Penance
07-06-2002, 02:55 AM
San Francisco, July 5 (Bloomberg) -- Sony Corp.'s sales of PlayStation 2 in North America more than doubled in May, outpacing sales of video-game machines made by rivals Microsoft Corp. and Nintendo Co., an industry report said.
Sony sold more than 520,000 of the machines in the U.S. and Canada, an increase of 315,200 from April, according to a report by NPD Group Inc. obtained by Bloomberg News. Sales of Microsoft's Xbox rose about 151,800 to 230,000. Nintendo sold 112,300 GameCube consoles, a gain of 30,300, according to the report, which is based on a survey of retailers.
All three video-game companies lowered the prices of their consoles in May, with Nintendo and Microsoft seeking to boost sales against PlayStation 2, the top-selling machine. Microsoft, whose sales of Xbox have fallen short of its forecasts, may lose more than $2 billion on the console by next June, said Brendan Barnicle, an analyst at Pacific Crest Securities.
``I don't think they are even going to break even on this one,'' said James Lin, an analyst who follows video-game software makers for Jefferies & Co. ``It's boot camp for Microsoft. They are going to learn as much as they can because the real battle will take place in the next cycle with PlayStation 3 and Xbox 2.''
Console makers aren't expected to begin releasing new machines before 2005.
Video-Game Sales
NPD spokesman Sean P. Dolan declined to comment on the data and the company didn't publicly release its report. The researcher compiles data on video-game sales and sells its reports to game and console makers, including Microsoft. Portions of the report were faxed to Bloomberg News by two video-game companies.
Microsoft spokeswoman Bridgitt Arnold declined to comment on the report.
Sales of video games and equipment totaled $9.4 billion in the U.S. last year, according to NPD, $1 billion more than consumers spent on tickets at movie theaters.
Microsoft lowered the price of the Xbox by $100 to $199, matching a cut the same week on PlayStation 2. Analysts say the Xbox costs more than $300 to produce because it contains a hard- disk drive and a built-in modem. Envisioneering Group, a market researcher and consultant, estimates that PlayStation 2 costs about $185 to build. Nintendo has said the GameCube costs $150 to make.
``The price cut is costing them more money, and I don't know how they will recover that, given that the price cut was only a blip on demand, not a permanent increase,'' Richard Doherty, research director at Envisioneering Group, said of Microsoft.
Redmond, Washington-based Microsoft's shares rose $2.38 to $54.85 today and have fallen 17 percent this year. Tokyo-based Sony's American depositary receipts rose $1.42 to $53.17. Nintendo, based in Kyoto, Japan, fell 190 yen to 16,600.
Price Reductions
Doherty surveyed retailers in the Northeastern U.S. and California. He said Xbox sales increased in the days after the price reduction, then returned to previous levels of about 3,000 to 5,000 consoles a week. Price cuts on Sony's PlayStation 2 and Nintendo's GameCube had a more lasting effect, he said.
Sony spokeswoman Monica Wik said PlayStation 2 sales haven't tapered off since the price cut. At an industry trade show in Los Angeles the week after the U.S. price reduction took effect, Kaz Hirai, the president of Sony's U.S. games unit, said PlayStation sales had risen as much as eightfold at some retailers.
PlayStation 2 went on sale more than a year before Xbox. It offers more than 500 game titles, about 10 times as many as can be played on the GameCube and Xbox combined. Lin of Jefferies & Co. expects sales of GameCube to accelerate this year when Nintendo releases ``Super Mario Sunshine'' and the latest edition of the ``Legend of Zelda'' series. GameCube is the lowest-price machine, retailing for about $150.
``It's not a console war at this point, it's a content war,'' Lin said.
Sales Expectations
Sony said it has shipped more than 30 million PlayStation 2 machines worldwide since they arrived in stores in March 2000 and expects sales to reach 50 million by the end of March. Microsoft in April said it expected to sell 3.5 million to 4 million Xbox machines in fiscal 2002, which ended last month, down from a prior forecast of as much as 6 million. The Xbox went on sale in November.
Nintendo had sold 3.8 million GameCubes by the end of March.
Microsoft plans to invest $2 billion over the next five years to improve Xbox, design a follow-up version and create a subscription-based service that will let users play games against each other on line. The world's biggest software maker is seeking to develop sales from products unrelated to the personal computer.
Microsoft is considering selling an Xbox that combines the ability to record and view television by using the machine's built- in hard-disk drive, said Doherty. That may increase costs by about $50 per Xbox.
``There's engineers looking at literally dozens of possibilities for the next phase of Xbox,'' said James Bernard, a spokesman for Microsoft. Bernard declined to comment on whether television recording is one of the features that may be added.
-Article. (http://search.bloomberg.com/fgcgi.cgi?T=marketsquote99_news.ht&s=APSX3dxTbU29ueSdz)
Thoughts?
Sony sold more than 520,000 of the machines in the U.S. and Canada, an increase of 315,200 from April, according to a report by NPD Group Inc. obtained by Bloomberg News. Sales of Microsoft's Xbox rose about 151,800 to 230,000. Nintendo sold 112,300 GameCube consoles, a gain of 30,300, according to the report, which is based on a survey of retailers.
All three video-game companies lowered the prices of their consoles in May, with Nintendo and Microsoft seeking to boost sales against PlayStation 2, the top-selling machine. Microsoft, whose sales of Xbox have fallen short of its forecasts, may lose more than $2 billion on the console by next June, said Brendan Barnicle, an analyst at Pacific Crest Securities.
``I don't think they are even going to break even on this one,'' said James Lin, an analyst who follows video-game software makers for Jefferies & Co. ``It's boot camp for Microsoft. They are going to learn as much as they can because the real battle will take place in the next cycle with PlayStation 3 and Xbox 2.''
Console makers aren't expected to begin releasing new machines before 2005.
Video-Game Sales
NPD spokesman Sean P. Dolan declined to comment on the data and the company didn't publicly release its report. The researcher compiles data on video-game sales and sells its reports to game and console makers, including Microsoft. Portions of the report were faxed to Bloomberg News by two video-game companies.
Microsoft spokeswoman Bridgitt Arnold declined to comment on the report.
Sales of video games and equipment totaled $9.4 billion in the U.S. last year, according to NPD, $1 billion more than consumers spent on tickets at movie theaters.
Microsoft lowered the price of the Xbox by $100 to $199, matching a cut the same week on PlayStation 2. Analysts say the Xbox costs more than $300 to produce because it contains a hard- disk drive and a built-in modem. Envisioneering Group, a market researcher and consultant, estimates that PlayStation 2 costs about $185 to build. Nintendo has said the GameCube costs $150 to make.
``The price cut is costing them more money, and I don't know how they will recover that, given that the price cut was only a blip on demand, not a permanent increase,'' Richard Doherty, research director at Envisioneering Group, said of Microsoft.
Redmond, Washington-based Microsoft's shares rose $2.38 to $54.85 today and have fallen 17 percent this year. Tokyo-based Sony's American depositary receipts rose $1.42 to $53.17. Nintendo, based in Kyoto, Japan, fell 190 yen to 16,600.
Price Reductions
Doherty surveyed retailers in the Northeastern U.S. and California. He said Xbox sales increased in the days after the price reduction, then returned to previous levels of about 3,000 to 5,000 consoles a week. Price cuts on Sony's PlayStation 2 and Nintendo's GameCube had a more lasting effect, he said.
Sony spokeswoman Monica Wik said PlayStation 2 sales haven't tapered off since the price cut. At an industry trade show in Los Angeles the week after the U.S. price reduction took effect, Kaz Hirai, the president of Sony's U.S. games unit, said PlayStation sales had risen as much as eightfold at some retailers.
PlayStation 2 went on sale more than a year before Xbox. It offers more than 500 game titles, about 10 times as many as can be played on the GameCube and Xbox combined. Lin of Jefferies & Co. expects sales of GameCube to accelerate this year when Nintendo releases ``Super Mario Sunshine'' and the latest edition of the ``Legend of Zelda'' series. GameCube is the lowest-price machine, retailing for about $150.
``It's not a console war at this point, it's a content war,'' Lin said.
Sales Expectations
Sony said it has shipped more than 30 million PlayStation 2 machines worldwide since they arrived in stores in March 2000 and expects sales to reach 50 million by the end of March. Microsoft in April said it expected to sell 3.5 million to 4 million Xbox machines in fiscal 2002, which ended last month, down from a prior forecast of as much as 6 million. The Xbox went on sale in November.
Nintendo had sold 3.8 million GameCubes by the end of March.
Microsoft plans to invest $2 billion over the next five years to improve Xbox, design a follow-up version and create a subscription-based service that will let users play games against each other on line. The world's biggest software maker is seeking to develop sales from products unrelated to the personal computer.
Microsoft is considering selling an Xbox that combines the ability to record and view television by using the machine's built- in hard-disk drive, said Doherty. That may increase costs by about $50 per Xbox.
``There's engineers looking at literally dozens of possibilities for the next phase of Xbox,'' said James Bernard, a spokesman for Microsoft. Bernard declined to comment on whether television recording is one of the features that may be added.
-Article. (http://search.bloomberg.com/fgcgi.cgi?T=marketsquote99_news.ht&s=APSX3dxTbU29ueSdz)
Thoughts?