Why Microsoft should be worried about new NPD sales figures

The console sales numbers for February are here, and sales have yet to slow down appreciably from the phenomenal year we had in 2007. But Microsoft has cause for concern about Sony's performance. The Xbox 360 maker told us to expect this a slow month due to supply constraints, but many observers won't concern themselves with the whys of a second consecutive disappointing month. Instead, the story will be that Sony has smoked Microsoft two months running. Sony now has some strong momentum that it can ride into the launch of industry juggernauts like Metal Gear Solid 4—which Sony will exploit with a new system bundle to draw in first-time PS3 buyers—and Gran Turismo 5: Prologue.

Add in the fact that Sony is now sitting on the de-facto high-definition standard in Blu-ray and the PlayStation 3 is by far the most future proof—and affordable—Blu-ray player, it has a distinct advantage for consumers who want more than just games out of their consoles. According to another study by the NPD Group, gamers are a very media-hungry bunch, and the PlayStation 3 simply gives them more choices in that area than the Xbox 360.  

"Consumers are recognizing the tremendous value of PS3 and we believe that Blu-ray becoming the high-def format of choice was the tipping point for many consumers," SCEA president Jack Tretton said in a comment about the February numbers.

Sony wants to focus on the strength of the entire PlayStation brand, noting that it generated the most US retail dollars in the industry for the second consecutive month with $511 million in sales—52 percent and 6 percent higher than Microsoft and Nintendo, respectively. This month's PlayStation 2 sales prove that Sony has three viable systems filling living rooms with hardware.

Sony 

The PlayStation 3 came in at number four position with 280,800 units sold, beating sales of the Xbox 360 by a hefty margin. The PS3 version of Devil May Cry 4 was a strong seller at number four on the software charts with 233,500 units moved. Not as good as the 360 version, but with the system's smaller installed base, it's an impressive achievement. Capcom did a great job of making sure both versions of the title were strong, and it paid off. Developers take note: the PS3 can move third-party games, and this is proof.

Other good news for Sony is the sales of the PlayStation 2. The system has historically done very well at retail, but in February Sony sold 351,800 units of the hardware; that puts the PlayStation 2 in third place for hardware sales, behind only the Nintendo Wii and the Nintendo DS. The PlayStation 2 is also a strong system for the Guitar Hero series, as Guitar Hero 3 charted at number nine in the software charts with 183,800 units sold. Those are very impressive numbers for the nearly eight-year-old system.

The PSP continues to do well with sales of 243,100 units in February. Sony's portable continues to be a destination for some great games, as proven by Patapon, Wipeout Pulse, and now God of War: Chains of Olympus. Expect as good, if not better, sales for next month.

Nintendo 

Another banner month for Nintendo as the company's two systems take the number one and two slots with ease. The Nintendo Wii sold 432,000 units, while the Nintendo DS sold 597,600 units. Nintendo has yet to provide a month in retail that's anything close to a disappointment.

Nintendo also sells software in great numbers. Wii Play comes in at number three on the software (although with a free Wiimote, it's also technically hardware) side with 289,700 units sold. Guitar Hero 3 for the Wii came in fifth place with 222,900 units sold, leading rhythm game fans to again ask where their version of Rock Band is. Mario and Sonic: Olympic Games on the DS came in sixth place with 205,600 units sold. 

Microsoft 

Microsoft had a slow month, but then again we were warned this was going to happen. At a Game Developers Conference press breakfast, John Schappert, the corporate VP of the Interactive Entertainment Business at Microsoft, told us that supply constraints would continue into February, and we should expect more systems on store shelves in March. Still, Microsoft managed to sell 254,600 units of hardware, beating only the PlayStation Portable in sales.

With its relatively large installed base, the system is still a monster in terms of shifting games. The top two slots on the software sales charts belong to 360 games, with Call of Duty 4 taking number one with 296,200 units sold and Devil May Cry 4 at number two with 295,200 units sold. Lost Odyssey came in at number seven with 203,600 units sold, right above Turok at number seven with 197,700 units. Rock Band on the 360 took tenth place by moving 161,800 units of the $170 game. 

"As one would expect moving into this portion of the console lifecycle, the focus is once again upon software sales. Software sales are up 47 percent for the month of February and 43 percent for the year on a comparable weeks sales basis," NPD analyst Anita Frazier pointed out. "With several marquee titles still to come in the front half of the year, the industry is poised to achieve another year of record-breaking sales despite difficult economic conditons."

If Sony can ride this wave of momentum in larger sales, especially with games like Metal Gear Solid 4 and Gran Turismo 5: Prologue on the horizon, they could see even better results next month. Microsoft may be short on ammunition to combat this new threat from Sony, and is starting to react to Sony's dominance in the European market with price cuts. Microsoft is far from being on the ropes, but Sony has every indication of being on a roll, and Microsoft needs to come up with a plan to fend off the growing threat.