Nintendo don’t crow about 600,000 Wiis: Microsoft is talking price wars
Last week was very telling time for the video console industry in the US, with Nintendo making a concerted effort to make sure its new Wii video console made a big impact. And it did. But even as Nintendo congratulates itself on a job well done, Microsoft is already talking about price wars.
Despite good initial sales, the Wii still has a long way to go
Nintendo reported that it sold more than 600,000 units in the space of eight days, along with 454,000 copies of The Legend of Zelda: Twilight Princess, representing more than 75 percent of all hardware purchasers.
It looks like Nintendo of America’s president Reggie Fils-Aime’s prediction that the company would sell 1 million Wii consoles in the three weeks after its launch is well on track to coming true. The Wii at US$250 is the cheapest next-generation console on the market at the moment. Sony’s PS3 costs $499 for the 60GB hard disk model, while Microsoft’s Xbox 360 costs US$299.
“Even with sales already in excess of 600,000 units, demand continues to exceed supply, as it’s clear this is one of the ‘gotta-have’ products for the holiday season,” said Fils-Aime.
“We’ve shipped retailers several times the amount of hardware the other company (ie Sony) was able to deliver for its launch around the same time — and we still sold out. Given the inclusive nature of Wii game play, we’re seeing this new form of video gaming is already a huge hit with gamers and newcomers alike. It continues to be a phenomenal launch.”
Of course, it’s important to put these numbers in perspective. With Sony’s well-publicized problems supplying stock of the PS3 to the US market and managing to ship less than half of its original target of 400,000 units, it’s clear that Wii has a significant advantage in terms of market share. However, if you take the Xbox 360 into account, which was launched a year ago, and which has sold more than 7 million units worldwide, you quickly realize that both the Wii and PS3 have some catching up to do.
Having said that, the next question is whether Microsoft has made enough of its year-long grace period, and whether the several million extra units that it has out in the marketplace is enough to keep it clear of the pack. Microsoft’s former Vice President of the Entertainment and Devices Division, Peter Moore originally predicted that the company would sell 10 million units in the first 16 months. It seems that Microsoft is well on the way to achieving this goal. And certainly there are enough Xbox 360s out there to ensure developer support, and to ensure that consumers have a good range of games to choose from and don’t have to worry about being caught with a semi-supported orphan (don’t laugh, it has happened before — Sega Saturn anyone?).
So where does all of that leave the console manufacturers? Well, if you listen to what Robbie Back, Microsoft’s current President of Entertainment and Devices at Microsoft told the San Jose Mercury News, Microsoft is in a position to rmake life really difficult for Sony and Nintendo:
“Because we were out there first, we have a bigger installed base of consoles,” he said. ”We can drive down the manufacturing curve sooner and faster. And because we designed a box that was fundamentally easier to manage on costs, we’re going to have that advantage.”
Back also made the observation that what’s important over the life cycle of a console is “who has the cost advantage, who can price most effectively?”
So while it’s good news that Wii may have won an early battle (though MSN did issue a questionable report that Xbox was actually the biggest selling console this past Thanksgiving weekend), both Sony and Nintendo still have a long way to go, particularly with a competitor as big and as ugly as Microsoft.
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November 28th, 2006
The “Legend of Zelda: Twilight Princess” game is simply dominating the market. They’ve kept all of us dedicated “Zelda” fans waiting for what feels like forever. I do think that they could have came up with a better name though…
November 28th, 2006
I seem to recall Gamecube having a massive cost/price advantage last gen and being more powerful than the PS2. I also seem to recall Dreamcast being cheaper than PS2 by a good clip.
It’s not all about price.
November 28th, 2006
I think it is good to keep in mind that while yes Microsoft has 7 million units sold and Nintendo has well over 600,000, and this is not a small difference… Microsoft took far more time to get their first million sold than Nintendo is taking. To put this into perspective, Microsoft launched last year on November 22 and by December 31 of 2005 they sold about 900,000 units in the U.S. At Nintendo’s current rate the Wii will sell more units in the U.S. in its first 3 weeks than Microsoft sold in it’s first 6. This is an astounding fact, and Japan is launching this weekend which I’m sure will really make Nintendo’s numbers make Microsoft’s first month numbers look like piddle. (Not sure if Microsoft has even sold 1 million in Japan to this date and I bet Nintendo will get there by years end.)
My basic point is that if Nintendo can maintain this momentum (and with games like Mario Galaxy, Smash Brothers, Big Brain Acadmey, Metroid, and WarioWare due out throughout the year next year I think they can), Nintendo won’t have a hard time “catching up” to Microsoft’s numbers.
As to the thought of a price war.. I laughed at that… Microsoft has the ability to start a price war with Sony, Nintendo already started it. Guess what, Microsoft is still losing money on their system, Nintendo is making money on theirs, do you really think that a Price War will break Nintendo’s console division? Hell they dropped the Gamecube to $100 2 years ago, this system is just slightly better than that… I bet they could easily get down to $150 tomorrow if they dropped Wii Sports and were willing to take a $50 loss on the console (where Microsoft is currently losing more than $50 on their “cough” $399 *cough* console)
November 28th, 2006
I’m glad someone mentioned that price doesn’t matter. A more expensive console won the last two “wars,” and before that the Sega Genesis lost despite a TWO year lead.
For all the spin, the XBox 360 is performing poorly. Its merely matching the originals performance to this point (the original got beat by the PS2 4 times over, and just barely edged the profitable Gamecube,) and only very recently has the hardware started making a profit- though the division as a whole is still in the red. As a whole, I think the total losses of the line are around 6 billion dollars. For a 30 billion dollar company like Nintendo or a 40 billion dollar company like Sony, this would be an epic disaster. For a 200 billion dollar company, I guess its a “growth market.”
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