Nintendo Sells 600,000 Wiis

Posted by jgaudiosi :: Industry Trends

Wii_2Nintendo has sold 600,000 Wiis in its first eight days in North America, according to the Japanese game giant. Nintendo's next generation console has become a $190 million business in North America. Nintendo's new "Legend of Zelda: Twilight Princess" has already sold 454,000 units in North America, which means 75 percent of Wii buyers also picked up that title. This is in stark contrast to Sony's PlayStation 3, which retails for $500 and $600, compared to Nintendo's $250 console. Sony shipped less than 175,000 PS3s at launch and has yet to resupply store shelves, although the company has said it will replenish supplies and is still on target to meet its 1 million PS3s shipped by the end of this year in North America. That's a claim many analysts and insiders don't believe will come true when all is said and done by January 1.

Microsoft's Robbie Bach, who heads up the Xbox 360 and Entertainment Divisions for the company, recently told the San Jose Mercury News that a price war is coming next year for next generation consoles. Aside from Nintendo, which is the most affordable of the new consoles, but doesn't feature high definition gaming or movie playback, Microsoft is in the driver's seat when it comes to price.

Xbox 360, which costs Microsoft $323 to produce, has room to maneuver with its $400 price point. Hardware has come down since the $525 it cost to make the machine last year at launch. On the flip side, Sony loses an estimated $300 with every PS3 it sells because of the internal components, which include a Blue-ray Disc drive. Nintendo is believed to be making a profit even with its $250 Wii, because it has gone the route of gaming-only device and its infrastructure is not as costly as either Sony's or Microsoft's.

Bach said Microsoft chose not to lower the hardware price of Xbox 360 this year because of Sony's pricing and the anticipated shortages of the launch. Microsoft experienced similar shortages last year with Xbox 360. However, for 2007, I expect Microsoft to reduce the price of its box, and possibly kill the Core system, which is useless to anyone who wants to use Xbox Live Marketplace. Nintendo is also in a position to lower its Wii pricing. Sony will likely reduce the PS3 price at some point, once it has enough in stock to satiate the early adopters. But it will clearly be playing catch-up to the competition in that department.

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