PS3 Launch Outsells Xbox 360 Launch?*

[RobertR1]

There is a market for both types of products. Nintendo is doing their own thing while MS and Sony are doing theirs.

It's wrong to conclude that MS and Sony are donig something wrong because Nintendo is doing something right.

The market is based off price levels. Nintendo is going after the mass consumer without any competition due to their price level where as Sony and MS are fighting amongst themselves for a niche market until their prices drop to a certain level.

Think of it like this (premium consoles only):
@599 you can cater to 5 million potential buyers
@499 = 10 million
@399 = 20
@299 = 40
@199 = 80

Using that baseline, MS and Sony can keep fighting but until they'll never hit that extra 40+million sitting around at their current price range. Nintendo is not only taking the enthusiast gamer who get a Wii along with a 360/PS3 but also going right at that range that MS and Sony have priced themselves out of. Ofcourse, both sides will eventually drop their price but by that time, Nintendo will have had saturated the market and ensured that their console has sold regardless of what the other two are doing. Let's not forget, the Wii is not a subsizied unit so they just made a profit on about 3.4+ million units and counting? How long before MS and Sony can make that claim?

One could even argue that 30million Wii's sold, along with the games/accessories attach rates for each console, could be more profitable than 50million 360's or 60million PS3's over the course of their lifespan.

 

[RobertR1]

On the other hand, someone who just bought an Enzo would not be worried about spending money on fuel. While a Kia driver is likely on a tight budget.

And based on www.fueleconomy.gov:
Ferrari Enzo: City 8, Highway 12, Annual Fuel Cost: $4250
Kia Rio: City 29, Highway 38, Annual Fuel Cost $1094

And those numbers are based on the premise that you are going to be putting the same piss into your Ferrari as your Kia. Which of course no sane person would do - you're going to buy the expensive premium stuff for the Ferrari.

So all things considered, you could still make a good bit of money just selling fuel to that one Enzo owner. It's not going to be the same margins, but a business model based on fule for th high end stuff is certainly viable. There is room for both products.

It all sounds great until you run the actual numbers and you see that volume, not price of vehicle or consumption, is king:


400 Enzo's at 650k = 260,000,000
Number of fully spec'd Kia Rio's at 16,000 to hit the same total = 16,250

Amount of money spent by all Enzo's on fuel anually = 1,700,000
Amount of money spend by all Kia's on fuel anually = 17,777,500

Ofcourse we're assuming that the Enzo driver actually drives his car for 15,000 miles a year. Just to cover the premium deltas we can even use the $4250 to offset the low miles per year the car will have but the numbers are clear. Volume wins.

 

[PatrickL]

On the other hand, someone who just bought an Enzo would not be worried about spending money on fuel. While a Kia driver is likely on a tight budget.

And based on www.fueleconomy.gov:
Ferrari Enzo: City 8, Highway 12, Annual Fuel Cost: $4250
Kia Rio: City 29, Highway 38, Annual Fuel Cost $1094

And those numbers are based on the premise that you are going to be putting the same piss into your Ferrari as your Kia. Which of course no sane person would do - you're going to buy the expensive premium stuff for the Ferrari.

So all things considered, you could still make a good bit of money just selling fuel to that one Enzo owner. It's not going to be the same margins, but a business model based on fule for th high end stuff is certainly viable. There is room for both products.

Sure but now add to your equation the fact that you will likely see 500 kias for one Enzo, do the math now

 

[Acert93]

On the other hand, someone who just bought an Enzo would not be worried about spending money on fuel. While a Kia driver is likely on a tight budget.

You are missing the point... trees for forests... blah blah blah.

Back to the PS3, if you reread my points, you will see that consumer stratisfication doesn't mean ONLY poor people buy Wiis. That is a MAJOR assumption. Further, based on the prices of Xbox 360's on ebay last year, people were willing to spend some serious cash on them.

Ultimately the bottom line is: Sony, just like MS and Nintendo, will need to hit as many consumer entry levels as possible. And the more they hit, the more units they ship. And the more units they ship the more potential game sales they will have.

But that is the future. For right now getting an install base of consumers buying games is important. Downplaying the Wiis sales success by noting PS3 consumers spent nearly as much money on hardware only emphasizes the fact that -- ignoring supply limitations... again! -- that the lower cost console was able to sell more units and create a larger consumer base for potential sales.

Not that any of that matters because the launch was STILL supply limited.

But I think anyone with an open mind would agree that demand for Wii is MUCH higher -- and that is even after outselling the PS3 this fall. Personally I think Wii demand will wane over time, but the idea that PS3 owners spent the same amount of cash to get fewer units isn't a consolation because the reality is there is a limited amount of money, especially when looking at a market with 150M consumers. Less than 5% of those are willing to spend $500 on a console.

Ps- on the car example. Take the 20 Kias and the 1 Enzo. Lets say the Enzo uses 10k gallons of fuel in a year and each kia only uses 5k gallons. The Kias still purchase 10x as much fuel.

 

[London Geezer]

Oh for Christ's sake, after years and years of experience posting on forums, you guys still don't understand that CARS ARE CARS. CONSOLES ARE CONSOLES. Comparing consoles and console markets to cars or the car market NEVER works. And threads get derailed, and become discussions about someone thinks that "it's like a Fiat 500 and a Ford Fiesta", and someone else thinks "it's actually a bit like a Lamborghini Diablo and a Lancia Delta"... They're different things, completely different markets, prices, value, use, EVERYTHING about cars and consoles is different!

 

[Rolf N]

You picked out a few special cases out of thousands. Did you notice what the large majority of them were going for?

You're wrong. I picked out every single PS3 sale on Ebay between 14:40 and 14:50 because those were the ten minutes directly preceeding me making a search on Ebay.com for ended PS3 auctions.

So what do you think? PS3 barely above retail prices two days after launch sensible statement to make yes/no.

That's an exaggeration.

Thank you.

From what I saw, and I occasionally check - just out of curiosity, what happened was the bottom completely dropped out of the PS3 ebay market about 1 week before Xmas. The 4 digit prices was just for a couple of days (pre and launch day).

Yup.

 

[Acert93]

Oh for Christ's sake, after years and years of experience posting on forums, you guys still don't understand that CARS ARE CARS. CONSOLES ARE CONSOLES. Comparing consoles and console markets to cars or the car market NEVER works. And threads get derailed, and become discussions about someone thinks that "it's like a Fiat 500 and a Ford Fiesta", and someone else thinks "it's actually a bit like a Lamborghini Diablo and a Lancia Delta"... They're different things, completely different markets, prices, value, use, EVERYTHING about cars and consoles is different!

The problem is some people don't understand consoles, so we use something everyone has seen at some point in their life. But you know, there are probably posters here who have never, you know, had to buy fuel (as they cannot drive!) so maybe cars are not a good example

The concepts of supply limited, market segments and average discretionary spending, average attach rates, and unit sales (instead of total spent) are pretty straight forward. If they have to be explained with analogies, I guess we already lose! Robert explained it well, and ultimately the same people spending $400 for a 360 or $500 for a PS3 are also buying Wiis. Its not magical that only poor people buy Wiis, or that by spending $400 on a 360 you magically buy more stuff for the 360. There is a finite amount of cash people have.

 

[tongue_of_colicab]

Ofcourse we're assuming that the Enzo driver actually drives his car for 15,000 miles a year. Just to cover the premium deltas we can even use the $4250 to offset the low miles per year the car will have but the numbers are clear. Volume wins.

hehe that one guy wich crashed his targetop Enzo had the Enzo with the second most milage on it and he didnt even had 15.000 miles on it. Ofcourse you'd rather sell fuel to the Kia because it will probably do about as much miles in 1 year as 99% of the enzo's do in their whole life.

 

[inefficient]

Oh for Christ's sake, after years and years of experience posting on forums, you guys still don't understand that CARS ARE CARS. CONSOLES ARE CONSOLES. Comparing consoles and console markets to cars or the car market NEVER works. And threads get derailed, and become discussions about someone thinks that "it's like a Fiat 500 and a Ford Fiesta", and someone else thinks "it's actually a bit like a Lamborghini Diablo and a Lancia Delta"... They're different things, completely different markets, prices, value, use, EVERYTHING about cars and consoles is different!

I agree

The point was that Wii's success does not mean PS3 is a failure. They both meet different objectives. And not just that there is a valid reason for both but both are financially viable.

 

[Nesh]

I agree

The point was that Wii's success does not mean PS3 is a failure. They both meet different objectives. And not just that there is a valid reason for both but both are financially viable.

exactly. people seem to fail to understand these. Or probably they dont want to

 

[Tap In]

I agree

The point was that Wii's success does not mean PS3 is a failure.

I agree.

I also believe however, that the Wii's success, is an example that price is King. If Sony can not reach that mass market price in a reasonable time frame, it COULD be a big problem.

 

[London Geezer]

I agree.

I also believe however, that the Wii's success, is an example that price is King. If Sony can not reach that mass market price in a reasonable time frame, it COULD be a big problem.

That's a bit contraddicting. The second part of your statement is not necessarily a cause of the first. To be clearer, price is king only within a certain range. Within that range (and personally i think Sony is a bit outside that range now), price is not king at all, as was shown when PS2 at one point kept being more expensive than both Xbox and GC, but kept selling many times more.

So, price is king... sometimes.

 

[scooby_dooby]

Oh for Christ's sake, after years and years of experience posting on forums, you guys still don't understand that CARS ARE CARS. CONSOLES ARE CONSOLES. Comparing consoles and console markets to cars or the car market NEVER works. And threads get derailed, and become discussions about someone thinks that "it's like a Fiat 500 and a Ford Fiesta", and someone else thinks "it's actually a bit like a Lamborghini Diablo and a Lancia Delta"... They're different things, completely different markets, prices, value, use, EVERYTHING about cars and consoles is different!

Hey now, that was the first car analogy I've seen that actually applied to the discussion at hand! Imressive feat Acert!

 

[Tap In]

That's a bit contraddicting. The second part of your statement is not necessarily a cause of the first. To be clearer, price is king only within a certain range. Within that range (and personally i think Sony is a bit outside that range now), price is not king at all, as was shown when PS2 at one point kept being more expensive than both Xbox and GC, but kept selling many times more.

So, price is king... sometimes.

good catch, I was too brief for my own good. to expand....

features + mind share + software + hardware + services + *in the sweetspot Price-RANGE* is King.

So if Sony can not get their package in the mass market Price-range in a reasonable time frame, it COULD be a problem since the competition will now be able to offer some (all?) of those other +'s within that price range.

 

[Tap In]

Hey now, that was the first car analogy I've seen that actually applied to the discussion at hand! Imressive feat Acert!

I agree... the Vessel/fuel analogy was a good one indeed and made perfect sense to me. :smile:

 

[dobwal]

Oh for Christ's sake, after years and years of experience posting on forums, you guys still don't understand that CARS ARE CARS. CONSOLES ARE CONSOLES. Comparing consoles and console markets to cars or the car market NEVER works. And threads get derailed, and become discussions about someone thinks that "it's like a Fiat 500 and a Ford Fiesta", and someone else thinks "it's actually a bit like a Lamborghini Diablo and a Lancia Delta"... They're different things, completely different markets, prices, value, use, EVERYTHING about cars and consoles is different!

I agree. Paralleling the PS3 vs. Wii to Kia vs. Enzo is wrong on so many levels.

"Let me think do I want a Kia or a Enzo?". You are looking at a thought that most likely has never happened. "Let me think do I want a Wii or Ps3". Its reasonable to believe that this thought has occurred and will occur pretty regularly in the future.

Both the PS3 and Wii are destined to be mainstream products. While the Enzo will barely budged off that 1 million mark and even with 500,000 miles and 10 yrs of ownership will never reach the Kia price level.

 

[Natoma]

Another way to look at this is on the amount of money consumers shelled out to for each platform. Just using vgcharts numbers (For simplicity let's assume 20GB and 60GB SKUs were an even split):
4mil units * $250 = $1Bil USD
1.41 units * ~$550 = $0.77Bil USD

Considering the price of a PS3, the numbers are impressive. The Wii attracted only 22% more dollars than the PS3. I think it's fair to look at it this way since the products are priced very differently and are functionally completely different products as well. This is the same reason why comparing bicycle sales numbers with motorcycle sales volumes directly is not usualy very relevant.

If you compared the PS3 launch with the PS2 launch based on dollars the market was willing to spend, it is very impressive.

You forget that Nintendo is making around $10 per console and Sony is losing upwards of, I think, $200 per console.

Not only that, but the Wii has higher attach rates, which means that publishers are making a hell of a lot more money with those sold consoles and with the PS3.

 

[scooby_dooby]

The point was that Wii's success does not mean PS3 is a failure. They both meet different objectives. And not just that there is a valid reason for both but both are financially viable.

Nobody said PS3 was a failure (since it's still supply contsrained DUH!), so that particular point was not necessary.

Acert's point is that, from a game publishers POV, they don't really care what the initial cost of the systems are, because in general they can make the most money off the system with the most units. Regardless of the initial cost.

Rationalizing low sales because of higher pricepoints is a little pointless, of course it's true that a console with a higher price will be harder to sell, but in then end, that doesn't matter.

Of course this discussion is really moot, as PS3 sold every unit they made, so all this talk about pricepoints is silly. They could've been priced at $99, or $1000 and would've probably sold the exact same amount of units.

 

[Natoma]

Guys, can we drop that site already, together with nexgenwars? Microsoft's and Sony's CES announcements should make it clear to everyone just what a fraud both sites are...
(at least for current gen sales)

How so? AFAIK MS and Sony are posting shipped #s while vgcharts is posting actual sales.

 

[Shifty Geezer]

"Let me think do I want a Kia or a Enzo?". You are looking at a thought that most likely has never happened. "Let me think do I want a Wii or Ps3". Its reasonable to believe that this thought has occurred and will occur pretty regularly in the future.

I think that's debateable. If all a person wants is games, perhaps. But I expect, at least if Sony do their marketting right, a lot of people will want the multi-functionality of PS3 at which point Wii isn't an option that'd be considered.

What's really needed are more duck analogies. Or other varied wildfowl. There's some rep going for anyone who can come up with a good one