Sony PS3 Misses Sales Target, Xbox 360 and Wii May Beat Targets

Market research by NPD Group shows Sony missed its U.S. November launch month PlayStation 3 sales target by more than half at 197,000 units, versus 400,000. An analyst cited supply constraints and commented, "There's no way that Sony will make its forecast for 1 million units in the U.S. this calendar year." Sony plans to sell 2m units worldwide by the end of '06, compared to Microsoft's Xbox 360 at 10m and Nintendo's Wii at 4m, with the latter two saying they may exceed original '06 estimates. In the U.S. in Nov., NPD estimates sales at 511,000 for the Xbox 360 and 476,000 for the Wii. Note on Nov. 27, Nintendo said it sold 600,000+ Wii's in the first eight days following its launch "in the Americas." Enterbrain, a Japanese gaming magazine, estimates 372,000 Wii's were sold in the first two days of its Japan launch. The Wii launches in Europe today. Reuters reports Microsoft's CFO said the Xbox 360 has out-shipped its predecessor by more than 1m units in its first three quarters post-launch, at 5.7m units.
• Sources: Bloomberg, News.com-Reuters, Nintendo press release
• Related commentary: Game On: Game Console and Software Stock Update, Heads Roll At Sony On PlayStation Delays, Sony: Holiday Sales Look Strong, Nintendo's Wii Setting the Pace for Next-Gen Game Consoles this Christmas
• Potentially impacted stocks and ETFs: Sony (SNE), Microsoft (MSFT), Nintendo (NTDOY.PK). Gaming software publishers: Electronic Arts (ERTS), Activision (ATVI), Konami (KNM), Take Two (TTWO), THQ (THQI)

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Comments

[Tom B:]

Bummer for Sony, but it does look like a temporary supply issue.

2006 Dec 08 09:10 AM

[carlivar:]

Also worth noting that Sony supposedly loses money on every console sold. Nintendo makes a profit.

Personally I think Sony is in trouble. Microsoft already has a nice foothold for high-def games. I see Nintendo as the system everybody owns, with the passionate gamers choosing between Microsoft and Sony for high-def. XBox 360 simply seems like the better system: price, availability, games, and a better online service. Reports are that the graphics in the PS3 may be better than Xbox 360 but not *that* much better.

Not to mention that Sony has been incompetent at nearly everything they've done the past few years. Flawed CD copy-protection, exploding batteries, terrible choices in digital music. No reason to think the PS3 will be any different.

2006 Dec 08 03:41 PM

[Tom B:]

You make some interesting points; I agree that Sony is messed up-- I sold mine at 50 around January '06. But you have to remember, MSFT can outdo ANYONE in terms of sheer incompetance-- look at the Zune. Look at Vista. Look at WindowsCE. The Xbox is supposedly their best-ever product, but I am skeptical they will be able to sustain that, and their marketshare is like a tenth of that of the PS2.

Question: do either SNE or MSFT see more than handful of on-line subscribers? I have no data-- my guess is "no".

2006 Dec 10 02:41 PM

[Reinhart:]

In actuality, none of the three makes a profit in hardware sales.

However, the Wii is a simpler console, which means it costs less to manufacture. But it is still sold at a loss because the price would most assuredly be higher than $249 for the hardware.

1st parties sell hardware below cost to ensure adoption; they make their profit strictly from software either through the markups with their own programming and from the collection of licensing fees from their 3rd parties for each title sold. Nintendo developed this particular business model, BTW.

As for Microsoft, they've sold a lot of systems, but there is also a lot of consumer anger against them because of the rather high failure rate of the Xbox 360, from systems that scratch game discs to a design or manufacturing problem that has led to an unacceptable amount of machines being bricked with the "red ring of death" with Microsoft completely denying the problems until it got to the point that it was the only thing left to do to save face in a competitive business. And, Microsoft's video game business has been losing money as well with estimates hinting at $4 billion, on top of the estimate that Microsoft will have to spend $1 to repair defective consoles.

At this point, it appears that the Wii is going to win.

The PlayStation 3 is the most powerful system with only modest quality problems, but it's also the most expensive and its library has yet to impress.

The Xbox 360 has the largest library and has been around the longest in the generation, but it has suffered serious damage to its reputation for serious quality control issues and how badly they handled consumer complaints up to now.

The Wii continues to sell out almost a year after it debuted with VERY few quality complaints on the hardware (firmware updates bricking Wiis and disc drive problems) and Nintendo's willingness to expeditiously resolve problems when they do pop up, and this is on top of the fact that the games are REALLY good on it.

2007 Oct 16 02:20 PM

[Reinhart:]

In actuality, none of the three makes a profit in hardware sales.

However, the Wii is a simpler console, which means it costs less to manufacture. But it is still sold at a loss because the price would most assuredly be higher than $249 for the hardware.

1st parties sell hardware below cost to ensure adoption; they make their profit strictly from software either through the markups with their own programming and from the collection of licensing fees from their 3rd parties for each title sold. Nintendo developed this particular business model, BTW.

As for Microsoft, they've sold a lot of systems, but there is also a lot of consumer anger against them because of the rather high failure rate of the Xbox 360, from systems that scratch game discs to a design or manufacturing problem that has led to an unacceptable amount of machines being bricked with the "red ring of death" with Microsoft completely denying the problems until it got to the point that it was the only thing left to do to save face in a competitive business. And, Microsoft's video game business has been losing money as well with estimates hinting at $4 billion, on top of the estimate that Microsoft will have to spend $1 to repair defective consoles.

At this point, it appears that the Wii is going to win.

The PlayStation 3 is the most powerful system with only modest quality problems, but it's also the most expensive and its library has yet to impress.

The Xbox 360 has the largest library and has been around the longest in the generation, but it has suffered serious damage to its reputation for serious quality control issues and how badly they handled consumer complaints up to now.

The Wii continues to sell out almost a year after it debuted with VERY few quality complaints on the hardware (firmware updates bricking Wiis and disc drive problems) and Nintendo's willingness to expeditiously resolve problems when they do pop up, and this is on top of the fact that the games are REALLY good on it.

2007 Oct 16 02:20 PM

[carleast:]

I certainly feel that the predicted trouble of Sony with the PS3 is very premature from Carl. Thomas certainly put things into perspective here when he said that total Xbox 360 sales so far only represent 10% of what the PS2 has sold so far. That doesn't include Christmas season sales though so I'm assuming that by the end of this year the 360 may have sold around 12m units. Bear in mind that for the past 3 quarters the PS2 has actually outsold the 360.

Sony may have had trouble over the past few years but they've never put a foot wrong as far as the Playstation brand is concerned so to predict that they have done it here is a bit rich. The 360 may have better games but surely that's a no-brainer considering that the 360 has been out for over a year and the PS3 has been out a matter of weeks. And maybe the first selection of PS3 games have only marginally better graphics you wait until this time next year.

And don't predict the end of Sony yet. If you were to list the worlds four most highly sort after consumer electronic goods they would be as follows: MP3 players, Computers (with a larger percentage of them being laptops by the day), Flatscreen TV's, and Games Consoles. Sony is failing with MP3 players. But who isn't? Apple have that one tied up for the time being. They are holding their own ground on the laptop front but it's a saturated market with too many players. It is the new generation Sony Bravia range that is taking the flatscreen tv world by storm. The reviews for the latest models has firmly put Sony back on the top of the pile where they share it currently with long term players Panasonic and Philips. And now they have the PS3 coming out which follows the PS2 which has so far sold over 100m units worldwide.

On two out of the four above Sony is showing huge potential once again. And if someone finally wises up at their MP3 division I fully expect them to be the main challengers to the iPod in the coming years.

Write them off at your peril. The sleeping giants are just waking from their hibernation.

2006 Dec 11 06:10 AM

[Tom B:]

"And if someone finally wises up at their MP3 division I fully expect them to be the main challengers to the iPod in the coming years."

they could do really good MP3 peripherals.

Stringer may be an interim "clean house" CEO, like Gil Amelio (at AAPL). They could get someone with a fire in his belly in a few years. I don't see SNE as a buy, by any means, but it is a "watch".

2006 Dec 11 09:28 AM