Console Hardware Fortunes
Sony essentially relaunched its PlayStation 3 platform with the
introduction of the PS3 Slim in August 2009. In September we
suggested that Sony should be able to sell between 2.0 million and
2.5 million systems in the last quarter of the year, with the system
coming in toward the low end of that range.
In fact, Sony hit the upper end with sales of 2.39 million systems
in all of October, November, and December 2009. It's been a long time
coming, but it now appears that Sony actually has a price/value
combination that can reach a much wider consumer market.
During the same October – December period Sony's prime
competitor, Microsoft, sold nearly the same number of Xbox 360
systems (2.38 million). For the sake of comparison, 2.65 million
units of Xbox 360 hardware were sold in the final quarter of 2008.
The decline in final quarter sales comes in spite of Microsoft's
modest shifts in model and price positioning.
The Xbox 360 Pro model
was eliminated in August and the Elite model was simultaneously
reduced in price to $300 while the Arcade remained at $200.
Here's a look at sales for each year since 2005 across all models of console hardware:
We feel that the pressure is now on Microsoft to avoid losing too
much momentum. The last two years have shown that Sony means to be
extremely aggressive with cutting its costs and the PlayStation 3
will eventually drop to $250 or lower.
Microsoft could conceivably afford a modest price cut of its
entry-level Arcade model to $175. Combined with its strong library of
software – both old and new – Microsoft could justifiably tout
the value of its system over the competition during the period when
Sony is unlikely to announce any further price cuts.
While the Wii experienced a drop in hardware sales from 2008 to
2009, we are actually optimistic about Wii hardware sales in the
coming months. The key here is timing. Recall that as of the end of
September 2009, the system's year-to-date (YTD) sales were 22% behind
those of the same period in 2008. By year's end the Wii was only
behind its 2008 total by 5.7%.
The takeaway here is that the right kind of price cuts can shift
the playing field dramatically. After its price cut the Wii went from
22% behind to only 5.7%. Sony's Slim moved PS3 hardware sales from a
32% deficit at the end of July to a 22% gain by year's end.
In the handheld space, the reverse has been happening. Nintendo
introduced the DSi and Sony launched the PSP Go, both priced higher
than existing models.
At
our last reading, we estimated that the Nintendo DSi had achieved
life-to-date sales of 2.8 million units and would hit 5.0 million by
the end of 2009. Given figures for the final two months of the year,
we now expect that the DSi has actually exceeded 5 million.
The 11.2 million Nintendo DS systems sold in 2009 and referenced in the above table is a record for
any handheld or console. While it is difficult to comprehend a second
year of Nintendo DS sales at the 11 million unit level, we hesitate
to speculate about the effect that a DSi price cut could have.