Xbox Sales Up, Microsoft Sees Market Share Gain

[Deepak]

Link

Xbox Sales Up, Microsoft Sees Market Share Gain
Thu Jul 17, 7:55 PM ET Add Technology - Reuters to My Yahoo!

By Ben Berkowitz

LOS ANGELES (Reuters) - Microsoft Corp. sold more Xbox (news - web sites) video game consoles in the June-ended quarter than it had first expected, though a price cut midway through the quarter played only a small part, an executive said on Thursday.

While not breaking out the console's specific sales in the quarter, Microsoft said its Home and Entertainment division, which is primarily the Xbox operations, saw revenue rise 8 percent in the fiscal fourth quarter.

In an interview with Reuters after Microsoft's quarterly earnings, Robbie Bach, the company's "chief Xbox officer," said the Xbox was gaining market share in the United States and Europe.

"Certainly the price cut probably had some effect, though I think most people would tell you the effect has been pretty modest," Bach said.

The sudden decision in mid-May to cut the Xbox's price to $179 from $199 came after chief rival Sony Corp (NYSE:SNE - news) (news - web sites). cut the price of its market-leading PlayStation 2 (news - web sites) console to $179 from $199.

Xbox remains a distant second behind PS2. Through May, according to data from NPDFunworld, the PS2 had a U.S. installed base of 17.7 million units.

The console market has largely become a two-horse race for share, with Nintendo (news - web sites) Co. Ltd.'s GameCube underperforming all expectations and lagging behind the Xbox and PS2 in most markets.

Since the November 2001 launch of Xbox, Microsoft said it has sold 9.4 million units worldwide, and by June 2004 it said it expects that number to rise to between 14.5 million and 16 million units. The total units sold during fiscal 2003 was 5.5 million.

The majority of the installed base to date, 6.2 million units, is in North America, with 2.2 million in Europe, the Middle East and Africa, and 1 million in the Asia-Pacific region, which is primarily the Japanese market . The Xbox, by Microsoft's own admission, has struggled in Japan.

"We're making progress from an organizational perspective" in Japan, Bach said. "The share numbers haven't really moved one way or another."

Xbox Live, Microsoft's online gaming service, finished the year with about 500,000 subscribers, the company said, with expectations it will reach 1 million by next summer.

The attach rate, or average number of games sold per console, stood at about 5.4:1 in the United States and 5:1 globally as of June 30, Microsoft said.

In the past, weak Xbox sales have actually been good for Microsoft's bottom line, since the company loses an amount believed to be $75 or more on each Xbox it sells.

Bach said Microsoft's focus now is on more-lucrative game sales. The heavily anticipated "Halo 2" is expected next spring, and a sequel to the successful "Project Gotham Racing" is set for this fall.

"We're in the phase of the console cycle where it's about the games," he said. (Additional reporting by Reed Stevenson in Seattle)

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The article is a bit vague. They do not quote the % increase in sales (consoles and games).
Just see the bold text, are they sure they sold 1m units in Asia-pacific considering how badly it did in Japan?

 

[Cyborg]

Yet they're 3 months behind nintendo with that 9.4M report. They also had the upper hand in the last yearly fiscal report with 3.9M vs 3.8M units. So if xbox's growth is faster than last year, nintendo is even faster than them worldwide.

 

[Grall]

I'm pretty sure XB is being outsold by far still by PSOne. It's only fairly recently it has passed DC and Wonderswan (systems that basically became extinct years ago).

Not sure that is anything M$ should brag about though... "Bwaahaha, we passed a dead handheld and a dead console, bwaaahaha, we're gaining on the competition!"...... Hmmm. No. Better just be quiet about it I guess!


*G*

 

[Qroach]

Nintendo has also used "shipped" as sold in the past. I seem to remember the first E3 after cube and xbox launched where nintendo stated they had sold more in the U.S> that MS, and that was clearly not true.

 

[Fafalada]

The catch up begins!

I thought they just missed their projection by 2.6M...
Oh, you mean catch up to their own numbers begins? 8)

 

[zurich]

I think PSOne console shipments are long dead (like in Japan).. there's no way that its outselling anything, however software is another matter.

 

[Goldni]

Man oh man that article is really deceptive. What "2 horse race" are they referring to? It show aint MS vs Sony like they tried to make it sound like. It's a "two horse race" between Nintendo and MS for second place. God forbid they mention Nintendo's numbers from E3 stating 9.55m as of March. Hmmm that sounds like more than 9.44m as of June to me. See below.

 

[nonamer]

I've read loads of information on the GA forums about how GC is actually outselling the Xbox, but that leaves me one nagging question: Where does that 9.55 shipped GC in March come from? I know it comes from Nintendo but where did they get it? None of the other sales data actually backs it up. AFAIK, the GC has sold to the consumer about 2.5M in Japan, 1.5-1.7M in Europe, and about 4-4.5M in the US now. As of Feb., it was actually 3.8M according to NPD I believe. http://www.planetgamecube.com/forums/messageview.cfm?catid=3&threadid=2082

Okay here comes the fuzzy math: Assuming they have a million unsold GC's, that adds up to 3.8 + 1.7-1.5 + 2.5 + 1 = 8.8-9.0. Could they have sold over 550k (give or take a few since my math is fuzzy ) GC in just 1 month? The only real solution in my mind is that there are about 1.5M GC's held by the stores but not shipped at that time. Confusing really (and to myself too). My guess is while GC has shipped more units, it looks like the Xbox is a lot closer when it comes to sell to the consumer, since I guess that the Xbox has about 5.5M sold to the consumer in the US, 2M in Europe, and about .8 in Asia for about 8.3M, for about 1.1 M in unsold Xboxes, whereas the GC is somewhere over 7.8M and probably around the lower 8 millions by now, but with more unsold stuff. It's all too vague to make good guesses, and frankly I really can't say who's really in the lead, and that article could be better with the numbers (I think I've heard contradiction articles, needs to be looked into though). Quite confusing.

PS: Goldni, I like that graph, really professional.

 

[wazoo]

PS: Goldni, I like that graph, really professional.

Talking about shipped vs sold is useless, because you will never get the true info worldwide. Both consoles are at almost at the same level, under diffeent conditions. Nintendo has a profitable business and is seen as a failure by the analysts, MS is losing lots of $ and is considered to be a success, which says a lot about the power of perception and PR.

 

[marconelly!]

Nintendo has also used "shipped" as sold in the past.

And so does Microsoft. For them, 'sold' means 'sold to retail', not 'sold to consumers'. At least that's how it's been so far in their reports.

Right now, Nintendo probably has ~500K units lead worldwide.

I think PSOne console shipments are long dead (like in Japan).. there's no way that its outselling anything, however software is another matter.

You would be surprised. In some of the months last year, PSOne sales have been higher than either GC or Xbox. You can check in those TRST reports, I know I was quite surprised.

 

[Qroach]

And so does Microsoft. For them, 'sold' means 'sold to retail', not 'sold to consumers'. At least that's how it's been so far in their reports.

No they haven't. MS has been quoting numbers from NPD primarily.

 

[cybamerc]

No they haven't. MS has been quoting numbers from NPD primarily.

Not in their fiscal reports.

 

[Geeforcer]

So right now we have a situation where MS and Nintendo are about on par - in fact everyone has trouble determining who is ahead, hence discussions like this. With that in mind, how can there be a talk of "two-horse race" when worldwide sales for numbers 2 and 3 (whoever they actually are) are indistinguishable?

"Car A has a top speed of 150-155MPH. Car B has a top speed of 130-136 MPH. Car C has a top speed of 130-135MPH. Clearly, its a two-car race between A and B!"