Hardware Race and Projections

As of May 2008, over 10.19 million Wii systems have been sold in the U.S., a milestone that Microsoft's Xbox 360 also passed during the same month. As of this writing, the Nintendo Wii probably has the largest installed base of the current generation of consoles, just ahead of the Xbox 360. The PlayStation 3 is significantly further behind at 4.45 million systems. Given current trends, the Nintendo Wii should have a lead of at least 400,000 systems by the end of June 2008.

The following figure shows just how rapid Nintendo's rise to the top has been.



In previous months we have used a linear model to show how each console's installed base may grow in the coming months. History shows that from January to October within any given year the data for a system's installed base is roughly a linear function, and the Xbox 360, Nintendo Wii, and PlayStation 3 data so far this year have likewise been linear. The graph below shows how a linear projection would play out through the end of 2008.



The linear models above predict the following at the beginning of October 2008:

• Nintendo Wii: 12.8 million systems
• Microsoft Xbox 360: 11.2 million systems
• Sony PlayStation 3: 5.4 million systems

Since the linear model doesn't account for the holiday sales period, it becomes questionable beyond that point. Given existing trends, we would speculate that Nintendo will have reached 16 million systems by the end of the year, with the Xbox 360 trailing at 14 million systems and the PlayStation 3 in third at 7 million or more.

As we have said before, future events can drastically change the reliability of the model above. For example, should Microsoft choose to drop its hardware prices there would be an immediate increase in its monthly sales. Sony is in the same situation, but has indicated that it is extremely reluctant to drop prices during 2008, preferring instead to work toward profitability rather than a larger installed base.