No one doubted Microsoft's (MSFT) Xbox 360 would outsell Sony's (SNE) PS3 over Christmas. The question was how bad the drubbing would be.
Today, via stats from the NPD Group, we know: In the US, Microsoft outsold the PS3 by (just shy of) 2-to-1, selling 1.44 million consoles to Sony's 726,000.
Where did Sony go wrong? Price, mostly. The PS3 is up to $200 more expensive than the Xbox. But that's not the whole story. There are also very few PS3-only titles worth buying, while the cheaper Xbox has had a series of hits exclusive to its system. Expect that problem to accelerate in the coming months: With a much smaller base of PS3s in people's homes, publishers won't put resources behind PS3-only games.
Sony needs to cut prices, and fast. The company appears to be experimenting with this, as Dell today offers the PS3 for $340, a price cheaper than we've seen before. (We've asked Sony and Dell about the offer and haven't heard back yet.)
We think Sony needs to go further and bring the PS3 down to $300 and keep it there -- the worst way to cut prices is in drips and drabs. Even if Microsoft cuts Xbox prices in response, that's OK. The tragedy of this generation's console wars is the PS3 really is the superior system: It's elegant and powerful, it doesn't nickel-and-dime its users for add-ons, and it does Blu-ray, a neat bonus. (But that's all Blu-ray is: gravy.)
But while the PS3 may be better, it's not $200 better. Certainly not in this economy.
See Also:
Sony's PS3 A Sinking Ship: Sales Plummet
Google Puts YouTube Video On Wii And PS3... And Not Xbox
Price Cuts At Last? Dell Selling PS3 For $340
Microsoft Exec: We're Shocked Sony Hasn't Cut PS3 Prices Yet
