FOUND: Walmart = Missing Link

[Vince]

12/13 20:53
Microsoft Xbox November Sales Trailed Forecasts, Analyst Says
By William Selway

San Francisco, Dec. 13 (Bloomberg) -- Microsoft Corp., which turned to video games to boost revenue as personal-computer sales slowed, sold fewer Xbox machines than expected in November, at the start of the holiday shopping season, an analyst said.

Microsoft sold 468,000 Xbox consoles in the U.S. in November, Banc of America Securities Inc. analyst Bob Austrian said in a research note to clients, citing data from market researcher NPD Group Inc. That's 33 percent less than the 700,000 Austrian had forecast.

The world's largest software maker has struggled to gain video-game sales against rival Sony Corp., whose PlayStation 2 has outsold the Xbox by 10 to one. The start of the holiday season suggests that Microsoft's sales from Xbox will be about $700 million this quarter, Austrian said, $400 million less than he had previously forecast.

``Industry growth rates, for both consoles and video games, may be slowing, or at least, seasonally weaker than expected,'' Austrian said.

Excluding Wal-Mart

Microsoft spokeswoman Molly O'Donnell said the NPD report doesn't accurately reflect all of the company's sales because it excludes those at Wal-Mart Stores Inc., the largest U.S. retail chain. The percentage of Xbox machines sold at Wal-Mart doubled in November from October, she said, declining to give precise figures.

``The report doesn't tell the whole story,'' O'Donnell said. ``We feel they've underreported for the Xbox.''

U.S. sales of video games and gear were expected to rise to a record of more than $10 billion this year, NPD Group said last month, buoyed by a holiday shopping season that typically generates more than half of the industry's annual sales. Sales rose 43 percent in the U.S. last year to $9.4 billion, aided by the November release of Xbox and Nintendo Co.'s GameCube console.

The sales shortfall of Microsoft's video-game player won't affect profit, Austrian said, because the Redmond, Washington- based company already loses some $70 on each machine. Console makers reap the bulk of their profits through their games and those made by third parties such as Electronic Arts Inc., which pay royalties to the makers of the machines.

Shares Decline

Shares of the largest video-game software companies dropped today after Goldman, Sachs & Co. analyst Chris DeBiase lowered his ratings on Electronic Arts Inc. and Activision Inc. for the second time in two months. Industry sales growth has started to slow, DeBaise said, citing monthly data compiled by NPD Group, which is sold to game makers and other paying customers.

Microsoft shares fell $1.67 to $52.50 by 4 p.m. in trading on the Nasdaq Stock Market.

We understand that the marketplace is a volitile place and the sector is depressed overall. So, say that - I understand, It happens.. it's a non-issue. Don't tell me Wal-mart is the hidden answer. This type of BS just reeks of...um.. Shit. Actually, it's reminescent of something much worse - 3dfx. <shudders> (EDIT)

http://quote.bloomberg.com/fgcgi.cgi?T=marketsquote99_relnews.ht&s=APfqPABaETWljcm9z

PS. When did Johnney Awesome get hired by MS PR? Just add 50% sounds very familiar..

 

[DeathKnight]

Marty's wife?

 

[zurich]

Wasn't Walmart traditionally the Nintendo excuse?

Really, MS's projections should have been downgraded accordingly when news broke that DoAXBV, PDO, Brute Force, etc. were 2k3 titles. Shifting 700k units with their (current) weak software lineup was pretty much impossible.

 

[DeathKnight]

Yeah, it was Nintendo's excuse. The thing is, however, is that Walmart probably sells more Xbox's than GC's.

 

[Blade]

The reason why Wal-Mart and Nintendo are associated with each other is because they have a strong relationship.

Similar philosophies, focused around the family. That's not the point however.. Wal-Mart advertises Nintendo games and consoles more than any other department store.. or any other store period. At least from what I can see..

Whenever I go into my local Wal-Mart, they're always wearing Nintendo pins in the electronics department and there's Nintendo advertisements all over the place. Wal-Mart was the no.1 place to buy a GameCube in 2001.. heck, even I bought mine there at launch.

Man, there was a huge line for the system. The store was set up specifically for GameCube that morning.

 

[BenSkywalker]

We understand that the marketplace is a volitile place and the sector is depressed overall. So, say that - I understand, It happens.. it's a non-issue. Don't tell me Wal-mart is the hidden answer. This type of BS just reeks of...um.. Shit.

Sony is reporting 5Million more units sold in the US then NPD(prior to November). On a global basis right now they have just passed the 30Million mark in reported sales by the tracking firms.

So Vince, is Sony a blatant liar? They reek of shit according to you, right? Hell MS is only insinuating a few hundred thousand more while Sony is boosting their numbers by twenty million on a global basis. Pick a side of the fence and stick with it. Either declare Sony a liar now and call all of their numbers shit or realize the truth, that NPD underreports numbers by a rather significant margin.

As far as Wal-Mart having a seasonal bump in terms of percentages, why should that surprise anyone in the slightest bit?

Why do sales spike around Christmas? Who is by far the largest seller of gifts? How many parents, or aunts or uncles, search out a gaming store to purchase their gifts when Wal-Mart has them in stock? Obviously there are a decent amount who do, but not seeing the logic of Wal-Mart having a larger impact on holiday sales then they do during the rest of the year is absurd.

I've never supported the assertion that WM sells more of any particular console then another overall, although for the particular month we are talking about WM did have a special giving away Amped with the rest of the XBox bundle for a certain period of time(Black Friday in particular).

Zurich-

Really, MS's projections should have been downgraded accordingly when news broke that DoAXBV, PDO, Brute Force, etc. were 2k3 titles.

It wasn't Microsoft's projections, it was the analysts who made the comments about the weakness in the market. Why would an analyst who makes a prediction try to cover his butt when it comes out wrong though?

 

[Legion]

Ben what do you think December sales will look like?

 

[marconelly!]

Ben, while I agree that adding the sales from Wallmart would get Xbox sales closer to the amount analyst predicted you have to keep in mind two things:

1) If MS spokesperson wanted for her report not to reek of damage control, she should have included real numbers. To say - this is how much we sold, and this is how much he predicted.

2) Analyst was making his predictions based on the already available data and numbers that he acquired through NPD. If he made the prediction for sales around 700K, he was making the prediction of the NPD report numbers, because those are the numbers he manipulated with. He was expecting that the next NPD sales report for Xbox would be 700K and the actual sales (Wallmart included) would, of course, be higher.

 

[CaptainHowdy]

"Is Sony a blatant Liar?"

from past records, I would say yes, I have heard nothing but lies
and half truths from them and MS both from the very start of thier console career, from how many polys thier systems will push, to what games are exclusive to thier system "Sony: Soul Calibur 2 is exclusive to PS2 MS: Splinter Cell will be Exclusive to Xbox"

 

[Magnum PI]

12/13 20:53
[...]

Excluding Wal-Mart

Microsoft spokeswoman Molly O'Donnell said the NPD report doesn't accurately reflect all of the company's sales because it excludes those at Wal-Mart Stores Inc., the largest U.S. retail chain. The percentage of Xbox machines sold at Wal-Mart doubled in November from October, she said, declining to give precise figures.

``The report doesn't tell the whole story,'' O'Donnell said. ``We feel they've underreported for the Xbox.''

i try to read PR the most pessimistic way possible. because they are formulating facts the most optimistic way possible. so i think this way i'm as much close to the truth as possible.

when something is not specified, that thing must show the facts under a negative light. if it was a positive fact, it would be specified.

so when the PR says than the the percentage of xbox machines sold at wal-mart doubled, and she declines to give the precise figure, it is probably as this percentage is small. like 8% after being doubled ? (perhaps more, perhaps less, i dunno)

so when she says "we fell they've underreported for the xbox" shey says the truth, but she doesn't say that NPD underreported even more the GC or the PS2..

and while she says that "The report doesn't tell the whole story", eventually she doesn't tell the whole story either..

 

[Vince]

Pick a side of the fence and stick with it. Either declare Sony a liar now and call all of their numbers shit or realize the truth, that NPD underreports numbers by a rather significant margin.

Ha! Are you attempting to route me or something? This is pathetic; reflective of your arguments as of late.

All your 'points' have been adequatly covered by otheers - so, theirs really nothing to reply to. I'm just curious why you must make everything "Sony vs. MS" or "Nintendo vs. MS" or Me vs Him". When did I even mention Nintendo or Sony?

 

[BenSkywalker]

All your 'points' have been adequatly covered by otheers - so, theirs really nothing to reply to. I'm just curious why you must make everything "Sony vs. MS" or "Nintendo vs. MS" or Me vs Him". When did I even mention Nintendo or Sony?

This has nothing to do with anyone v anyone to me. I have stated numerous times that the numbers are off for all three players by the same margin. You have quoted Sony numerous times when they report their sold or shipped numbers, when have I questioned them? Either Sony's numbers 'reek of shit' along with MS or both of them are right. I'm saying Sony/MS/Nintendo are right when they post numbers. By what you have stated in this thread, you are stating that NPD is right which means that not only are MS and Nintendo are wrong, but also Sony.

Marco-

I agree with both of your points. I'm saying that this article has nothing to do with MS missing their own projections, as their projections were not mentioned and that NPD underreports for all platforms.

Magnum

so when she says "we fell they've underreported for the xbox" shey says the truth, but she doesn't say that NPD underreported even more the GC or the PS2..

I didn't get that she even implied that. If she had said something along those lines then I would be backeing the BS assertion.

 

[Logan Leonhart]

I´m not a business expert, but it´s only logical that if Ms´ numbers are underreported, Nintendo´s and Sony´s are also underreported, and probably moreso, since Walmart is a family oriented store, and PS2 is simply the most popular console anywhere.

 

[Vince]

Either Sony's numbers 'reek of shit' along with MS or both of them are right. I'm saying Sony/MS/Nintendo are right when they post numbers.

Ben, Sony doesn't use Walmart as an excuse - it's that simple. The guys predicted X number of consoles to be sold, they didn't do it. Instead, they're responce is that their "under-represented" and that Walmart is the answer.

This is bullshit, no matter who does it. XBox sales are down from this time last year - quite a departure from PS2s trend [same timeframe]. Ohh, I know what happened... Everyone shops at Walmart this year, my bad.

By what you have stated in this thread, you are stating that NPD is right which means that not only are MS and Nintendo are wrong, but also Sony.

I thought we talked about this in the other thread - stop extrapolating out things I've never stated.

I stated that this was bullshit and MS should just say that sales are lower than hoped for due to a depressed gaming sector. Nothing about NPD or the vendors being right or wrong...

How you can listen to such blatent PR speak thats so wrong and twisted and defend it is beyond me. Read the damn article man.

 

[BenSkywalker]

The guys predicted X number of consoles to be sold, they didn't do it. Instead, they're responce is that their "under-represented" and that Walmart is the answer.

It wasn't MS's projections that were off, it was the particular analyst that they spoke to(to quotew you-read the damn article man ). MS didn't state they would sell 700K units or any other particular amount. They stated that they sold more then what NPD reported, which is certainly the case.

So if an analyst projects Sony to sell six million units in the month of December and someone calls them up and asks why they only sold three million when they actually sold five, is Sony then guilty of some PR BS when they say they sold more then that?

Logan-

I´m not a business expert, but it´s only logical that if Ms´ numbers are underreported, Nintendo´s and Sony´s are also underreported, and probably moreso, since Walmart is a family oriented store, and PS2 is simply the most popular console anywhere.

I always extrapolate the same amount for each console based on NPD numbers(in other words, NPD does underreport for all the consoles). Saying which Wal-Mart sells more of depends on how you look at it. Based on typical perceptions- The PS2 appeals to casuals the most so it would have an advantage there- The GC appeals to a younger demographic so Nintendo has an advantage there- MS has appeals to the bargain hunters so they have an advantage there. I figure it all washes out in the end.

Legion-

Ben what do you think December sales will look like?

Very hard to say at this point. Looking at the overall sales for this holiday season it appears that we are looking at an early/late buying season(big boom Black Friday and the few days leading up to Christmas, soft in between) although it is possible that is will end up as it did in 2000 with the late surge in sales never happening(this is overall retail, not just games).

Given the overall state of the economy this year and consumer confidence I expect that they holiday sales for gaming overall will only be up ~15%-20% which is actually quite a bit off from last year. I'm a bit hesitant to put any firm numbers out, but I would expect that barring a very weak late December we should see sales rates 70%-100% higher then November's with run rates moving less then 10% for any of the platforms(I'd say 10% at the outside and very unlikely, more likely in the 5% range). Likely the relative standings should all remain relatively close to what they are now.

The NPD numbers could be hit harder this year as the slow economy could drive more people to the bargain chains to pick up their electronics gear. This is currently a wide spread trend with consumer electronics(going beyond gaming) as the bargain chains continue to take marketshare away from the specialty stores(it has gotten to the point where BB and CC have had their stock downgraded by many analysts). Less then stellar economic conditions could result in NPD underreporting by more then their usual margin if shoppers continue the trends they are already showing this holiday season. Hopefully we will see some year end numbers from the big three in early January to see exactly where they actually stand instead of trying to extrapolate based on NPD data.

No matter how it ends up, it certainly appears that all three consoles are plenty strong enough to finish off this generation. Both Nintendo and MS will be in the ~10Million range by the end of this year(likely between 10-15Million on a global basis although the Box may come up a bit short, I don't expect it to). Sony should be in the ~50Million range by the end of the year, giving us an installed base in the 70Million-80Million range for current gen consoles after just over two years. It took the last generation considerably longer to reach that level of penetration. Certainly a good sign for all involved(first, second and third party).

 

[wazoo]

No matter how it ends up, it certainly appears that all three consoles are plenty strong enough to finish off this generation. Both Nintendo and MS will be in the ~10Million range by the end of this year(likely between 10-15Million on a global basis although the Box may come up a bit short, I don't expect it to).

Can you explain me what do you mean by "global basis" ??

 

[BenSkywalker]

Can you explain me what do you mean by "global basis" ??

Total sales for all regions.

 

[Johnny Awesome]

Naturally I agree with Ben, because he's right.

Vince, why don't you stop mis-quoting know-nothing analysts? You're just making a fool of yourself. You're pretty naive if you think that Sony had only sold 11.3 millon PS2s at the end of September, as reported by NPD.

This certainly doesn't jibe with the fact that Sony had reported shipments of 11 million in Japan, 10 million in Europe, and 40 million world-wide. That's an aweful lot of PS2s in transit or in warehouses.

With my usual NPD data adjustment, Sony likely moved about 2 million PS2s in the US during November. Xbox and GCN sold roughly 702,000 units each.

Personally, I think December is going to be slow with numbers like this:

PS2 - 3 million
Xbox, GCN - 1.1 million each

That's put MS somewhere around 8 million on a global basis with Xbox. They only forecast 9-11 million by June 2003. There's really nothing to see here folks. MS is beating their own revised internal projections they made in June 2002.

Xbox and Gamecube are here to stay. PS2 lovers may as well get used to it. I still think Nintendo's going to have a rough time in US/EU until holiday 2003 due to lack of software, but it's just a personal opinion. After that they should be fine, with a $99 price tag and whatever Nintendo has cooked up for next Fall they'll do ok in the long run.

I also think that Sony has a rough 2004 ahead of it. Already, any multi-platform game that isn't a sequel to a well-known Playstation era franchise sells roughly 1/3rd to half as well on Xbox as it does on PS2. That's pretty good given the userbase advantage that Sony has. Hitman 2 and Time Splitters 2 are perfect examples of what I'm talking about.

The worst thing that could happen to Sony is that all the core PS2 owners go out and get an Xbox. This would really hurt multi-platform game sales on PS2. This is bound to happen more and more as the prices get lower.

 

[Vince]

It wasn't MS's projections that were off, it was the particular analyst that they spoke to(to quotew you-read the damn article man ). MS didn't state they would sell 700K units or any other particular amount. They stated that they sold more then what NPD reported, which is certainly the case.

Heh.. No, see, what I object to is the way in which MS PR twisted the numbers and sayed they're "under-represented". As Marco said, the analyst obviosuly understands how the numbers work and made a projection. MS missed, and instead of saying it was because - as the analysts himself stated (and I beleieve is the reason) - the market is just underpreforming on a whole, they gave a bad excuse.

The PR woman didn't give any exact numbers, just some shady 'around 2X' sales which tells us nothing and claimed to be "under-represented" as if they're the only ones.

So, is Walmart's '2X' going to put them above? What was Walmart selling at baseline? What precentage of sales of Xbox does Walmart compose? How did Walmart's '2X' sales compare to the increase for XBox across the industry? Did Walmart sales even affect this?

They game no hard numbers, as as such, we can't see or do anything but put a "Damage Control" logo on this and accept it. As any numbers you give aren't offficial and may or may not be true and unless it comes from MS's mouth (which, unlike you must account to the SEC) it's useless IMO.

Thats where I'm comming from - When an anylists will say, "Yeah, they missed because the marketplace sucks" and PR says, "It's because we're underrepresented" - I disrtress.

So if an analyst projects Sony to sell six million units in the month of December and someone calls them up and asks why they only sold three million when they actually sold five, is Sony then guilty of some PR BS when they say they sold more then that?

Ahh, not the 'roll'...

Actually, I'd hope the analyst would take sales like this into account as Marco said. It should be assumed really and if Sony missed by 1M or 3M, either way, they failed to hit their targets and should pay (as MS did that day) in share price and investor confidence.

Unlike, the all knowing Johnney Awesome - who thinks he's smarter than the Analysts (I'll laugh at that one later) - they get information and projections from the vendors. This is their job; SCE, MS, Nintendo all want to look good in the investors eyes and do what it takes to make these guys represent them well.

So, when something like this happens - hell yeah I listen. It's just too bad that Johnney doesn't use his ears as Mark Twain said... maybe he wouldn't look like such a fool 3 months down the road.

 

[marconelly!]

I also think that Sony has a rough 2004 ahead of it.

So now it's 2004? Oh, boy...

One year ago it was "2003 - the year of Xbox catching up with PS2!" Time to push it back I guess

The worst thing that could happen to Sony is that all the core PS2 owners go out and get an Xbox. This would really hurt multi-platform game sales on PS2.

Surely that would be the end of PS2 and it's horifying reign!

And just imagine what would happen if all the core PS2 owners would just suddenly die from some unknown disease! Or... or, if someene nukes the Sony headquarters! Now THAT would spell the certain doom to the future of PS2