[David Cole, DFC Intelligence]

On the Wii's progress so far: The Wii demand clearly exceeded expectations, and shortages are definitely a better problem to have than excess inventory because of lack of demand. You can't just turn manufacturing on and off like a water faucet. There are so many components in the supply chain that it can take months to increase production. At the same time, you don't want to over-increase production, in case things cool off. So I have no problems with the way Nintendo has handled a complicated supply issue.

As for the game selection: When you actually look at the Wii lineup, there is not much that jumps out... Zelda and Metroid, but those were available for the GameCube. I had someone ask me the other day: "Okay, I bought a Wii and played Wii Sports -- now what?"

However, you don't expect a great deal in the first year [of a new console platform] in terms of software. Clearly, the lineup will be getting much better in late 2007 -- Mario, Super Smash Bros. -- and especially 2008. Nintendo is in a good position, because the Wii has done so well before the big software products hit.

On the Xbox 360's progress so far: Well, you pretty much said it all. Is the Xbox 360's main purpose [to be] the system of choice for shooter fans? That would be a nice niche, but probably put them well behind the Wii and PS3.

Right now, the Xbox 360 has the largest, most diversified software lineup. However, if they don't quickly take advantage of that fact and build an installed base beyond U.S. FPS fans, the competition will catch up fast on the software front. This holiday season and early 2008 are critical for the Xbox 360.

On the PS3's progress so far: Agree. With the PS3, we have said it could be a system that really will not start to catch legs until 2009. However, we have also said that come 2011/2012 we could have a situation where the Wii has sold more overall units, but current software sales are higher for the PS3. I think the competition forced the PS3 to market a little earlier than SCE would have liked.

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