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Is there anything Microsoft can do to accelerate demand for the 360 besides a price cut and the release of Halo 3?
I'm not sure a price cut will do it. I am beginning to think that A) there are fewer price-insensitive hard-core gamers than we all believed, B) high-definition matters, and over 70 percent of households don't have it yet, and C) people are conditioned to wait for price cuts. It's still early, so maybe December will surprise us.
The rule of thumb in the industry is that November hardware sales are generally twice those of October, and December's are usually twice those of November. Given how far Xbox 360's October numbers were below your estimates, why did you stick to your bullish predictions for November and December until earlier this month, once the November sales data was released?
Sort of the same answer as above. I really thought that next-gen hype would drive consumers to stores in November (it did), and that they would buy 360s (they didn't). Instead, they bought PS2s, DSs and PSPs.
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Numerous publishers, journalists and analysts have said that Microsoft will increase its market share this generation over the previous one. But the first 13 months of Xbox 360 sales have been much slower than you expected. Do you have any evidence that Microsoft is actually expanding its audience, or is it more likely that Microsoft is simply taking longer to reach the same audience--and the same ceiling--it reached with the original Xbox?
I think Microsoft will expand its market share over a longer time period. The next-generation consoles are a lot more expensive than the current generation at launch, and I think that there is some price elasticity of demand. It may turn out that this cycle develops far more slowly than we thought, while at the same time, the current gen declines more slowly.
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Is part of what analysts and industry observers may have overlooked, in making their Xbox 360 predictions, that the main purchasers are no longer parents buying consoles for their kids, but rather twentysomething and thirtysomething men with their own disposable income and brand loyalties?
During the year, the primary purchasers are the first-party consumers--the gamers themselves. At holiday, it is a third-party gift-giver. At these prices, there are fewer first-party purchasers and more third-party purchasers, suggesting a greater shift to holiday sales.
Because of the phenomenal success of PlayStation and PlayStation 2, it's safe to assume that Playstation 3 has started at a higher point on the demand curve than Xbox 360. But it's also started at a lower point on the supply curve than the 360, and it's $200 more expensive than its main rival. Are you predicting the PS3's sales growth to be faster, slower or identical to the Xbox 360's?
I think PS3 sales will be similar to the 360 (around 200,000 a month in summer), primarily due to the price point and light lineup. Also, the PS3 has two other competing consoles, so it is unlikely that it will be far ahead.
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