User:Raptime21

Competition and Competitive Advantages

Sony Playstation 3 competes with 2 major gaming devices in the video game market currently. These include Xbox 360 and Nintendo Wii. Nintendo Wii, owned by Nintendo, was released in November, 2006 and is the only console with a sensored remote which makes gaming interactive, as opposed to simple controllers. Disadvantages of the Wii compared to other consoles is their lack of graphics and non DVD playback. Xbox 360 was released by Microsoft in November, 2005. Positives of the Xbox 360 is its plethora of gaming titles it owns, its graphics quality, and its CD and DVD playback compatibility. However, to enter Xbox’s online network (Xbox Live) there is a fee. Playstation 3, owned by Sony, was released in November 2006 and rivals the high quality graphics of the Xbox 360, contains a huge library of games, and is wireless and free for online gaming. It also is the only gaming console with rights to the Blu-Ray playback as well as CD and DVD playback as well.

Market Sales

Sales for the three consoles has been very competitive from 2005 (when the first of the three market competitors was sold publically) to now. In November 2005 until the first half of 2007, Xbox 360 was the market leader (selling to mainly the Americas and Europe) despite having production problems at the time it was sold publically due to the amount of Xbox 360's that were produced were less than the consumer demand. This initially slowed sales but they were still the market leader. The Playstation 3 was released in November 2006, however when the PS3 was initially released, it was produced at a production cost of about $805.85 and priced to consumers at $499.00, resulting in operating losses of about $1.97 billion by March 2007. This made profit losses for Sony, and the high price of the console contributed to the competitive disadvantage of it compared to the Xbox 360 and Wii. In the first half of 2007, the Wii (selling to mainly Japan and the Americas) sold more consoles in the U.S. than Xbox 360 and Playstation 3 combined, thus making the Wii the dominant competitor in the market. But in October 2007 when Halo 3 (game) was launched, Xbox 360 sales doubled compared to October 2006 sales. More people wanted to enter the Xbox 360 network because of this game. Sales for September 2007 of the Xbox 360 were 528,000 and 501,000 for the Wii. During this time, production costs for the Sony Playstation 3 decreased as a result of eliminating the Emotion Engine chip and hardware cost decreases, and by the end of 2008 the Playstation 3 was profitable. Playstation 3 was able to be much more competitive than it was before the high production costs. In early 2008, sales were declining for the Xbox 360 so they started selling Xbox 360 consoles below cost in order to gain market saturation and increase profits on the peripherals and software because of the higher profit margin on those. Xbox live users increased substantially during this time. From May to June 2008, Xbox 360 was the market leader with the most sales of any console. By November 2008, the Wii sold 13.4 million consoles worldwide, which was twice that of Playstation 3 units sold and 2 million more than Xbox 360. However in 2009, Wii sales fell by 47% from that of 2008 because of price reductions in Xbox 360 and Sony’s future plans of creating a motion-sensing wireless controller. By mid 2009, the cost of producing Playstation 3 consoles had fallen to 70% that of it in 2006, which is about $240 per console, thus increasing profits for Sony. However by the end of 2009, Wii cut the price of their console and came out with the software release of New Super Mario Bros. Wii and increased sales in December 2009 in the U.S. to more than 3 million, taking Wii out of their slump. To give an overall look at sales since the console's release, Xbox 360 has sold more than 41.7 million units since 2005, Wii has sold 73.97 million units since 2006, and PS3 has sold 38.1 million consoles since 2006.

References:

"Consolidated Financial Highlights" (PDF). Nintendo. 2010-07-29. p. 9. http://www.nintendo.co.jp/ir/pdf/2010/100729e.pdf#page9. July 30, 2010.

Kenji Hall (2009-05-07). "Has Nintendo Peaked?". BusinessWeek (McGraw-Hill). http://www.businessweek.com/globalbiz/content/may2009/gb2009057_844946.htm. Nov 29, 2009.

James Orry (2010-07-23). "41.7 million Xbox 360s shipped life to date". VideoGamer.com. http://www.videogamer.com/news/41_7_million_xbox_360s_shipped_life_to_date.html. Aug 1, 2010.

Mattice, Bradley (2007-10-19). "Bragging Rights: Microsoft's Xbox finally outsells the Wii". Fortune Magazine. http://techland.blogs.fortune.cnn.com/2007/10/19/game-on-xbox-outsells-the-wii/. Jul 26, 2008.

"PlayStation®3 Worldwide Hardware Unit Sales". SCEI. http://www.scei.co.jp/corporate/data/bizdataps3_sale_e.html. July 29, 2010.

Eaton, Jeremy. "Xbox Versus Playstation 3 Versus the Nintendo Wii and Which is Better." Associated Content. http://www.associatedcontent.com/article/2231853/xbox_versus_playstation_3_versus_the_pg2.html?cat=9. Oct 1, 2009.