Console Post of the Week
General commentary first, with NPD-specific analysis toward the end. I fully expect Sony's pop last month following the price cut to have weakened considerably.Anecdotal reports on the Web, as well as a few e-mails from you guys detailing personal experiences, seem to indicate that the service level for repairing Xbox 360's has pretty much collapsed.
When my console puked a few months ago, I had a replacement unit in less than two weeks, and overall, I was satisfied with the service. Now, though, the replacement time seems to be 4-6 weeks, which is totally beyond what anyone would consider as reasonable.
Scrutiny of Microsoft seems to have evaporated as soon as they announced the price cut, but this should still be a major story.
Sony announced something quite interesting last week:
Sept. 4 (Bloomberg) -- Sony Corp. will sell about 332 billion yen ($2.9 billion) of shares in its insurance unit in Japan's biggest initial public offering this year, raising funds for the consumer electronics and games divisions.
From Bloomberg, full story here.
Well, if that's used to fund a $100 price cut for the PS3, dropping it to $399, then it's a reasonable move. 10M consoles x $100 = $1B.
That seems logical, which immediately makes me suspect that Sony won't do it, although they desperately need to. The PS3, in nine months, hasn't cracked 5 million sales yet. Worse, that's a totally bastardized install base. How many of those people bought the PS3 just to play movies? How many bought it just to play games? It's hopelessly muddled, and companies considering which platform to develop for realize that--software sales have been far lower than expected for the number of consoles that Sony has sold.
Nintendo, meanwhile, has "officially" taken over the lead in total sales, based on a Financial Times article that appeared earlier this week (and which I can't link to because it's already in the archives, which are subscription only cough losers cough). Here's a summary from 1UP:
The report is based on sales figures from Enterbrain in Japan, NPD Group in the US and GfK of Germany, which tracks European sales. Sales figures from each console's launch date through the end of July (and the end of August in Japan) were added up, with the Wii just barely edging out the 360: 9 million for the Wii, 8.9 million for the 360, and 3.7 million for the PlayStation 3.
I believe those are probably the most accurate numbers we have at this point.
Also, in an interesting sidenote, Andy Herron sent me a link to a report on the staggering delays for Nintendo-developed games to reach Australia and New Zealand after they're released in the U.S. A fellow named Aaron Rex Davies is mad as hell about it and has written a report, which you can see here, comparing the delays for Nintendo versus third-party developers.
It's also a little-known fact that the Wii in Australia has a poisonous stinger, which means that you will be dead in ninety seconds if anything bites you outside or inside the house.
N'Gai Croal had an interview with Satoru Iwata (President of Nintendo), and his statements are a striking contrast to how Sony executives conduct interviews (which led to my "don't be a dickhead in interviews" rule). Here's an excerpt (full interview here):
...Nintendo's next obstacle is to not lose its internal energy and internal momentum. I believe my most important role right now is to prevent Nintendo from being in a company where people say, "Oh, Nintendo is arrogant," "Nintendo has let its guard down," or "Nintendo has lost its challenging spirit." We want to avoid all of the pitfalls that can come from losing one's momentum.
Oh, and what's the last thing Iwata said to N'gai in the interview? Thank you. Very nice to see you.
It looks like somebody missed their mandatory training in being a gaming executive asshole.
Even when I was criticizing Nintendo several years ago for being, well, inter-planetary, I always appreciated how they spoke of their customers. They never told us to get second jobs to pay for their crap, or how lucky we were to buy a Nintendo product, or how it was our fault if we didn't like one of their games.
Okay, NPD numbers are out, so let's take a look (thanks Gamasutra):
Wii: 403,600
Xbox 360: 276,700
PS2: 202,000
PS3: 130,600
It's been obvious since launch, but Sony's strategy isn't going to work. Their launch price was at least $200 over what the market would bear (more likely, $300), and they are far, far behind the eight ball because of that.
Here's what I mean. They lowered the price of the 60GB PS3 by $100, and their August NPD numbers (based on weekly sales, because June was a 5-week period, while July was a 4-week period) doubled--they went from 20k sales a week to 40k.
So in a four-week reporting period, they would have added 80,000 units.
That first month spike after a price cut doesn't mean much, though--it's basically the maximum effect, not the ongoing effect. One month later, that 80,000 unit bump dropped to 50,000.
They need to sell huge numbers to recoup their investment in the Cell processor, and these numbers are unbelievably bad. Don't kid yourself--this is not a 10-year console, no matter what Sony says. They can't afford to wait until year three to be competitive.
Like I said, all that first price cut did was make them a closer last. Or, at least it did until Microsoft dropped their price, because the gap went from 11,000 units last month to 146,000 this month. Worse (for Sony), that's probably the smallest gap they're going to have for the rest of the year unless they go to $399.
The last thing Sony can afford right now is to get outsold 150,000+ units a month. This will sound outrageous, and it would have seemed impossible a year ago, but if Sony doesn't cut their price to $399, and soon, they risk becoming irrelevant in this generation.
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