Wii, not PS3, to challenge Xbox during holidays

Nintendo's Wii console will do more to challenge Microsoft's Xbox 360 this holiday shopping season than the long-awaited PlayStation 3 from Sony Computer Entertainment, according to analysts.

U.S. customers got their hands on Sony's PlayStation 3 on Friday, but the console is suffering from a lack of supply as well as a hefty US$599 price tag for the 60G-byte model. Sony also offers a US$499 version with a smaller hard drive. However, the US$299 Nintendo Wii, though not targeted at hard-core gamers like the Xbox and PlayStation 3, will give Microsoft's early-to-market Xbox 360 a run for its money.

The Wii will reach customers in the U.S. on Sunday. Microsoft released the Xbox 360 last November for the 2005 holiday shopping season with a US$399 or US$299 price tag, depending on which version is purchased.

"Nintendo has done a great job with the Wii," said David Mercer, a vice president with U.K. research firm Strategy Analytics. "The price point will be very tempting even for consumers that many have not even thought of buying a console. As a general holiday present, Nintendo will do well."

Matt Rosoff, an analyst with Directions on Microsoft in Kirkland, Washington, agreed that the Wii will be a successful holiday seller. "But people will still be buying a lot of Xbox 360s this year," he said. "There are more games for them, and they are significantly less expensive than the PlayStation 3. And they're available. They're in a really good spot."

That's good news for Microsoft, which has a lot to prove with the Xbox 360 before the end of the year. The company has projected it will sell 10 million consoles by 2007. By the end of September, Microsoft said it sold 6 million worldwide, which means it must sell 4 million in the last three months of the year.

In addition to introducing new Xbox titles for the holiday season to bolster 2006 sales, Microsoft also released an external HD-DVD drive for the console and will begin allowing users to download movies to their Xbox 360 via the Xbox Live online marketplace on Nov. 22.

Holiday competition from the Wii aside, Microsoft should try to take advantage of the PlayStation 3's two main weaknesses this holiday season -- lack of availability and cost -- to prove it can stick it out against the PlayStation 3 over the long haul, Mercer suggested.

"There's a lot of loyalty to the PlayStation brand," he said. "People who want the [PlayStation 3] but can't get ahold of one are the people Microsoft should be targeting."

Even though Sony will be lucky to sell 1.5 million of its projected 2 million PlayStation 3 consoles this holiday season, the Sony console should outlast its competition over the long haul, Mercer added.

"In the long term, there's no question the PS3 is a superior system," he said. "It's designed to be going strong in five or 10 year's time. We just don't see the Xbox 360 having that kind of sustainability."

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Elizabeth Montalbano

IDG News Service
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