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PS2 Vs. X-Box: Winner Emerging?
gripdamage writes "This article on
MSNBC says XBox's sales are slowing and are not expected to meet Microsoft's
expectations. MSNBC previously
reported that sales have been weak in Japan. The strongest and most
interesting assertion in the article is that "In its regular global video game survey last week, Goldman Sachs said U.S. retailers showed a
'surprisingly clear' preference for Sony Corp.'s PlayStation 2 over the Xbox."" X-Box isn't dead yet - not by a long shot.
What the heck does the RETAILERS opinions of the boxes have to do with things?
A retailer's relationship with a manufacturer/product can make a lot of difference between a product that sells well and one that doesn't. A good example of this is in grocery stores where the store brand gets preferential treatment -- better placement, more advertising, slightly lower cost -- over the name brand. I've even seen grocers put name-brand products in odd locations (for example, name-brand crackers in a completely different aisle from the rest) or just not carrying popular brands at all. If you shop at King Sooper's or Safeway (I forget which) in Denver, you can buy three generic brands of fig cookies, but you can't find Fig Newtons in the store at all.
If you are a retailer you decide things like how many units to carry, store placement, promotions and so forth. If a product is in high demand, there's not much a retailer can do to dissuade people -- but if a product (like the XBox) is trying to make inroads into an existing market with a popular front-runner (like the PS2) how retailers treat the product can make a lot of difference. Since Microsoft isn't selling the XBox direct to the public, they have to depend on retailers. (Having a direct outlet is a double-edged sword -- retailers tend to dislike companies selling their products directly, because they have an incentive to take sales away from the retailer (more profits) and can afford to sell the product cheaper than the retailers.)
If a product doesn't have decent margins or you don't have a good relationship with the vendor (or both) you can certainly understock the product and hope that people will go to the competition's product and kill the products you don't like. I'm not saying that's happening with the XBox, but if several large retailers like Best Buy decided to promote the PS2 more heavily it could certainly have a negative impact on XBox sales. (I doubt this is the case...their margins on the XBox can't be much lower than on the PS2, which has virtually no margin. Game titles are where they make their money, and I imagine the margins are about the same for XBox and PS2.)
Oh, and speaking as someone who used to work in retail -- I don't care for "oily salesmen" any more than you do. The things I looked for were decent margins, stock when I needed it, a good return policy for unsold inventory and decent terms (net 30 or better).
This is true, and I'm sure is has some effect on sales, but really it doesn't matter.
How many of Microsoft's first products have been losers?
Quite a few. Remember the first time you tried IE? Remember the first time you tried Windows? Remember the first NT server you had to admin? You always thought there had to be a better way.
Microsoft is notorious, IMHO, for releasing losers that don't do well initially. It is their endurance that keeps them up there. They have the resources and can keep throwing money at something till it becomes a decent project, while other companies would have said, "Well, we tried to get into this market, but it didn't work. Let's not waste even more of our money..."
Instead, Microsoft is determined to be a player, regardless of what it costs - for they know in the long run they will have a good product that will increase market share and make money. Once they get to that point, they want to control the market.
So, look beyond the X-Box and think about the future... The X-box may not be it, but you can guaran-damn-tee that it does not stop here for Microsoft.
Moon Macrosystems. Sun's biggest competitor.
Wow, the defeatist "Microsoft will win, they are amazing!" attitude is really rampant around here for a while.
OK, first off, the numbers don't support what you're saying - they support what I'm saying. Even in the US, the GameCube is selling better than the XBox (just barely 32K/week as opposed to 28K/week). In Japan, where the GC brought Nintendo back with a vengeance, the PS2 is selling 85K/week to GC's 34K/week (and keep in mind that the GC has been out LONGER, with a weak library of games), and the XBox is churning a measly 5K/week, only barely outselling the WonderSwan Color and the ORIGINAL Game Boy, and losing to the PS1 (7K/week). Hype for the Xbox is losing ground dramatically, and Microsoft doesn't seem to be turning it around. I mean, honestly - the article was about how the X-Box is dying! The GameCube doesn't have articles like that out for it (because, um, Nintendo's doing fine?)!
Second off, Microsoft's first party titles aren't that strong. They're okay. But they still have the stigma of "they'll go to PC". Even if Halo never goes to PC, they probably cost themselves several hundred thousand sales in both Halo and XBoxen just by suggesting it might. This is dangerous. Really dangerous.
And if you think they can buy EA and Square, not likely. They're rich, but not THAT rich. I dunno, I could be wrong - a better financial analyst could step in here - but EA and Square (which have a joint venture, recall) are pretty hefty companies, especially Square in Japan. I don't think they'd be that easy to buy.
Nintendo doesn't have anything to worry about at all. They're making really huge amounts of money, the GameCube is doing extremely well in Japan, in the US, and is generating a lot of hype in Europe (spaced releases are a good thing - they maintain Internet hype). The GBA is a phenomenal success, and Nintendo is even more of a behemoth in the handheld market than Microsoft is in the OS market.
Sony doesn't have anything to worry about as well. The mindshare is still theirs - XBox can't win with a few unique titles and ports - they need almost ALL unique titles (No PC! PCs are a competitor here!), and the ports need to be far and away better than the competition, which won't happen unless Microsoft does the ports themselves (companies try to do the least amount they can to port a game).
Nintendo's fine because their first party publishers are a helluva lot more prolific and successful than Microsoft, which is hit and miss (ooh, they've produced some crap). Nintendo also has a fair library of second party publishers, which Microsoft needs badly. Third party publishers only push a console from "secondary" to "primary" status. They just do good things for the industry in general, not consoles in general.
Huge megacorporations can't just intrude on other industries this easily. It takes time, and it's highly unlikely they will dominate the industry - after all, they'd need to do something far and away BETTER than the competition, which they AREN'T doing. They're doing things arguably worse, arguably equal. And in that sort of a situation, the incumbents (Sony & Nintendo) win.