Wii Pace Slows, Microsoft Grows

While many analysts expected Wii hardware sales to slow, it was still novel to see Wii hardware sales drop under 75,000 units per week. The Wii has sold slower in only two prior months.

The first was March 2007 at a rate of about 52,000 units per week, right before an increase in hardware production finally reached retailers.

The second was January 2008, when sales dropped to 68,500 systems per week after Holiday 2007 sales drained every available unit from retail and left relatively nothing for the first month of the year.

Is the drop in May 2009 significant? Yes, but not necessarily because there is anything wrong with Nintendo's business. The previous sales record-holder, the PlayStation 2, managed just under 71,000 per week during its third May on the market in 2003.

If indeed supply has finally surpassed demand, then the figure in May 2009 may well be the new normal sales level for the Nintendo Wii. It is lower than historical Wii sales levels, but it is also more than 25,000 units per week higher than its nearest competitor, the Xbox 360.

Suffice to say that both Sony and Microsoft would probably be thrilled to claim that their lead platform had sales as strong as the Wii did in May.

To put the sales in perspective, we have noted the three exceptionally slow months for the Wii on the figure below.

For example, year-to-date (YTD) Wii sales are down at this point in 2009 and Xbox 360 sales are up, but this misses the crucial relative sizes of those two figures.

Microsoft has sold about 1.4 million Xbox 360 systems so far in 2009 while Nintendo has sold approximately 2.7 million Wii consoles -- quite an important fact that is overlooked when merely comparing relative growth or decline.

Furthermore, Xbox 360 had some of its weaker sales at the beginning of 2008. With the September 2008 price drop, sales increased substantially (as happened to the PlayStation 3 with its November 2007 price drop). Without further price drops, it is possible that the Xbox 360 will end the year with little or no growth over 2008.