It depends when it declines. But after 2011 we'll likely see new consoles from somebody - Sony will be eager to go first if they're dealing with two Wiis (Wii / Kinect), and two DSs (DS / 3DS). Nintendo will be ready if Japan starts to collapse completely for Wii, or if price cuts / seasonality stop working. Microsoft will be ready if Kinect doesn't have legs or only works in USA / UK / Australia / Canada to boost hw.
By end of year we're looking at something like 84m Wiis, 50m X360s, and 47m PS3s. My impression is Move will cannibalize X360 further in Continental Europe and X360 will continue declining in Japan during 2011. Kinect will cannibalize PS3 in the USA / UK / Australia / Canada. So for 2011, Wii / PS3 will be close in Japan, Wii / X360 will be close in Americas, and in EMEAA various countries will have Wii and X360 close OR Wii and PS3 close, with Wii winning by a bigger margin overall since EMEAA preferences are split.
Continental EMEAA is probably 25% of the X360 market, and Japan is 3% or so. If those both drop off by 20%, Microsoft needs to beat figures in the strong Kinect regions by 6% or so. That's probably doable, but it might not be easy, and the drop off in the weaker regions could be bigger if PS3 drops in price (likely) and if Wii drops in price (one price cut in five years would be madness - two would be simply "good").
No reason to expect X360 to be down much in the USA in 2011, given H1 2010 was fairly weak, but H2 will be hard to match.
Worst case scenario for X360 now is probably:
LTD 2010: 50m
LTD 2011: 59m (Wii / PS3 cheaper)
LTD 2012: 66m (new consoles)
LTD 2013: 69m
LTD 2014: 70m
That'd put it about 13% higher than NES. My main issue with Kinect is it came in too late. PS3 / Wii are very strong competition. By the end of 2011 X360 could probably be as high as 64m if everything went correctly, 75m by end of 2012, 82m by the end of 2013, 86m by the end of 2014, 88m by the end of 2015, and 89m by the end of 2016.
The winning HD console is probably going to get to about where Wii is now - right around 80m. Whats fascinating about Wii is it hasn't declined quickly at all in the West and Nintendo still has a couple effective weapons to spur demand (price cuts, cheaper software pricing, more new bundles, and big game sequels - NSMB Wii 2 in 2011?). Here in the USA its looking like after two decline years, its still going to only be 24% of its peak. Thats nothing - PS2 declined 44% from 2002 to 2004.
If Move doesn't catch on the USA though I don't think its crazy to think X360 could beat PS3 by 15m units, just in the USA. By the time Sony has the opportunity to cut price again PS3 sales will be near 4m over 12 months (down from the 4.9m high) and likely only grow back to 4.5m - 5.5m at a time when X360 may be doing 6m - 7m.
People are difficult to govern because they have too much knowledge.
When there are more laws, there are more criminals.
- Lao Tzu
, yeah I agree that looks worst case scenario, good job.
