http://biz.gamedaily.com/industry/feature/?id=15506
Analyst: Next-Gen Underperforming; PS3 Price Cut 'Critical'
Sony and Microsoft can spin the results any way they want, but Deutsche Bank analyst Jeetil Patel says that the sales are just flat out disappointing, and that in Sony's case a price cut is "critical" in order to stimulate the market.
Following the release of the February video game data late yesterday, Deutsche Bank analyst Jeetil Patel has weighed in on the performance of the next-gen consoles [When are we going to stop calling it next-gen? Ed.], labeling sales for the new platforms as "poor."
"Next-gen hardware sell-through of 700K units in Feb-07 brought its total HW installed base to 8.0mn in the US, still 30% less than the prior cycle at 11.2mn units at equivalent stages. Xbox 360 (230K) and PS3 (130K) unit sales were below expectations of 250K-300K and 200K respectively. Retail checks reveal that ample supply exists, suggesting a demand problem for next-gen consoles," explained Patel.
For the Wii, however, demand doesn't appear to be a problem. If anything, it's Nintendo trying to keep up with demand that's a problem. "With Wii shortages likely in the next 1-2 quarters (and potential PS3 re-allocations to Europe), we are concerned that next-gen sales could further disappoint," said Patel.
With PS3 sales not meeting expectations, at this point Patel said that a price cut on the hardware is "critical," but the analyst does not foresee that happening until at least the start of Sony's next fiscal year (April), and even that is a "long-shot," Patel stated.
To put the PS3's situation in context, Patel said, "PS3 consoles are available at retail but sales are lackluster. Its 130K units sold in February was less than Xbox 360 sales last year (160K) and even less than the original Xbox sales of 140K in Feb-2002."
Deutsche Bank was equally unimpressed with the Xbox 360, however. "Particularly disappointing is Xbox 360 HW sales of 230K in February, which puts its installed base at 5mn or in-line to the original Xbox which was an unproven console and faced substantial competition from the PS2," Patel noted.
Nintendo really has taken the lion's share of the market recently. In fact, combining the 485K sales of the DS with the 335K sales of the Wii shows that Nintendo grabbed 54 percent of the market in February. Nintendo of America President Reggie Fils-Aime has labeled the appeal of the Wii as "explosive" and he reiterated that Nintendo is doing the best it can to alleviate shortages. "... there are hundreds of thousands of consumers still waiting to get their hands on the system so we continue to both ship more units to retail every week and work non-stop to build capacity," he said.