DFC Report: "Clear possibility that PS3 could end upthird in market share"

[Titanio]

well first of all I'm looking end of year (including all the Holiday sales) not PS3 November.

As for when they'll actually sell 10mil, Feb/March 07 latest?

But... they could easily SELL 5-6 million in November December. Having them on the shelf will be key.

but back to my question

You (from your post above) must think that they won't sell that many November/December? With the hype for next gen at a fever pitch with PS3 launching and all sold out, GoW, Forza and Madden (and several other good titles) on the shelf?

I disagree. :smile:

5-6m in two months alone? Or ltd?

Highly unlikely to the first, quite likely to the second, if not a little more even. But the point remains that this would leave a large gap between shipped and sold that would take months to get through. If they sold 7m by Nov/Dec, and shipped 10m+, you're looking at an excess that is close to 50% of what's been sold through, which I'm thinking is not a typical lag between shipped and sold at all. Either that, or 360s take a very..long...time...to get from plant to retail.

 

[Tap In]

5-6m in two months alone? Or ltd?

Highly unlikely to the first, quite likely to the second, if not a little more even. But the point remains that this would leave a large gap between shipped and sold that would take months to get through. If they sold 7m by Nov/Dec, and shipped 10m+, you're looking at an excess that is close to 50% of what's been sold through, which I'm thinking is not a typical lag between shipped and sold at all.

sorry corrected above... I meant 5-6 million MORE units (added to your 3+ mil number)= 9million-ish sold by end of 2006

We're both just using our crystal balls here and I don't think you can look at any numbers on the 360 up until now for a real prediction. The data is corrupted due to the shortage.

As for the lag... yes I think MS is also anticipating a huge sales end of year and are stockpiling expecting them to go out the door for holiday.

Edit: I'm worse than Xbdestroyer for edits so don't quote me for 5 minutes.

 

[Titanio]

sorry corrected above... I meant 5-6 million MORE units (added to your 3+ mil number)= 9million-ish by end of 2006

No, I doubt it'll sell 9m by years end. Maybe 8. That's just my prediction, of course, and assumes no price drop (which could actually really happen..but we'll see). I kinda hate making outright predictions like this, they can come back haunt But that's my guess at the moment, subject to revision as always

 

[RancidLunchmeat]

No, I doubt it'll sell 9m by years end. Maybe 8.

According to videogamecharts.com, they've sold 3.2M as of Mar 31, 2006. It's now July, so we're still missing 3 months of sales figures in the 3.2M number.

(Not that I expect those three months to be very impressive).

However, the PS2 was selling at a clip of about 4M units over the holiday season in the United States alone. I have no reason to believe that the 360 can't come close to accomplishing 2M in sales for each month of Nov or Dec, especially when you go back to talking about world wide figures.

If they didn't sell a single unit from Mar 31, until Nov.. and then only matched the typical PS2 sales rate for the US across the entire globe, that would still put the 360 sales figures at approximately 7.2M.

Obviously, the 360 is selling units beyond Mar. 31. It will be real interesting to see what happens to 360 sales when Madden 2007 ships in August and the 'non impressive/can't tell it's next gen' graphics for the 360 get compared to the Xbox and PS2 versions.

 

[pc999]

Dont want to make this a predict XB sales but like someone pointed there will be lots of new SW to get sales, possible price cuts and many turned off from the possibility of buying a PS3 (games that aparentely will be pricier), I think it is possible.

IIRC they also said that they are on track to that and doing the same sales they predicted.

Anyway if they can sell 10M till the end of 06and remember that at the best Sony will sell 6M till Q207 (optimistic IMO) so for some time during a good amount of 07 they will have around 2x more units on he market and if this time is cruncial to dev make their choises then many (most) will put XB360 in their plans.

 

[Powderkeg]

I am qite sure I know many people tht only go to the net with their PC and if they got the change to chose between a 250$ (and very easy, small...) Wii or a PC, they would prefer a Wii.

THEY DO NOT BUY HARDWARE FOR GAMES.

They buy a PC to do other things on. Finances, email, chatrooms, web browsing, online banking, etc... Since they already have the PC, they will occassionaly play games on it, but they don't buy the PC to play games on.

And they won't buy a console to replace thier PC with because you can't do your finances and online banking on a console, and that's the reason they had for buying th PC.

The same for DVDs many may chose a (even if pricier) Wii based on size and look alone.

I don't know a single person who would buy a $250 DVD player with no progressive scan or DD5.1 support over a $50 DVD player with progressive scan and Dolby Digital 5.1 output, no matter what size or shape the $250 DVD player is. Especially when the $250 DVD player isn't even on the same aisle as the rest of the DVD players in the store.

Somehow I just don't picture women who aren't console gamers walking into the game console aisles looking for a DVD player.

 

[Powderkeg]

5-6m in two months alone? Or ltd?

Highly unlikely to the first, quite likely to the second, if not a little more even. But the point remains that this would leave a large gap between shipped and sold that would take months to get through. If they sold 7m by Nov/Dec, and shipped 10m+, you're looking at an excess that is close to 50% of what's been sold through, which I'm thinking is not a typical lag between shipped and sold at all. Either that, or 360s take a very..long...time...to get from plant to retail.

Actually that wouldn't be unusual at all. Consoles typically sell between 750k and 1.5 million per month in November and December alone in the US, and they would need that stock to already be in stores, or at least on their way to the stores just prior to November.

So yeah, 3+ million being in the world-wide shipping channels come late October would be pretty normal.

 

[RancidLunchmeat]

THEY DO NOT BUY HARDWARE FOR GAMES.

They buy a PC to do other things on. Finances, email, chatrooms, web browsing, online banking, etc... Since they already have the PC, they will occassionaly play games on it, but they don't buy the PC to play games on.

We still talking about that one article about casual gamers that turned out to really represent female gamers, that really turned out to be representative of people who buy/download cheap games that they already have the ability to play?

Yes, a completely worthless study in the realm of console games. All this study demonstrated was that there was a market for games on devices people already own and if those games are entertaining enough, people will actually spend money to BUY them.

That's it. Then again, it's what B. Gates has been trying to say for a couple of years which is one of the reasons why he wants to invade the cellphone business. (Well.. he doesn't really want to sell games, he wants to sell the standard OS that will enable all cellphone users to purchase the games they want to play, but.... 6 of this half dozen of that)

Somehow I just don't picture women who aren't console gamers walking into the game console aisles looking for a DVD player.

Of course they won't. They'll go buy a cheap DVD player so they can watch Season 1 of Sex in the City. Now if they find out later that they can also use their little remote thingy, click a few buttons, and download Snood using this DVD player, they might be likely to do that. They also might be likely to register the game so they can play it more than 20 times (or whatever).

But they aren't going to buy a $250 DVD player to watch Season 1 of Sex in the City on it with the hope and/or knowledge that maybe in the future they'll be able to use it to spend $20 more dollars playing a game they find enjoyable after they've watched Season 1 twenty five times and their copy of Season 2 hasn't arrived yet.

 

[pc999]

And they won't buy a console to replace thier PC with because you can't do your finances and online banking on a console, and that's the reason they had for buying th PC.

Why cant they do it? If it can have educational SW and Opera (even if made by others)...

BTW it will have 480p.

And there is no gamers buying DS just for games, why will that not happen the same with the wii too?

Unlike you said no gamers will probably not: 1) dont look at the games 2) look but dont care, what they will see is some guy/girl swinging in the air a requet/basebol/golf styck(whatever it is caled in english) that does not exist and that make a completely fx on the people whatching it does stimulate curiosity (even if call them fools and walk way)
that soon or later they would like to know what is that strage thing (people need to konw what is the things that are strange to them).

But they aren't going to buy a $250 DVD player to watch Season 1 of Sex in the City on it with the hope and/or knowledge that maybe in the future they'll be able to use it to spend $20 more dollars playing a game they find enjoyable after they've watched Season 1 twenty five times and their copy of Season 2 hasn't arrived yet.

250$ is the worst case, price cuts would lower it fast to 150$ IMO.

Althought it is this kind of strategy I am speaking.


The problem with PS3 is that it will have much harder time to get even at 250$, will not have a good suport to having PC like programes and it is marketed as high tech thingh (althought with linux suport they had a good chance to do it, but it will have a much lower impact and too later).

 

[Titanio]

According to videogamecharts.com, they've sold 3.2M as of Mar 31, 2006. It's now July, so we're still missing 3 months of sales figures in the 3.2M number.

They've shipped 3.2m by the end of March.

By the end of May they'd sold 1.7m in the US. Europe had previously been tracking at about half the US figures, and if that remained the case, they've probably sold ~2.55m between the US and Europe til that point. Japan has sold ~130k by the end of May, so between the 3 major regions, you're looking at less than 3m in sales WW by the end of May (perhaps about 2.7m).

However, the PS2 was selling at a clip of about 4M units over the holiday season in the United States alone. I have no reason to believe that the 360 can't come close to accomplishing 2M in sales for each month of Nov or Dec, especially when you go back to talking about world wide figures.

The PS2 actually never quite touched 4m in the US alone between Nov/Dec. The only time they came close was in 02, and that was at $199. You're also talking about "only" matching the PS2's sales rate, but that was the PS2! 360 sales in its first x months haven't matched PS2's in the same period, so I'm not sure about that starting to happen on such a scale all of a sudden come Nov.

I think ~1m per month in the US for those months is perhaps more likely, which might place WW figures for those months at ~3m. To hit 9m would require another ~3m in sales between June and Oct. Jun/Jul/Aug at least are likely to be very slow indeed, so..

Anyway, my original point was about shipments. MS's claim is 10m shipped by PS3's launch. I think to hit that they will have to create a larger bubble in supply than they've been used to, or than is typically the case (except perhaps in the case of PSP! ). Unless they slow down shipments in the last couple of months, which they could do, but doesn't usually make for good PR if it goes public.

If MS did even sell 9m by year's end, and had shipped 10m by PS3 launch, and kept pace with shipments (1m per month, at least?), there'd likely be over 3m+ coming down the pipe for Q1 07..so again, unless plant-to-retail takes a very long time, and those shipments would be spread even further into 07, that seems a little excessive. 3m+ in the pipe for the holidays may be reasonable, but the same for Q1 then, does not make as much sense. It just seems to me that the whole "10m by PS3" chant (conveniently double-digit, echoes the "first to 10m wins" claim pushed on shareholders and senior management), repeated ad nauseum across the board at MS, seems much more tied to PR concerns than retail concerns.

If they can sell 10m/11m by year's end, 10m shipped by early Nov seems quite reasonable. But I've my doubts on the former (others don't, for example - PJ McNealy, the analyst cited earlier pegs them at that level by year end, but then I think all of his estimates for all the consoles are a little optimistic).

 

[Shifty Geezer]

They've shipped 3.2m by the end of March.

Do we have any absolute confirmation of that? videogamecharts complies figures from NPD, Media Create, etc., which are 'sold at store' figures. I guess what we're waiting for, in part here, is an official confirmation from MS about sales and their 5 million unit target. Though that'd be shipped. Ack, this numbers talk is so prone to errors, having no reliable sources of data! No-one knows what's happening in the EU. Sure there's XB360s on the shelves, but they're getting sold also. These numbers don't seem to appear until end of year financials noting units shipped, where a guess can be made based on what's sold elsewhere.

Has anyone a link to some average breakdown of shipped versus sold numbers? There must be a general 'buffer' of store and warehouse space that based on store buying practises, would give an indicator from a shiped figure, the minimum likely to have been sold onto the public. That is, if the storage for unsold consoles is 2 million units, a 7 million shipped figure would at worst mean 5 million sold to end users as no more could be kept to sell, so no more stock would have been bought until they'd moved the excess.

 

[Titanio]

Do we have any absolute confirmation of that? videogamecharts complies figures from NPD, Media Create, etc., which are 'sold at store' figures.

It's shipped, the figure was announced in MS's Q3 earnings:

http://www.joystiq.com/2006/04/28/3-2-million-xbox-360s-sold-388-million-in-operating-losses/

Has anyone a link to some average breakdown of shipped versus sold numbers? There must be a general 'buffer' of store and warehouse space that based on store buying practises, would give an indicator from a shiped figure, the minimum likely to have been sold onto the public. That is, if the storage for unsold consoles is 2 million units, a 7 million shipped figure would at worst mean 5 million sold to end users as no more could be kept to sell, so no more stock would have been bought until they'd moved the excess.

That's basically what I wonder too. In the PSP's case, there seems to be a large disconnect between shipped and sold, or at least that is often argued, FWIW.

 

[Shifty Geezer]

From 3.2 million shipped at the end of Apr, from March through to end of May there were 700K sold in the US. No, I guess we don't know whether they're part of that same stock or in addition to. There's really no way of knowing actual sold-to-end-user figures it seems. The only way we can make fair comparison of sales is to assume the industry won't buy more stock than they expect to sell, which given a maximum storage amount, would give a worst case sell-through figure. Thus it might be safe to assume that with 20 milion Console X shipped, 40 million console Y, and 50 million console Z, 18, 38 and 48 million have been sold through respectively, given a 2 million storage capacity. But without that known capacity we remain very much in the dark.

edit : And thern, that 2 million storage might be shared between consoles, so you might have 1 million of Console Z, 700K of console Y and 300K of console X in storage based on relative sales. The worst-case figure would stand, but the relative sell through could be a lot different, which represents significant percentages early on. At 3, 4, and 5 million shipped, if you've got 2.7M, 3.3M and 4M sold respectively, that's 27% : 33% : 40% market versus the shipped ratio of 25% : 33% : 42%. Actually that's not so bad. Maybe percentage shipped is a good indicator, not of total sales, but certainly market adoption?

 

[Powderkeg]

Why cant they do it? If it can have educational SW and Opera (even if made by others)...

Let me know when they release Microsoft Office for the Wii, and then we can discuss them replacing their PC with a Wii.

 

[nintenho]

I personally don't know anybody who's getting a PS3 because they just won't pay that much for a game system. Why is it relevant to discuss this? The systems can have their images in usefullness change a lot in a year. Usually that means it'll be seen less as a multipurpose tool but Sony might have thought of this. Most consumers would resent buying a console at launch and Sony knows this. They hopefully will have a massive price drop a year from now. It's just paranoia creating paranoia.

 

[Arwin]

I think ultimately the PS3 will become the largest console of the next-gen ones, followed by Wii and 360. The question is, when? Initially, depending on how fast Nintendo can ship them, the Wii may well outsell the PS3. With the 360 having a head-start, I think it is rather obvious PS3 in that case will be third for at least a while.

I think it's hard to predict though, and that makes it exciting.

 

[Geo]

So far as budgetary allocations go, hopefully Sony is going to cut some slack to PS3 pricing from the BRD budget. Clearly PS3 is meant to be a major weapon in the HD format war that is finally starting to heat up. Well, okay, that's fine. . .but it has consequences, and since a "win" would accrue to profits elsewhere, the cost should be shared elsewhere inside Sony as well. That's reasonsable, at least.

 

[SPM]

Let me know when they release Microsoft Office for the Wii, and then we can discuss them replacing their PC with a Wii.

Who needs MS Office? There a point for point free equivalent to MS Office called OpenOffice which reads and writes MS Office formats and is better in many ways - native export to PDF, and native export to swf for presentations, native support for ISO 26300 ODF file format (the recently released international standard for inter-exchange of office documents, as already adopted by US Library of Congress, the state of Massachusetts as it's office file archiving standard).

It would require 128MB RAM at least, so I am not sure if it will run on Wii. However there are other lightweight options like Abiword and Google's Writely web based wordprocessor (which also use ODF natively).

If you are locked into Microsoft's monopoly formats, then MS Office might be your only option, but for everyone else, especially for education and home use, OpenOffice or Writely may be a better solution.

http://www.writely.com/
http://www.openoffice.org/

By the way, I predict ODF is rapidly going to displace MS Office as the future "standard" file format (if you can call MS Office's myriad of mutually incompatible file formats a standard).

 

[Powderkeg]

Who needs MS Office? There a point for point free equivalent to MS Office called OpenOffice which reads and writes MS Office formats and is better in many ways - native export to PDF, and native export to swf for presentations, native support for ISO 26300 ODF file format (the recently released international standard for inter-exchange of office documents, as already adopted by US Library of Congress, the state of Massachusetts as it's office file archiving standard).

It would require 128MB RAM at least, so I am not sure if it will run on Wii. However there are other lightweight options like Abiword and Google's Writely web based wordprocessor (which also use ODF natively).

If you are locked into Microsoft's monopoly formats, then MS Office might be your only option, but for everyone else, especially for education and home use, OpenOffice or Writely may be a better solution.

http://www.writely.com/
http://www.openoffice.org/

By the way, I predict ODF is rapidly going to displace MS Office as the future "standard" file format (if you can call MS Office's myriad of mutually incompatible file formats a standard).

#1. That requires an OS and a hard drive with enough storage space for the programs and the files they generate. How much storage space does the Wii have? And let's not forget to add in the storage space requirements you need for all of the other things normal people use PC's for, such as digital pictures and movies, and music collections.

#2. We are talking about common people. How many of them even know about this software, and if you told them there was an alternative, do you really think they would trust it? Do they use it on their current PC's which can run that software right now?

 

[BenSkywalker]

But Sony currently has 70% of a ~145M unit pie with their ~100M units.

145Million....? Last I was aware it was pushing 170Million- and that was Q1 of this year. Sony has roughly 60% of the market this generation.

That sort of growth seems extremely unlikely, especially considering the growth between the PS1/N64/SS and the PS2/GCN/Xbox is in the low single digits (something like ~142M units versus ~147M units).

This gen isn't over, and it could end up in the 180-190Million range when it is done. They only company that is going to bail out quickly on their last gen hardware is MS- the PS2 has a high chance of remaining the best selling console for this year and into next.

Blu Ray/HD DVD? No, because DVD had a much wider appeal and market position last gen so there is no reason to believe it could spur 70% growth.

There is a flip side to that. PS2 managed to retain a decent premium over a dedicated DVD player- this time it comes with a hefty discount. If it ends up being a solid BluRay player then that will likely be a fairly major factor.

With numbers like 50% adoptions rate from MS this does not seem encouraging either.

50%....? Did you add a zero by accident? I haven't seen any numbers that suggest they have gotten remotely close to 20% for Live when looking at last gen numbers, actually I don't think I have seen any solid numbers that had it over 10%. I don't think online gaming is going to be a big push this gen, but that is mainly as it was such a non factor to the broader market last gen.

Obviously it is hard to predict market side, although it is safe to say 250M units is out of the question.

Why? This gen will be relatively close to 200Million units when it is done, 250Million is likely conservative when looking at a global basis for next generation, particularly given MS's apparent goal of following Sony's reliability/marketshare inflation plan

Sony has already hinted at the goal of 100M units. The question is can they get their with their pricing model.

WHAT PRICING MODEL? Since you have the documentation demonstrating when they are going to make price moves or for what particular trigger points- tell us the pricing model. All market research indicates that Sony is certain to have shortages this year at their target price- so explain to us what in Sony's documentation that you have seen that we have not gives you this insight. You can't leave information like that out when talking about something like this- clearly your insider information changes the conversation in a major fashion. Based on everything public all we have is people making rather foolish assumptions with nothing in the world to back them up.

Sure, the cost WILL decrease and the gap will shrink, but based on minimum SKU pricing even if Sony sees a 2x cut increase over MS there is still a $100 gap.

There is only a $100 gap to start with....? You do bring up a good point though. Look at how badly the GameCube decimated Sony and MS last generation. Price point is very clearly everything in this market.

A lot is going to boil down to marketing. There is a lot of talk about "prestige" quality, but will the PS3 have that cutting edge technological image in 3, 4, 5, and 6 years? With game libraries full of cross platform titles will Sony be able to make the sales pitch that the PS3 is worth an extra $100 in years 3 and 4?

Could you maybe upload the documents that have that indicate this will be the case? Given that the largest difference in cost is the BluRay drive which will be a commodity part at that point you could you tell us if Sony offers any reasoning as to why they would retain their premium if not for the reason that they still can't build them fast enough?

That is going to be the question and I am not sure there is a clear answer on that yet. But like I said, Sony didn't need to create that question in the first place.

We really need to see this documentation on their pricing model to make informed comments on this. The only thing those of us in the general public have seen is the launch price which all market data definitively shows is a non issue for them selling out during the launch window.

As a general question- I notice that people here are assuming that MS is going to be flawless in execution from this day forward that Sony is going to screw everything up. In all honesty- how could MS have launched the 360 any worse then they did? What could they have done to reduce the impact of the early launch?

Massive shortages(Sony and Nin will have the same)
Broken promises(BC anyone? how about making Riddick a priority over Barbie)
High initial price($100 premium over what came before, same as PS3)
'PGR3' as the premier launch(PS3 has UT2K7)
Huge marketing push

Moving past the first six weeks-

Still hardware shortages(Sony and Nin will be the same)
Oblivion(the only really strong thing that the 360 has going for it)
Almost every title being delayed
Strong marketing push

Then we get into where we are now-

Hardware everywhere
Games nowhere
Nigh no marketing push

What else could they have done wrong? What could MS have done that would have made things worse then what they are right now? Why are people under the assumption that they are all of a sudden going to start executing flawlessly?