As has been the case all year long, Nintendos Wii and NDS took the historically busy month of December. Continuing the momentum generated by Microsofts September price drop, Xbox 360 turned in a solid performance with modest gains over 2007. Sonys platforms, on the other hand, had a tough month, as each of them posed smaller totals than December 2007.
NoE recently announced 2008 sales numbers for NDS and Wii in Europe, and similarly to US returns, both platforms had record years. Wii sales for the year totaled over 8.3 million units, making it the largest year for a home console in Europe ever. Not to be outdone, NDS sold 11.2 million units during 2008, making it the largest year for any console in European history. The LTD (lifetime to date) sales of Wii and NDS in Europe are 14.2 million and 31 million units respectively.
The most impressive aspect of Nintendos success thus far is that they have left themselves with a number of ways to maintain (and perhaps further propel) consumer demand in the future. On the NDS side of things, the hardware remains at $129.99 its original launch price. While the most logical means of maintaining demand would be for Nintendo to drop the price of the handheld as warranted, it looks like the company might go in a different direction. The DSi, an NDS hardware refresh that was released in Japan during Fall 2008, is rumored to release in North America in April this year at $179.
Nintendo has managed Wiis success in a similar manner. Its current MSRP ($249) is the same as its launch price, and with each unit reportedly being sold at a handsome profit, Nintendo will have no problems dropping the price as demand wanes. Further, it has been customary in past generations for Nintendo to periodically release their consoles in new colors and with unique designs, but they have yet to find a reason to reach into this bag of tricks with Wii. Expect to see new colors at some point in 2009.
Whichever way you slice it, Nintendo is sitting pretty on the success of Wii and NDS. They have this generation wrapped up from a numbers perspective, and it will be interesting to see how the company leverages their current dominance throughout the next few years and into their next product releases.
Microsoft continues to ride the wave of momentum generated from their September price cuts. Sales have continued to climb, and though their November and December 2008 results are only marginally better than their 2007 returns, you wont hear them complaining in the face of Nintendos sales monsoon and a shaky economy.
Still, theres definitely something to be said for the fact that 360 was not able to more prominently outpace last years totals for November and December. The console is significantly cheaper than it was last year, and while its hard to compare 2007s and 2008s respective lineups from an objective basis, 2008s slate, at the least, had some heavy hitters. I think the economy might be pointed to as some means of explanation, but its worth noting that Wii showed a marked improvement over 2007 (and might have done better had there been a more robust supply) despite any issues with the economy. Thats not to say that Microsoft should be concerned with their returns, but Ill be interested to see how the next few months unfold.
Microsofts success is more apparent in contrast to Sonys lagging sales. As in November, all of Sonys platforms saw a year over year decrease in sales in December not exactly the positive trend that the company was no doubt hoping for. Still, its not as if this decrease in sales has been unexpected. Especially in the face of Microsofts price drop, it was clear in September that there was little Sony could do this year to reverse the stagnation.
Dont expect the situation to improve for Sony in the short term. As I mentioned in last months analysis, the PS3s Blu-ray capability is no longer a compelling part of the consoles feature set since there are now a number of players retailing for ~$150. Further, it seems as if Sony is in no hurry to drop the price Dan Reeves of SCEE recently commented, The most important thing for us as a company in the very short term is for us to start making money.
Thats not to say that the game is over completely. With the manufacturing costs of PS3 dropping consistently, it wont be long before Sony does start making a slight profit on unit sales. The only question is whether or not that milestone will immediately spur a price drop (as Wedbush Morgan Securities analyst Michael Pachter thinks will happen). I cant imagine that Sony can afford (ironic?) to wait for too long for a price slash of some kind, but it will be interesting to see what happens.
