Monday, July 02, 2007

Console Post of the Week

What a week.

Last week was a microcosm of what's happened in the last few months in the console wars. Let's take a look.

Sony's first off this week, and here's their big news: production problems with the PS3 have now been resolved.

Phew, what a relief.

Here's the quote (thanks Daily Tech):
“Production problems have now ceased, we're in full production as far as PlayStation 3 is concerned and there's a steady chain of supply in North America, Japan and Europe,” a Sony Computer Entertainment Inc. spokesperson said, as recorded by Compound Semiconductor.

Of course, there haven't been any production "problems" since early January, and the entire world is drowning in PS3's, but let's not let reality get in the way of anything Sony says.

At this point, if Sony is indeed running at "full production" (based on their earlier claims of 11 million units in the current fiscal year), then they're manufacturing 650,00 more consoles a month than they're selling.

Somewhere in Asia, in a warehouse (or several), Sony has 1-2 million PS3's.

Think I'm crazy? Sony's selling roughly 250k units a month worldwide, but let's be incredibly generous and say they're selling 300k. They're making 900k a month, though, if they're at full production.

Retailers can't take those excess units--they're stuffed to the gills already.

I'm just waiting for the story to break and photographs of PS3 warehouse row to get published.

In Japan, which no one seems to be talking about, the PS3 has imploded in remarkable fashion. The Wii has been outselling it 5-1 (or more) for months, and last week, when the very well-reviewed Folksoul was released in Japan, it sold 18,000 copies.

I said two months ago that I believed Sony would cut the price of the PS3 by the end of June. Since it's July 2 today, I was wrong. But Sony is up against the wall here, no matter how much they spin the disastrous numbers.

On top of all the problems they have right now, here's the biggest one, and it's the one nobody has even mentioned: how many years will it take to get the PS3 to $299? Remember, the Playstation and PS2 launched at $299. It would be a Christmas miracle if Sony gets the PS3 to $299 by December of 2009.

That's three years after launch.

December 2009 would also be 4+ years into the lifecycle of the 360. At that point, the 360 will be a $199 machine--at most. And the successor to the 360 will only be (in all likelihood) a year from launch.

When your BOM starts out $250-$300 more than the competition, your costs are going to be higher for the entire generation. And that's a killer.

There's more about Sony (developers are shifting resources away from the PS3 in Japan, and this fall's football games from both EA and Take-Two are running at 60fps on the 360 but only 30fps on the PS3), but that's for another week.

On to Microsoft, and they're treading in dangerous water.

There is an explosion of articles about hardware failure rates. Take a look:
One gamer on his twelfth 360
UK repair center refusing "red ring of death" units
Influx of units needing repairs blamed on modders?
1,500-2,500 units a day sent for repair in the UK

I'm not claiming that all of these stories are accurate, because it doesn't matter. What matters is that Microsoft has a PR disaster here, and as long as they refuse to address this issue directly, these anecdotal reports are going to dominate the discussion.

Everyone should be in love with the 360 right now. It's a poweful, high-definition console, Xbox Live and the Marketplace are fantastic, and the lineup of games for the rest of the year is incredibly strong.

Instead, all anyone's talking about are the hardware failures.

Let's move on to Nintendo, who has basically taken over the world at this point. Over seven months after launch, it's still difficult to walk in to a store in the U.S. and buy a Wii. By the time of the console's one-year anniversary in November, the Wii will have sold over 12 million units worldwide.

That is not a fad.

Here's a note from Steven Kreuch:
I was walking by the Nintendo store here in NYC and asked them when they get Wii's in... they said that they get them in every day, but you have to get there by 7:30 a.m. to get in line before the store opens at 9 a.m. That's right... there is still a line every day to get a Wii here.

N'gai Croal broke the story on Wiiware, which you can read here. Wiiware is a downloadable game initiative--not games from back catalogs, but new games, with a focus on making development affordable for smaller, independent studios.

Reggie Fils-Aime, who eats thousand dollar bills for breakfast, had an interview with N'Gai here. Reggie didn't mock the competition. He didn't brag. He just explained the vision that Nintendo had for Wiiware.

How refreshing.

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