NikkoCitigroup: Nintendo's Wii champ in Japan, Xbox 360 global winner

Posted by: Kenji Hall on August 18, 2006

Nintendo’s Wii and Sony’s PlayStation 3 are still months away from launch, but these days every analyst seems to be weighing in with a prediction of the winner. Consider NikkoCitigroup’s. The brokerage’s video game industry analyst, Soichiro Fukuda, now thinks the Xbox 360 will be the overall champ among the next-gen consoles. Previously, he’d seen it as a closer call between the Xbox 360 and the PS 3. The reason: Sony’s decision to price the PS 3 way out of reach of most ordinary folks. Through spring 2012, Fukuda puts sales of the Xbox 360 at 71.5 million units (43.9%), PS 3 at 46.5 million units (28.5%) and Wii at 45 million units (27.6%).

But Fukuda is hardly the authority, and others have very different views on the three-way battle. The Yankee Group recently has picked Sony as the favorite, while DFC Intelligence’s David Cole has predicted that Sony’s PS 3 will flop because of its high price.

There’s really no way to know which machine will come out tops until game developers offer more details on the titles they’ll publish. But pricing on the PS 3 has apparently spooked some developers, and that could be bad news for Sony.

With his prediction, Fukuda has implied that a console maker(ie. Xbox 360) doesn't need to succeed in Japan to be No. 1 in game machines globally. And in Japan, at least, the winner will be the Wii, Fukuda says. He thinks the Wii's affordability will persuade many non-gamers in the PlayStation camp to defect. He also speculates that Nintendo may try to tap into its broad base of DS owners by letting them use their handhelds as a controller for the Wii, thus adding another cool feature to the living-room console.

Nintendo hasn't released pricing details, but is expected to do so in the next few weeks. By NikkoCitigroup's own reckoning, the Wii's low-priced, prehistoric processing chip will allow Nintendo to sell the console for 19,800 yen, instead of 25,000 yen (and in the U.S. at $179 instead of $199). That would be less than half the suggested retail price of the PS 3 (62,790 yen including tax) and about 15,000 less than Microsoft's Xbox 360. A lot of analysts are focusing on price as a determining factor and--since I'm among those in the market for a new console--I'm inclined to agree.

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