PS4 Vs Xbox One: Here’s Why Sales Don’t Matter
Sony Corporation (NYSE:SNE) managed to sell about one million units of the PS4 on its first day of sales. That makes the console launch the biggest of all time, and adds to optimism about the latest Sony game machine. The one million open day sales says very little about demand however, and it says even less about the earnings potential of the PS4.
Opening day sales for games consoles are not decided by demand. As with the release of the iPhone 5s, and many iPhones before it, supply is the defining factor. The fact that Sony Corporation (NYSE:SNE) was able to get a million consoles on the shelves is impressive, the fact that they sold nearly every console available is not. The second fact was expected, and it means little for Sony.
The PS4 is tipped to be the bigger selling of the two consoles in the first few weeks, but the initial boost will not offer much to Sony by way of advantage. Unless one console dominates the other, the software lineup will be similar on both in the medium term. One million isn’t all that big of a number, it doesn’t mean the company has won the console war, it means that the company managed to make more consoles than most expected.
Consoles don’t make all that much money for the companies that make them. The real money is in the sale of games for use on the platform. It won’t be clear what level those sales will come in at right now, and initial console sales are a poor way to predict mid-generation game sales. Fans arguing about the consoles will use the initial sales figures, wise investors will ignore it.
PS4 Vs Xbox One
There has been no indication about the number of Xbox One consoles that Microsoft Corporation (NASDAQ:MSFT) will make available for sale on Friday, but it is likely that it will come close to the number offered by Sony Corporation (NYSE:SNE) put on sale last week. Neither console is likely to meaningfully outperform the other over the launch period. The middle of a console generation is where the battle is fought.
The relative virtues of the consoles have been listed many times, but in business terms there is no clear winner yet. Investors are not going to be betting too heavily on either machine, however. Both Sony Corporation (NYSE:SNE) and Microsoft Corporation (NASDAQ:MSFT) have buried their games divisions in labyrinthine businesses. Investors simply cannot get real exposure to the market.
Sony did incredibly well to get one million consoles on the shelves last week, but it means almost nothing to the company’s investors or the future of the PS4. The numbers mean that the console launch was not an absolute failure. Apart from that one million consoles in 24 hours isn’t impressive. It’s a number that Sony Corporation (NYSE:SNE) is using for marketing. Microsoft Corporation (NASDAQ:MSFT) may have its won next week.
Disclosure: Author has no position in any stocks mentioned, nor does he plan to initiate one in the next 48 hours.