The way I see it, many people walking into a store looking to buy a PS3 are quite amendable towards the possibility of buying a 360. Why? Because unless you are a fan of a particular exclusive franchise (and let's face it not many exclusive franchises have carried forward from PS2 to PS3 yet, I'm looking at you Jak), once the similarities to the 360 are pointed out a lot of customers are going to see that 360 on the shelf and follow the old bird in the hand principle. Result: Sony loses a sale, possibly for good, even going to the next generation if that consumer really gets hooked on some 360 [console] exclusive franchises. That's the benefit to the consumer of multiplats, but the detriment to the console maker who can't make enough to meet demand. I think 25% and maybe up to 40% of PS3 customers would be willing to walk out of a store with a 360 if their preferred console isn't on the shop shelf; if the sales person gives the right sales pitch. Same thing would apply if 360 was in short supply and PS3 was plentiful.

Wii, on the other hand, has so much market differentiation (both software and user interface) that the vast majority of people walking in to a store looking for a Wii will walk out empty-handed and come back later to buy a Wii; no matter what the sales pitch of the sales person. I think maybe 5% of people planning to buy a Wii might be swayed into buying a PS3 or 360 (and as PS3's are also supply constrained those 5% would all go to the 360); with the right sales pitch of course. The upcoming motion controls could work to increase that %, again given the right sales job.

Included in the features and software differentiation is the price differentiation. Someone intending to buy a PS3 has decided to pay for the most expensive console (in many countries most expensive equal with the Elite, but in some countries (mine included) Elite is cheaper than 120 Gig PS3), if an alternative (cheaper or same/similar price) is presented to them then there is no price barrier to overcome. With Wii, as the cheapest "full featured" console, someone has decided to spend less than it costs to buy the "full featured" sku's of the other consoles. So suggesting that rather than spending X on a Wii later why not spend X+Y on a 360 or PS3 is a tough sell. Arcade comes in to play here as cheaper than the Wii, so it would be easier to get someone to take an arcade now, instead of waiting for a Wii, on the basis of price. But the Arcade still has to work against the differentiation in features, and for a reasonably informed consumer the fact that it's missing some basic features that come as standard with the Wii.

So are we seeing this difference between short supplies of Wii and short supplies of PS3?

Well we know, because of historical evidence, that when Wii is supply constrained more or less the moment Wii supplies are sufficient there is a big leap in sales for the week (see Americas sales for WE 6 March vs WE 27 Feb, with no software releases to "explain away" the large increase). This and even more illustrative examples from further back in the past pretty clearly shows that Wii buyers generally won't be distracted from their decision.

But what about short supply PS3? The only potential evidence I can point to in support of my hypothesis is that in America 360 is up YoY more weeks than it is down, and YoY YTD it is marginally up (by 11K, or 1%). There are likely to be other factors involved in 360 being up YoY in Americas, but given WW 360 is down by ~13% (27% excluding America's), some of the reason the Americas is bucking the global trend (i.e. a few % of that 28% difference) could be a sizeable number people intending to buy a PS3 are walking out with a 360 because a PS3 wasn't available. A huge % of the WW YoY difference for 360 is Japan (69% YoY drop), and I think that's directly attributable to PS3 slim and price cut. If customers aren't walking away with a 360 when they went in intending to buy a PS3, then as soon as supply constraints come off PS3 we should see a similar % surge in sales as we have with Wii. So absent any major software releases the week after PS3 becomes sufficient to meet demand, if 360 hasn't taken any sales away from PS3 then we should see a 25-30% lift. If normal supplies resume and there is a significant game release (GoW III perhaps, though normal supplies may not resume in time) then one might expect a 40-50% lift for that week. Much worse than being supply constrained on the week a big exclusive releases is being supply constrained when a big multiplat releases. Imagine those people who decide to buy their console at the same time as they go to buy FFXIII. They turn up, FFXIII is available for both consoles, but there's no PS3 available. What are you going to do? A lot of them will buy the 360 because they want to play FFXIII NOW. Some will choose to wait. It's not 360 "stealing sales" off PS3, rather it's PS3 giving the sales away. I expect a bigger HW lift in proportion to FFXIII sales for 360 than PS3 in Americas.

So, what do you think? Does PS3 being supply constrained hurt long term PS3 sales more than it hurts long term Wii sales?

No

Um well I do see the point that do to a lot of similarities and price differences, the 360 becomes a good second choice for a potential PS3 owner that couldn't find the PS3. However, I'd like to point out that in the first holiday season that Nintendo was able to have an ample supply of shipments (still sold out though) for Wii, they were able to sell almost 4 million units in December in America alone. Imagine if they could have had that same ability in the holilday seasons the previous 2 years.

The supply constraints severely hurt Nintendo, because they were never able to put the competition away. And as 360 started to come down in price and so do PS3, they became viable options as well when they couldn't find a PS3. Nintendo's inability to keep a healthy supply of stock, mainly because it was almost impossible, really did keep PS360 alive, especially in America (alone with the 2 getting constant big games from 3rd parties which Wii was mainly relying on Nintendo).

So I will have to respectfully disagree, and state that the length of shortages for Wii have severely hurt it's sales and market percentage moreso than PS3's current issue.

Yeah I'd have to agree somewhat, 360 and PS3 tend to eat eachother's sales since they are so similar, while most people looking to buy a Wii probably wouldn't use PS3 or 360 as a substitution.

But I still think the shortages in the US hurt the Wii more than Nintendo would like. It could have been up YoY easily if Nintendo was just able to supply the US with enough Wiis to meet demand. They had a chance to REALLY run away with it.

Oh, it definitely hurts. Week to week there are customers that would have been perfectly willing to buy their product, but not able to.

They're not earth-shaking, but its a definite problem.

Its not like without shortages PS3 would be selling at Wii levels with shortages lol.

I think this is only true at Xmas time. Any other time, if you want a PS3, 360 or Wii, your only gonna get that system

What's that got to do with anything? Have you missed the point or are you being deliberately inflammatory?

I think NPD might have proved you wrong, sorry.

I sort of agree. Wii sales are still pumping along nicely, there's nothing particularly disappointing about them, but yes the longer the period of supply constraint the worse it is for total potential sales. However my thinking is that if PS3 went for even 6 months of having supply shortages this would be very detrimental to PS3, especially in the USA where 360 is strongest. The fact Wii has withstood multiple years of supply shortages and still has the highest demand ever shows it to be much more resilient than PS3.