PS3 Will ‘Soon Pass the Xbox 360 For Good,’ proclaims Analyst

Recently, IndustryGamers revealed that in just six months Sony managed to shave off another 1.4 million units from Microsoft’s global installed base lead with Xbox 360. As it stands now, the gap between PS3 and 360 is around 3 million units, despite the fact that Xbox 360 hit the market a full year before Sony’s console. So the question has to be asked: Did Microsoft squander their lead?

We asked a few of the prominent games industry analysts that very question. DFC Intelligence’s David Cole noted that Xbox 360 simply lacks diversity – it focuses almost too much on shooters – and Microsoft probably should have targeted the European market a bit more heavily.

“We have been forecasting for the past 3 years that the PS3 would catch up to the 360 by 2011.  I think the big issue is that the 360 has been primarily the platform for FPS games and has lacked the diversity to appeal to a broader international market…mainly Japan and Europe where Sony is very strong.  The Xbox 360 was just much stronger in North America than it was globally,” he said. “The main issue I think is Sony (and also Nintendo) being so strong in Europe and Japan.  I think in terms of doing things differently they should probably have focused more on Europe and just given up on Japan. They would have had a better chance in Europe.”

Cole doesn’t see Kinect necessarily being enough to stave off the Sony attack either. “Going forward I don’t know if there is much they can do.  They will try with the Kinect but I don’t see that working.  I think the PS3 will soon pass the 360 for good,” he said.

Of the analysts we contacted, Cole was definitely the least optimistic for Microsoft. Other analysts chose to put things in a broader perspective, reminding us that Microsoft is still fairly new to video games compared to Nintendo and Sony and they should be commended for their accomplishments thus far.

“We do not believe Microsoft has in some way squandered a first to market advantage; particularly when you consider how most game pundits back in the day expected Sony to dominate the next generation,” said Janco Partners’ Mike Hickey, who’s clearly a bigger believer in Kinect than Cole. “Perhaps more important is where we go from here, with no meaningful console introduction in the medium term; we believe Microsoft’s Kinect system is the most identifiable organic installed base accelerator (aside from continued price cuts and/or aggressive promotional bundling), which will likely extend their global lead over Sony’s PS3 console.”

EEDAR’s Jesse Divnich sees things similarly to Hickey. “Nothing went wrong. The achievements of the Xbox 360 are incredible,” he stressed. “It went from fighting for a distant second place last generation to now being considered one of the healthiest platforms to develop for. The PlayStation 2 outsold the Xbox nearly 7 to 1 in Europe and nearly 40 to 1 in Japan.  In 2010, PlayStation 3 is outselling the Xbox 360 a tad over 1 to 1 in Europe and only about 10 to 1 in Japan. For a company that entered the video game space late, going up against two competitors with decades of loyal gamers, Microsoft should be proud of their accomplishments. Any faults to point out would simply be nitpicking.”

Wedbush Morgan analyst Michael Pachter was essentially in agreement as well, noting – unlike Cole – that Microsoft might even be able to remain in second place.

“What did people expect?  They have a huge advantage in Japan, have been roughly equal in Europe and pretty far behind in the U.S.  It is only a matter of time before the lead in Japan erodes the lead in the U.S. I would NOT say that anything has gone ‘wrong.’  At the beginning of the cycle, I thought PS3 would win because of greater loyalty in Europe and a stacked deck in Japan.  Nintendo surprised me greatly with their phenomenal sales, and after a year or two, I said that I thought Sony would still finish second due to the Japanese advantage.  I now think that with Kinect and a pricing advantage, Microsoft might hold them off, and I certainly don’t think that Microsoft has done anything wrong at all,” Pachter commented.

What do you think? Should Microsoft have made better use of the Xbox 360’s first year? Could things have been done differently so that the lead would be bigger now?