2009 trends and predictions..

[saicho]

Seihyouken said:

Sullla said:

I would like to echo mrstickball's comments, as I see a very similar situation playing out. Wii continues to do crazy numbers due to lack of supply contraints, and it should be able to maintain about a 40% increase year over year simply by releasing a stream of new software late in the year. (I mean, Wii did great numbers in the last two quarters of 2008 without releasing hardly anything big on the software side.)

360 won't be able to maintain 60% increase year over year, simply because the sales were so good after the autumn price cut last year. Still, I predicted in January that this would be an excellent year for the 360, in both hardware and software, which is being borne out thus far. This will be the year that the 360 cements its second place status (although Sony fans will continue to argue for a miracle comeback for the PS3) by pulling 10m+ ahead in hardware.

I see PS3 having a rough year. The only game that would noticeably affect hardware sales is Gran Turismo, and that's not coming until Christmas, and most likely not until 2010. Notice how Killzone 2 did great software sales, and did nothing to attract new users by moving hardware. That's kind of the year I see ahead for Sony... The only other thing they can do is cut the hardware price, which ensures that Sony will never make a dime off of the PS3. Are they willing to go there? I think Microsoft is hoping that Sony does try slashing prices, so Microsoft can undercut them on price yet again and continue to bleed Sony dry of capital. Anyway, by the end of 2009, it will be clear to just about everyone that PS3 will remain in 3rd place permanently.

I wrote down 80m/40m/30m at the start of the year for hardware, and I'm still feeling pretty comfortable with them.

I can't say I agree with your predictions. For one, it's quite clear that Killzone 2 did in fact move a fair amount of hardware. Not to the extent of Metal Gear Solid 4 or Halo 3, but certainly more than any game released on 360 last year, and I think that's noteworthy. You also make two big assumtions in your analysis. One is that Sony couldn't profit if they cut price, and the other is that Microsoft would be willing and able to undercut them. Personally, I don't see either of these being true. For one, Sony is borderline profitible at the moment, particularly in Japan and mainland Europe. With the upcoming 40nm hardware revisions coming later this year, likely in the summer, Sony should be able to sell the PS3 at $299 worldwide without being any worse off then they were in 2008. However, with increased hardware sales comes increased software sales and with huge 1st party releases such as Gran Turismo 5, Ratchet & Clank Future 2, Uncharted 2, and God of War III, much if not all of Sony's hardware loses would be offset right off the bat. Sony could also periodically release a premium bundle similar to the 160GB Uncharted bundle at $399 to help offset losses. For your second assumption, I just don't see Microsoft cutting price to match Sony if they cut price. If Sony only cut price by $50, then PS3 still likely wouldn't be capable of outselling 360 this Christmas or even in the new year. It'd likely be a waste of money on Microsoft's part to match Sony's cut and companies like Sony and Microsoft NEVER cut price unless they need to. On the otherside of the spectrum, if Sony took the much more likely course and cut price by $100, then Microsoft really couldn't afford to match them. If Microsoft cut the price of the 360 by $100 later this year, they'd likely to cutting into the base production cost of the system, which means they'd be selling the system at a permanant loss from then until they take it off the market. And with Microsoft going on record about keeping the 360 on the market much longer than the original Xbox, that could amount to upwards of 2-3 years. Microsoft isn't that self-destructive. They won't conciously throw away all profitiblity this generation just to stick it to Sony this Christmas.

In all likelyhood, the price of the two consoles in Q4 will be $399 for the PS3 and $149 for the 360. A $100 cut from Sony and a $50 cut from Microsoft. At that price difference, PS3 will likely outsell 360 this Christmas and greatly outsell it through most of 2010. 2009 so far is, and will continue to be similar to 2007 and 2010 will be similar to 2008. History will repeat itself.

1.Assuming Sony is borderline profitable right now, they would be borderline profitable or at loss again if PS3 has a $100 price cut.

2. If history taught us anything, that is Microsoft is willing and able to undercut Sony at every turn in the console war. Finacially Microsoft is also in much better shape than Sony right now and they can totally afford it.