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Analyst Reveals October U.S. Console Sales - iPod Touch 'Cannibalizing' Handhelds?

Wedbush analyst Michael Pachter breaks out October's U.S. console sales figures, examining why Wii and PS3 struggled while Xbox 360 grew -- and suggesting iPod Touch is "cannibalizing" handheld hardware.
Analysts describe October's U.S. console retail results as a "mixed bag," with software outperforming expectations to 6 percent growth -- but a severe 26 percent hardware revenue plunge weighing on the results overall. Now, more details on individual title and console performance are emerging from analysts, who've received new numbers from the NPD Group not included in the original results released yesterday. According to Wedbush's Michael Pachter, it was the contraction in handheld unit sales, down 34 percent, that helped created a significant drain on the hardware market -- although unit sales of Xbox 360, PlayStation 3 and Wii were together down 25 percent year over year. "We believe the iPod Touch is cannibalizing dedicated game handheld hardware sales, and expect weakness in handhelds to persist until the 2011 introduction of the Nintendo 3DS," suggests Pachter. However, a USA Today report says Nintendo claims "more than 342,000 units sold" for its DS, a number that would indicate the device led other platforms. At 232,000 consoles sold, Wii unit sales fell a sharp 54 percent in the United States: "The Wii continues to struggle due to gamer fatigue and a lack of high-profile releases," the analyst noted. However, neither the 160 GB model's release and Move's September launch could stir PlayStation 3 sales enough to help them make the tough comparison to last year, which saw the long-awaited release of the price-cut, slimlined PS3 in September. PlayStation 3 sales fell 22 percent year over year to 250,000 units. As Microsoft announced yesterday, Xbox 360 unit sales were the lone grower -- Microsoft's console saw a 30 percent boost to 325,000, and was the top-selling non-handheld console. Fable III, Halo Reach and continuing momentum from August's slimlined hardware launch are continuing to drive demand for the Xbox 360, says Pachter. For Sony Computer Entertainment of America, it's software momentum on which the company's currently focused. "PlayStation 3 software sales were incredibly strong in October and PS3 was the only platform that had growth in the software over September, to the tune of nearly 50 percent," says SCEA corporate communcations director Patrick Seybold. "With next week's launch of the industry's most anticipated title, Gran Turismo 5, we're sure to carry the momentum through the holidays." Seybold also said the Move bundle saw a 15 percent sales increase in October over its September launch month, and suggests that "strong consumer demand" is making it a challenge to keep up retail inventory.

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