MSFT: X-Box 360 Vs PS 3

3> X-Box 360 Vs PS 3: First let me state why this is important, gaming is the next battle ground. It has already taken over the movie industry and will be gaining in on the PC industry. In fact, gaming consoles will provide the link between PC and Home entertainment convergence.

With the PSP 3 delayed till Nov 2006, X-box 360 is in a great position to gain a market leadership position. This one year lead in console means more than the products sold in the time period. As all the top three consoles are similar in the features at a basic level, the key factor in console selection becomes the content (games) offered on the console. Now let me stake my neck out and put down how the things will play out.

With PS3 not in the market this summer, game developers along with marketers will focus on X-Box 360 system. With an expected 4.5-5 million installed base by summer, they have a great foundation to bank on.

Come November X-box 360 will stake out about 7-8 million install base. That means in the 2006 holiday season, X-Box for the first time have the gaming console leadership. And this in my opinion will shift the momentum towards the X-Box 360 System both in terms of consumers as well as content provider.

Over all, I think X-box 360 and PS-3 will end at parity in this generation of game consoles if Sony doesn’t screw up its holiday 2006 launch. This is an important point, Microsoft has already played its cards well (that’s debatable considering Holiday 2005 Chip shortage) and Sony has to play their cards correctly to gain parity.

Now to some minor tactical issues:

Sony may reduce the price of it’s PS2 to $99 this summer to stop the Xbox 360’s march. Sony has a much lower manufacturing cost compared to X-Box first generation. I don’t know the exact figure, but it is around $30-40. I don’t think it is very likely, as people buying 2nd generation and 3rd generation gaming consoles are totally different consumer segments. So, this will have small impact of probability of having a 7-8 million installed base before holidays though impact of X-box first generation sales will be huge.

Microsoft will release latest Halo game along with the Sony’s PS3 release. This again is a small tactical play. Though “Halo on X-box 360” advertising will give boost to X-box 360 visibility, I think people deciding to buy PS3 will already know that Halo will not be available on PS3 and have taken that into their decision making. Now this analysis assumes that people are rational and make rational choices. This is a whole another discussion on consumer psychology and irrational decision making.