Kenology on 15 May 2008
Analysts Unmoved By 360's 10 mln US Milestone
On Wednesday, Microsoft announced that Xbox 360 has sold over 10 million units in the U.S. SVP of Microsoft's Interactive Entertainment Business Don Mattrick stated, "History has shown us that the first company to reach 10 million in console sales wins the generation battle."But analysts quizzed by Next-Gen question the logic behind the "first to 10 million wins" idea.
Mike Hickey with Janco Partners says that he sees "little significance" in Microsoft's announcement, calling it little more than "a corporate catalyst for a press statement and a last-chance chest-pounding moment."
He added, "...We do not expect Sony or Nintendo will announce defeat this week, in the drama wake caused from Xbox 360 domestic units sales crossing an arbitrary line in the sand.
"It’s unclear to us if Microsoft considers the Wii console from Nintendo to be a competitive product, but we expect the Wii’s installed base will likely eclipse the Xbox 360’s installed base in CY08, and eventually win the console war by a wide margin."
Hickey said that he has "no doubt" that if supply for the year-younger (and less expensive) Wii were able to meet continuing high demand, Nintendo's console would have beat Xbox 360 to the 10 million mark in the U.S.
So far, Wii has sold around 8.8 million in the U.S. despite tight supply.
Arvind Bhatia with Stern Agee argues that the console battle is far from over. "Everyone knows 360 has the lead over PlayStation 3. However, declaring victory this early in the cycle is premature," he says. "Sony is likely to catch up given its relative strength in Europe and Japan. Also, Blu-ray provides Sony with an edge."
Worldwide, PS3, which like Wii also launched a year after Xbox 360, sold around 9.24 million units in its last fiscal year, and about 12.85 million total. Launched in November 2005, Xbox 360 has sold 19 million worldwide.
"I guess getting to 10 million units first is one of the benefits of launching a year before your competition," says Colin Sebastian with Lazard Capital Markets. But like other analysts, he also brought up the Wii factor. "Based on unit sell-through trends, it would appear that the Wii is positioned to surpass the 360 installed base down the road. Regardless of market share, in this cycle we see the potential for three healthy console platforms, unlike the PS2 dominance last time around."
Michael Pachter with Wedbush Morgan Securities simply called Microsoft's announcement "spin," adding, "Nintendo will pass them this month."
