Console Post of the Week: They Said What?
Sony released earnings last week, and here are a few data points for discussion (from a NY Times article):
Sony also cut its sales goal for PlayStation 3 game console to 9.5 million units for the year from 11 million. The fiscal year ends in March.
Sony sold 4.9 million units of the PlayStation 3 in October-December quarter. In that same period, a rival Nintendo sold about 7 million units of the Wii.
4.9 million? Oh, really?
Remember, Sony changed its accounting method from "production shipments to recorded sales" when they announced Q2 earnings in October 2007 (see here). So Sony is claiming that they sold, not just shipped, 4.9 million units from October-December of last year.
Well, let's take a look.
The U.S. numbers are pretty easy to find, thanks to NPD. October-December sales in the U.S., according to NPD, were 1.385 million.
Japan? Also easy to find, thanks to Media Create. 472,000.
So let's see.
1,385,000+472,000+REST_OF_WORLD=4,900,000.
Solving, that gives us REST_OF_WORLD=3,0430,000.
For that formula to work, "rest of world" sales had to be over 3 million for the quarter.
WTF?
Let's look at the Wii numbers in comparison, then. In the U.S., Nintendo sold 2.85 million units in October-December. In Japan, they sold 1,001,000 units. That's 3.85 million units total.
That compares to 1.857 million in the same territories for Sony. In others words, Nintendo more than doubled Sony's PS3 sales from October-December in the U.S. and Japan.
Nintendo needed to sell 3.15 million units in the rest of the world to get to the 7 million numbered mentioned in the New York Times story. Sony needed to sell just over 3 million to get to the number that they've claimed.
So for Sony to be telling the truth, they had to have sold as many units as Nintendo did outside the U.S. and Japan.
Um, okay. Because there's absolutely zero data to indicate that's happening. And there's a good reason that there's no data to indicate that: because it's not happening.
Let's look somewhere else for clues. Kaz Hirai said that Sony sold 1.2 million PS3's in the last five weeks of 2007 (see here). He also said, on January 7, that Sony sold roughly the same number in the U.S. for the last five weeks of 2007.
Okay. So if Sony sold an equal number of PS3's in both Europe and the U.S. in the last five weeks of 2007, one way to make an educated guess at Europe's sales for the quarter would be to look at U.S. sales for the quarter. According to Sony, they were identical for the last five weeks, and if they were tracking that closely, it's not unreasonable to think that the sales for the rest of the quarter would be close as well. Also, the vast majority of sales in the holiday quarter would have come in the last five weeks, anyway.
According to NPD, Sony sold 1.385 million PS3 from October-December in the U.S.
Ouch.
So for Sony's numbers to have any chance of being real, even though European and U.S. sales tracked evenly for five weeks, Europe would have needed to magically sell 10X as many units (or more) in the rest of the quarter as the U.S. did.
If Europe's sales just matched the U.S., Sony winds up over 1.6 million units short of their claimed number, and if even after adding in sales from the smaller countries, it's highly likely that they'd still be over a million units short.
Well, let's try another angle, then. When Nintendo released their earnings last week, they gave this breakdown:
Hardware sales for the Wii now total 20.13 million, with 4.99 million consoles sold in Japan, 8.85 million in North and South America and 6.30 million in the rest of the world.
Let's break that down into percentages, by region:
Japan: 24.78%
North and South America: 43.96%
Rest of World: 31.29%
I'm not trying to claim that Sony's sales, by region, are the same as Nintendo's. But based on the numbers we do know, it's highly unlikely that sales outside of the U.S. and Japan constitute over 60% of Sony's sales. That's what they'd need for their 4.9 million number to make sense.
Okay, one last try. EA, in their earnings report issued last week, including an interesting supplement: an estimate of console sales in 2007 for Europe. Take a look:
Wii: 4.0 million
PS3: 2.8 million
360: 1.9 million
If these numbers are correct (I think labeling them "better than a guess but not entirely accurate" would be fair), then Microsoft desperately needs to do something to increase their market share in Europe in 2008.
I digress.
So if Sony sold 2.8 million units in Europe in 2007, and we know that they sold 1 million units in PAL territories by early June (which does include Australia and a few other countries, so it's no absolutely one-to-one in terms of applying to Europe), then even by the most generous estimate, they sold, at most, 1.5 million units in Europe in the October-December quarter.
Which means, even after looking at the numbers from multiple angles, Sony's claim of selling 4.9 million units in the last three monts of 2007 comes up at least a million units short. At least.
I know that everyone tries to put a marketing spin on their numbers. Totally understood. But when a company is putting a number out there that's off by over a million units, that goes well past marketing.
Is there any possible explanation? Well, if Sony changed back to reporting units shipped instead of units sold, then the number makes sense. Failing that, then no, I don't think there's any possible explanation.
Now here comes the fun part. I'd be willing to bet that several industry analysts are going to use that 4.9 million number (and its closeness to the 7 million in sales for the Wii mentioned in the NY Times article) as "proof" that Sony is gaining momentum and will overtake Nintendo.
Proof ain't what it used to be.
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