As we said, Nintendo should put in a strong performance, although it only has two weeks after launch to meet demand before the holiday begins. The pressure is really on Microsoft: Only 1% of European households have bought an Xbox 360, so far. |
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