The real numbers and logical forecasts.
======================================
TOTAL SALES TO DATE:
360 (nov2005-now) - 28 million (9.0m per year average)
PS3 (nov2006-now) - 20 million (9.7m per year average)
Here we see a very tight race with the 360 currently leading total sales from what appears to be the extra year it had on the market (as the PS3 annual rate of sales is actually beating the 360 despite maintaining a higher shelf price).
Since before the console even launched, so-called media “analysts” have been predicting an early death for the PS3. The opposite occurred, the trend shifted to the PS3 outpacing the 360. Looking forward from here, the 360 will continue to sell well until a PS3 price cut by summer 2009, which is an overdue matter that we expected but did not get this winter. This will moderate trends once again.
While sales for the PS3 weren’t as good as the 360 this holiday, they were impressive considering the lack of a cut, almost 400k units moved. The 360 sold 800k, but it has a 1/2 the shelf price at the moment. Sony's cut happened earlier in the year while Microsoft's happened more recently. In the end, 2008 sales of the PS3 grew by 60% over 2007 and many months in 2008 saw the PS3 outselling the 360. This is a huge turnaround.
Consider the below sales stats from those fighting for the same demographic last generation as the 360 and PS3 are today. You will see that predictions of the PS3’s early demise are ridiculous, the xbox1 and gamecube performed far worse at lower price points and did not die premature deaths.
PS2 (mar2000-now) - 140 million (15.6m per year average)
XBOX1 (mar2001-2006) - 24 million (4.8m per year average)
Gamecube (sep2001-2006) – 22 million (4.4m per year average)
An elaboration for why the analysts were wrong the first time.
================================================================
We all know that price is not the same as value. Price is what you pay, value is what you get for the price, and the PS3 offers an undeniable cost savings for those interested in its all or most of its features. Analysts flat out ignored or missed the cost disparity between a PS3 and a similarly configured 360.
Let’s look at the cost increase from base ($200) to upgrade a 360 arcade to PS3 equivalence in a four year ownership model.
1. Four years of netplay (+$200).
2. Blu-ray stand-alone (+$200).
3. 60gb proprietary hard drive expansion (+$100)
4. Wireless network adapter (+$100)
Keep in mind that even if these upgrades are all made to the 360, there are still irresolvable shortcomings. There is no way for the 360 to use blu-ray for games, so its disc durability and disc drive noise is naturally quite a bit worse. The 360 also has what could be considered design flaws. First is the tray-based disc drive, which has plagued the system with disc-scratching problems. Also, the earlier models were not sufficiently cooled and have a 30% failure rate, though warranty changes now relegate that one to an annoyance.
But let’s pretend that the above upgrades produce a PS3 equivalent in terms of features. Adding the above comes out to a whopping $800 total cost. That’s 2x the cost of the PS3.
This analysis should make it obvious why PS3 sales are as strong as they are despite the shelf price. Because most of the consumers who are decent at math and want the above four things would not be caught dead spending $800 when they can get them for $400. Analysts missed it, and sadly, a lot of consumers missed it. It's just an embarrassing blip, and instead of owning up to the mistake, analysts are jumping on the latest sales numbers for another opportunity at redemption.
The 360 might appear a better value to casual gamers who have only a mild interest in certain upgrades, or find it easier to pay smaller installments over time. For those who do care about most or all features, it is vastly overpriced compared to the PS3, and this was the demographic that analysts underappreciated by the millions when making their critical error. We need to also realize that it would be incorrect to assert that all who buy an Arcade do so with the intention of not buying upgrades and achieving the aforementioned value. That fails to happen with frequency, many consumers are oblivious to the nickle-dime strategy. Sucking people in with a low product price only to hit them with overpriced upgrades, service fees, or extended warranty that they may not have been aware of is called “nickle-diming.” It is an incredibly effective and popular technique, so much so that it has become the norm for many products like printers. Microsoft has thus far used it to perfection and taken very little flak for it, as analysts and consumers normally fixate on shelf prices, naturally lowest on any product using the nickle-dime strategy.
EDIT: Updated numbers to most recent figures.
======================================
TOTAL SALES TO DATE:
360 (nov2005-now) - 28 million (9.0m per year average)
PS3 (nov2006-now) - 20 million (9.7m per year average)
Here we see a very tight race with the 360 currently leading total sales from what appears to be the extra year it had on the market (as the PS3 annual rate of sales is actually beating the 360 despite maintaining a higher shelf price).
Since before the console even launched, so-called media “analysts” have been predicting an early death for the PS3. The opposite occurred, the trend shifted to the PS3 outpacing the 360. Looking forward from here, the 360 will continue to sell well until a PS3 price cut by summer 2009, which is an overdue matter that we expected but did not get this winter. This will moderate trends once again.
While sales for the PS3 weren’t as good as the 360 this holiday, they were impressive considering the lack of a cut, almost 400k units moved. The 360 sold 800k, but it has a 1/2 the shelf price at the moment. Sony's cut happened earlier in the year while Microsoft's happened more recently. In the end, 2008 sales of the PS3 grew by 60% over 2007 and many months in 2008 saw the PS3 outselling the 360. This is a huge turnaround.
Consider the below sales stats from those fighting for the same demographic last generation as the 360 and PS3 are today. You will see that predictions of the PS3’s early demise are ridiculous, the xbox1 and gamecube performed far worse at lower price points and did not die premature deaths.
PS2 (mar2000-now) - 140 million (15.6m per year average)
XBOX1 (mar2001-2006) - 24 million (4.8m per year average)
Gamecube (sep2001-2006) – 22 million (4.4m per year average)
An elaboration for why the analysts were wrong the first time.
================================================================
We all know that price is not the same as value. Price is what you pay, value is what you get for the price, and the PS3 offers an undeniable cost savings for those interested in its all or most of its features. Analysts flat out ignored or missed the cost disparity between a PS3 and a similarly configured 360.
Let’s look at the cost increase from base ($200) to upgrade a 360 arcade to PS3 equivalence in a four year ownership model.
1. Four years of netplay (+$200).
2. Blu-ray stand-alone (+$200).
3. 60gb proprietary hard drive expansion (+$100)
4. Wireless network adapter (+$100)
Keep in mind that even if these upgrades are all made to the 360, there are still irresolvable shortcomings. There is no way for the 360 to use blu-ray for games, so its disc durability and disc drive noise is naturally quite a bit worse. The 360 also has what could be considered design flaws. First is the tray-based disc drive, which has plagued the system with disc-scratching problems. Also, the earlier models were not sufficiently cooled and have a 30% failure rate, though warranty changes now relegate that one to an annoyance.
But let’s pretend that the above upgrades produce a PS3 equivalent in terms of features. Adding the above comes out to a whopping $800 total cost. That’s 2x the cost of the PS3.
This analysis should make it obvious why PS3 sales are as strong as they are despite the shelf price. Because most of the consumers who are decent at math and want the above four things would not be caught dead spending $800 when they can get them for $400. Analysts missed it, and sadly, a lot of consumers missed it. It's just an embarrassing blip, and instead of owning up to the mistake, analysts are jumping on the latest sales numbers for another opportunity at redemption.
The 360 might appear a better value to casual gamers who have only a mild interest in certain upgrades, or find it easier to pay smaller installments over time. For those who do care about most or all features, it is vastly overpriced compared to the PS3, and this was the demographic that analysts underappreciated by the millions when making their critical error. We need to also realize that it would be incorrect to assert that all who buy an Arcade do so with the intention of not buying upgrades and achieving the aforementioned value. That fails to happen with frequency, many consumers are oblivious to the nickle-dime strategy. Sucking people in with a low product price only to hit them with overpriced upgrades, service fees, or extended warranty that they may not have been aware of is called “nickle-diming.” It is an incredibly effective and popular technique, so much so that it has become the norm for many products like printers. Microsoft has thus far used it to perfection and taken very little flak for it, as analysts and consumers normally fixate on shelf prices, naturally lowest on any product using the nickle-dime strategy.
EDIT: Updated numbers to most recent figures.
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.
in' things.
