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Not only did software take a beating in April, but hardware was similarly hard hit, with unit sales of just under 1.2 million systems, compared with 1.6 million units as expected from analysts like Wedbush's Pachter and EEDAR's Divnich.
Sony's older systems were particularly weak during the month, with only 65,500 PlayStation Portables and even fewer PlayStation 2 systems sold during the four week period. According to Wedbush's Pachter, the PSP and PS2 both fell far below expectations, showing year-over-year declines of over 50% and 70%, respectively.
PlayStation 2 unit sales appear to have declined to the point that the NPD Group will no longer report them in their media releases, although the company will presumably continue to track sales and provide those figures to their customers.
This is reminiscent of when the NPD Group dropped Microsoft's original Xbox and Nintendo's GameCube from their media releases in 2006, as sales for those consoles dropped significantly below the 50,000 units per month mark.
The figure below shows how PS2 sales have changed over the past year, represented as average weekly rates for each month.
Prior to April, PSP software sales were commonly known to be quite poor, especially relative to its installed base of over 17 million systems. With the apparent collapse of hardware sales, the situation has gone from difficult to nearly impossible. Look at it this way: on average no more than three PSP systems were sold at each retail store every two weeks in April. In reality, online sales probably drove that average to 1 system every week, or lower, at brick-and-mortar locations.
What are Sony's options? We've long suggested that a PSP successor should be announced sometime in 2010, although the actual launch of that system could realistically come any time from the end of 2010 into mid-2011. Another option is the soldier on stoically and continue to support the existing base with software both on UMD and through the PlayStation Store on PSN, although we would argue that this leaves the PSP brand, such as it is, open to further degradation.
The figure below shows how PSP sales have varied over the past 12 months, ending with the weakest sales in April 2010.
While Sony's PlayStation 3 was up 32% year-over-year, monthly sales of 181,000 units still falls short of the industry's expectations. In response to April's sales, SCEA President and CEO Jack Tretton made no mention of the hardware shortages that the company has suggested as a key cause for sluggish PS3 sales earlier this year. Sony has clearly improved its fortunes in 2010 – NPD's Frazier noted that the PS3 was the only system to see growth across all segments in April – but its hardware is lagging.
If Sony has a good explanation for why its flagship system sold 90,000 systems per week in February but only 45,000 systems per week in April, we'd be interested to hear it. Maybe they company is still having difficulty getting hardware to retailers. Fortunately, the company has three very easy comparisons in May, June, and July, so it will be able to continue to tout year-over-year sales increases until at least August.
Microsoft's Xbox 360 had another record first quarter and is still up year-to-date from the same time in 2009 after the modest April results. At the end of that month the system was on the cusp of breaking the 20 million system barrier, and has no doubt passed that milestone as of this writing. Even as Sony's PS3 sales have improved, the Xbox 360 has maintained a healthy lead over its main competitor.
The conventional wisdom holds that Microsoft can move on the pricing of its system at essentially any time, and that it will exercise that power as needed later this year. We think this is reasonable, especially as the company incorporates Natal into its system bundles later this year.
As for Nintendo, the Wii had the weakest sales it has had since mid-2009, but the new hardware bundle should bolster the system's sales in the near term.
As for the Nintendo DS platform and its three systems (Lite, DSi, and DSi XL), the results of April 2010 were very encouraging. In a conversation with Pachter, he suggested that Nintendo DSi XL sales were roughly three times the level of PSP sales during the month. That's certainly a lower average rate than the system saw for its launch in March, but we are impressed that the newer model with its larger screen and commensurately higher $190 price accounted for more than 40% of the platform's sales for the month.
While an exact hardware breakdown is not publicly available, we can estimate that at worst the Nintendo DS platform now has an average price that is at least $8 higher than the system's 2004 launch price of $150. We're not aware of any other console or handheld whose average price has risen above its launch price after more than five years on the market.