Xbox 360 versus PS3

This holiday season brings two new gaming consoles to market: Sony's PS3 and Nintendo's Wii. These join Microsoft's Xbox 360 as the new generation of consoles. Nintendo's product is really targetted at a different audience than the PS3 the Xbox 360 so I won't discuss it. Sony has dominated the console world for years with its PlayStation line. Will that continue with the new generation of consoles?

I don't think so. One obvious reason is price. PS3's, when you can find them, are running at $600 and up, versus about $400 for a 360. If the machine offered significantly more than the 360, the price differential could be justified. But it doesn't offer more. Sure, its controller is motion sensitive whereas the 360's is not. But is that really worth $200 (or more given the shortages of the PS3)?

The big reason, though, is simply that they are joining the fight a year late. The 360 came out a year ago. Most gaming enthusiasts who have eagerly awaited the next generation machines have already bought one, the 360. If they have a 360, why buy a PS3? If they haven't already bought one, they will buy one this year. And guess which one is in stock in stores, and at lower prices? The 360.

The old Xbox was always far behind the PS2 in market share, primarily because it came out a couple years after the PS2, and there was little reason to shell out the money for another console, particularly one that offered little if anything beyond what they already had. With this generation Microsoft has turned the tables, beating the PS3 by a full year.

Furthermore, because the 360 has been out for so long already, it has a larger stable of games ready for it than the PS3 has.

You can already see this playing out in the marketplace. CNET reports November console sales with the 360 selling about 2.5 times as many machines as the PS3. One could argue that the PS3 wasn't out for the full month, so sales will obviously lag. True, but the Wii was only out for part of the month as well and it sold nearly as many units as the 360. Those half million sales for the 360 are a half million customers the majority of whom have now bought their next generation console and won't be looking to buy another until the next generation comes around. They are customers largely lost to Sony.

Another reason Sony will never catch up is stupid marketing ploys. When the 360 came out last year, Microsoft under supplied the market which created shortages, which in turn created buzz for the new machine. Sony appears to have seen that and is trying the same ploy. They too under supplied the market. One of the reasons only 200,000 units moved in November is that that's all they bothered to send out to retailers. They certainly got their wish for lots of publicity and news coverage of crowds clamoring for the product. Of course, they also sent a message to parents looking to buy a machine for little Johnny this Christmas that they shouldn't even bother looking for a PS3 and that they should just go ahead and get the in-stock 360. This is demonstrated by the declining online demand for the PS3 after its launch, the only console to show a decline in interest. As written in Joystiq,

However, the data could show the dangers of trying to utilize a product's scarcity to drive demand. A hard to find product can drive the desire to have it, but make the product too difficult to find and people will just give up; which makes the competition -- who has ready supplies -- very happy.

Shipping only 200k units at launch for the holiday season was pretty stupid.