Microsoft's Xbox 360 Is Looking Good

| About: Microsoft Corporation (MSFT)

All three current generation home consoles are about to or have had substantial price cuts. Sony (NYSE:SNE) has been forced into it by being ridiculously overpriced, Nintendo (NTODY.PK) is doing it to counter a huge slump in Wii sales and Microsoft (NASDAQ:MSFT) is doing it because they can and because they want more market share. So let’s look at the current state of the Xbox 360.

Firstly, for every three Sony Playstation PS3s in the world there are four Microsoft Xbox 360s. A considerable success considering that this is only Microsoft’s second machine and that they entered a market dominated by Sony.

Next, the Xbox 360 is played more (figures for North America). It is played more than any other console and about twice as much as the Wii is played. This reflects the fact that it has a far bigger software library ( 684 Metacritic games) than the PS3 (384) and the Wii (455). And also that Xbox Live is a compellingly successful online portal that is a long way ahead of the competitors.

More telling is that PS3 and Wii unit sales in North America have decreased this year, at what should be the peak of the console cycle. Of the home consoles only the Xbox 360 has seen increased sales, up by 17% compared with 2008.

All this will change going into Q4; not only will the hardware price cuts be felt (for instance with PS2 owners upgrading) but there is a veritable glut of new AAA blockbuster titles on all three platforms, a glut that is continuing into Q1 ‘10. It will be very interesting to see what the state of the industry is like in March, after the dust settles.