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Analyst: April NPD Highlights Need For Console Price Drop

Examining the recently released U.S. hardware and software sales figures, EEDAR analyst Jesse Divnich has said falling PS3 and Xbox 360 sales highlights the need for price drops, an
Examining the recently released U.S. hardware and software sales figures, EEDAR analyst Jesse Divnich has said falling PS3 and Xbox 360 sales highlights the need for price drops, and declared Sony's GTA sales a comparative victory in light of former multiplatform releases. As noted in the recent NPD results, the Xbox 360 version of GTA IV sold at a ration of 1.85:1 versus its PlayStation 3 counterpart, but, said Divnich, "As reference, the last two big multi-platform titles were Rainbow Six Vegas 2 and Army of Two, which had sales ratios of 4.38 to 1 and 2.70 to 1 in favor of the Xbox 360, respectively." "Given that, it is likely that Sony can claim a small victory in the GTA IV war," he continued, "despite the low hardware sales that both sides faced. Sony and many analysts have suggested that the PS3 would gain market share after the release of GTA IV as many loyal PS2 owners would make their next- generation purchase in April for the GTA IV release. "Unfortunately," he concluded, "this may not be exactly true and instead it could be that many of those loyal PS2 owners have already made the jump in prior months in anticipation for the GTA IV release." Looking at this month's hardware numbers, Divnich pointed out that this month was the first time Xbox 360 sales have dropped below 200,000, which he notes, "ended up resulting in an Xbox 360 price drop the following month (August 2007)." "It wouldn't be wrong to assume that Microsoft might follow a similar strategy as last year given that the Xbox 360 has dropped below the 50,000 units a week sold threshold mark," though he concedes Wedbush Morgan analyst Michael Pachter's point that the price drop could have been "a reactive response by Microsoft due to their 'red ring of death' issue in addition to low sales. "Last month I stated that it is likely that both the PS3 and the Xbox 360 have saturated their market potential at their current price points," he continued. "April's results only reinforces that theory. Of course, it might be a little too soon to speculate that we can expect a price drop in the coming weeks or additional hardware SKUs (An Xbox 360 with Blu-Ray capability) in the coming month, but if May's hardware sales drop below the 50,000 units sold a week threshold, we can definitely expect something in terms of a change in strategy from both Microsoft and Sony." "The question remains, is Nintendo's large lead mostly due to price or due to uniqueness of the console? Likely it is a combination of both and given this huge gap in sales," Divnich concluded. "Microsoft and Sony should not necessarily pursue a pricing and promotion strategy to beat out each other, but rather pursue one that could tap into the same target markets that Nintendo is clearly dominating."

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