Why Microsoft's XBox 360 Will Outsell Nintendo's Wii

Includes: MSFT, NTDOY, SNE
by: Bruce Everiss

According to the best guesses there are about 30 million Nintendo (OTCPK:NTDOY) Wiis in the world, 20 million Microsoft (NASDAQ:MSFT) Xbox 360s and 15 million Sony (NYSE:SNE) Playstation PS3s. So the Wii has currently sold 50% more than the 360. And 10 million is a lot of units to make up. Here is how it will happen:

  • As this site has been predicting for a long time, the Xbox 360 is now $199. This is the price point at which historically 75% of consoles sell. However the 360 got to this point very early in its life, so far, far more than 75% of 360 sales are yet to happen. Currently the Wii is above the magic $199 price point, expect it to come down as predicted here. But even at a new, low price point the Wii will have difficulty in perceived value against the Xbox 360.
  • Sony is making massive losses on the PS3, and so it cannot bring the price down. All the company has been able to do recently is pass on lower hard drive prices by giving customers bigger drives at the same price. As the PS3 and the Xbox 360 are very similar in their capabilities Sony will now lose a huge number of potential sales to the Xbox 360.
  • The Wii is for many people little more than a glorified toy. It is just a box for playing Wii Sports or Wii Fit. If these people want proper gaming they will buy a 360.
  • The 360 has by far the best catalogue of games in this generation. This is because it was launched first, because it is far easier to develop for than the PS3, because Microsoft has invested a lot in exclusives and because 360 owners buy more games than owners of the other consoles. The Wii has some brilliant first party exclusives, but these are relatively few and most third party games are little more than shovelware.
  • The Wii is very stunted in capabilites being largely just an uprated gamecube. Its capabilities are far behind those of the Xbox 360. This is especially damaging in the lack of HDTV support and a hard drive. Comparing the two machines side by side is like looking at a Ferrari next to a bicycle.
  • The Wii is going to have a very short production life, perhaps four years, before it is replaced by a SuperWii that will correct its weaknesses. The Xbox 360 is going to be in production for at least eight years, the last half of that life as the low cost partner to the Xbox 720 (Phoenix) in a two model range. So the 360 has a long time to catch up and overtake the Wii for total sales.
  • The 360 is being engineered into a single chip (+memory) combining the GPU and CPU. The effects of Moore’s Law are such that this will become cheap enough to incorporate into televisions, which Microsoft seems to be gearing up to do. Nintendo has no chance here... with the Wii, who would want a non HD console built into their HDTV?
  • The Xbox 360 has Xbox live which is by far the best online gaming portal there is. Microsoft have built a formidable USP here and are not about to lose it anytime soon. The company will invest what it takes to keep its online offering well ahead of those of its competitors. So great will the power of live become that every keen gamer will be forced to buy the hardware necessary to access it, just so as to remain a viable member of the gaming community.
  • Microsoft has now made the Xbox 360 commercially viable in Japan by creating the games that the Japanese want. This is a huge turnaround and adds a lot to the potential total sales of the console.

The success of the 360 goes against Microsoft’s traditions, normally the company waits for the third iteration of a product to become the market leader. And of course if you add the sales of the Wii to the sales of the SuperWii then Nintendo have the potential to still end up ahead.

Disclosure: None