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The race for supremacy in the games market is now well and truly on with all contenders now on the track and running. But what is critical is stock. Nintendo and Microsoft have it while Sony is hardly in the race.
Retailers selling all three consoles will not let a consumer walk aout the door without making a purchase. They will sell what they have in stock and if there is any hint that a consumer cannot afford the over priced Sony PS3 they will push them into another gaming console.
While stock of the PS3 is scratchy and the chance of consumers scoring one slim Sony does say that more stock will be available but this may not be good enough if consumers take to the Nintendo Wii.
Nintendo introduced the Wii video-game console in the U.S this weekend. It is due in Australia on the 7th of December 2006. What Nintendo is betting on is that the company can exploit shortages of PlayStation 3 to win sales from Sony.
Wii goes on sale today in 15,000 U.S. stores priced at $250, ($395.00) in Australia. This is about half the cost of Sony’s PlayStation 3. Supplies of PlayStation 3, released in the U.S. two days ago, have been limited by production snags with Sony insiders now saying that it could be 6 months before Australia sees the console.
Nintendo, loser of the last console war, avoided costly features and built a cordless controller that swings like a bat to increase its share in the $20 billion video-game market. Nintendo plans to ship 4 million machines worldwide by the end of the year, twice as many as Sony, which dominated the previous generation of video-game players.
It is an opportunity for us,'' said George Harrison, senior vice president of marketing at Nintendo of America, in an interview. Sony's shortagescreates a window for us.”
PlayStation 3 sold out in minutes after buyers lined up at stores for days. Supplies will be limited for several weeks, predicted Josh Martin, an analyst at Boston-based Yankee Group. Sony hasn’t determined whether it reached its U.S. launch target of 400,000 units, spokeswoman Kim Otzman said on Nov. 17.
Fewer people will have to wait in line for Wii, Harrison said. Stores sold as much as 75 percent of their allotment through pre-orders, so consumers can walk in and pick them up.
U.S. Focus
Wii’s U.S. debut will be followed in Japan on Dec. 2 and in Europe Dec. 6. Sony released PlayStation
Advertising will target adults in an attempt to go beyond the children and teens that have been Nintendo’s traditional market, Harrison said.
Half of Kyoto, Japan-based Nintendo’s initial shipments will go to the U.S., Reggie Fils-Aime, President of Nintendo of America, said in an interview. There were quite a significant number'' of machines at stores, he said without elaborating. </FONT></P><P><FONT ="3"> </FONT><FONT ="3">As stockpiles sell out, Nintendo will replenish them at a rate of <st1_metricconverter ProductID="250,000 a" w_st="on">250,000 a week, he said. </P><DIV class=NFBreak contentEditable=false style=page-break-before:always> </DIV><P></FONT></P><P><FONT ="3"> </FONT><FONT ="3">Retailers are telling us that they have four, five six times the amount of Wii product for every one PS 3 that’s in stores so our supply chain is working well,” Fils-Aime said.
PlayStation 3 sells for $499 and $599 in the U.S. Sony has said it plans to sell 2 million units worldwide by the end of the year. Microsoft Corp. has sold 6 million units of its Xbox 360 since its introduction a year ago. The console sells for $299 and $399.
Profitable Console
Wii, while less expensive than its rivals, costs less to produce and will be close to breakeven at launch, Harrison said. Each copy will make a profit in 2007, he said.
Sony will lose at least $307 on the $599 PlayStation models, according to an analysis of costs by researcher iSuppli Corp. Redmond, Washington-based Microsoft, the world’s biggest software maker, also lost money in Xbox’s launch. ISuppli hasn’t done a breakdown of Wii’s costs, spokesman Jon Cassell said.
The strategy of Sony and Microsoft is part of a larger corporate strategy to achieve other corporate goals'' including controlling a range of entertainment content, Harrison said.Nintendo’s a video-game company. That’s our only business.”
PlayStation 3 includes a Blu-ray disc player that can show high-definition movies. Microsoft, which supports a rival high- definition video format, began selling an HD DVD player this month for $200. Both players can be connected to online networks for additional game play, e-mail and shopping. The Wii doesn’t have a high-definition players or an online feature.
PlayStation Demand
With Wii, Nintendo tried to develop a system that was easy to play and added the controller to attract people who don’t typically play, Harrison said.
Nintendo shares have gained 16 percent in the past three months on investor optimism the Wii will do better than its predecessor, the Game Cube, which was outsold by PlayStation 2 9-to-1 worldwide.
Nintendo is expanding the market'' by bringing in older customers, Brian Farrell, chief executive Officer of video-game publisher THQ, said in an interview. He called the competition between the console makers avery fair fight.”
Nintendo shares were unchanged at 26,000 yen in Osaka on Nov. 17 and have gained 82 percent this year. Sony gained 60 yen to 4,770 yen in Tokyo and has slipped 1 percent this year. Microsoft shares fell 7 cents to $29.40 in Nasdaq Stock Market composite trading and have gained 12 percent this year.
Once production reaches full swing, PlayStation 3 will become the top-selling console in 2007, according to analysts including David Mercer at research group Strategy Analytics Inc. in Milton Keynes, England.
Next year, Sony will sell 9 million units of PlayStation
There's a huge bent-up demand for the PlayStation 3,'' Mercer said.PlayStation is such a strong franchise.”
