Xbox 360 Elite: Microsoft's Response to the PS3?

| About: Microsoft Corporation (MSFT)
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In late March, Microsoft (NASDAQ:MSFT) confirmed widespread rumors about a revamped video game system by launching the Xbox 360 Elite.

The system boasts a hard drive twice as large as its nearest competitor, the capability of playing super high definition video, and a black finish.

Priced $30 less than the lower end of the PS3 (but sans HD-DVD) Microsoft could have more appropriately branded this console the 360 L337, since the demographic truly interested in this level of storage, video quality and aesthetic detailing is hardcore gamers.

But with most of these potential buyers already owning current generation Xbox 360s, is there really a market for this console?

The chart below shows online retail demand for the US market, based on people shopping consoles at SKU level pages.

  • The Sony (NYSE:SNE) PS3 continues to trail the other two systems in terms of online demand, with the gap widening substantially. While demand for all three consoles fell from February to March, PS3 demand fell by nearly 20%
  • Nintendo (OTCPK:NTDOY) Wii demand has begun to come back to earth, but is still a 40% higher than the 360, and almost double that of the PS3
  • Having launched a year earlier than its competition, 360 demand has remained the most stable in the post-holiday lull
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    Since the Elite was confirmed in late March, and didn’t appear as retailer product pages until the very end of March, this announcement didn’t have a large effect on March monthly demand. The real story plays out at the weekly level. The chart below shows weekly Xbox 360 shoppers broken out by the model package*.


  • Demand for various system bundles has remained relatively stable, while console-only shopping has gradually declined.
  • The 360 Elite has surpassed aggregated core and premium system shoppers in terms of online demand, despite it being currently unavailable and listed on retailers for only 3 weeks.
  • Interestingly, the Elite launch has driven incremental shoppers to the 360 brand. Looking at the aggregated** total shoppers, there has apparently been very little overlap elite shoppers and bundle or “lesser system” shoppers.
  • While the 360 Elite has yet to even be released, it is already generating significant interest. Whether this interest is from current 360 owners looking to upgrade, or gamers who have waited to see how the next-gen consoles compared, it appears that Microsoft’s answer to the PS3 may be short and sweet; “Own3d.”

    For this analysis, retail demand is measured as the total unique visitors to SKU level pages at the top 20 online electronics networks.

    * Model packages were broken out into system only (someone shopping either a core or premium Xbox 360), system bundles (i.e. console and game bundle), and Elite.
    ** Aggregated 360 demand measures the total number of shoppers for a 360, regardless of overlap: If someone shopped both a 360 Elite and a Bundle, they would only be counted once.

    Where do Compete's traffic numbers come from?