Console sales beat goals, makers' early reports say

Sony said Sunday night that between the debut of the PlayStation 3 in late November and the end of the year it had shipped one million of the consoles to retailers in the United States. It said it still expects to ship 6 million consoles worldwide by the end of March.

The 6 million figure, in particular, was surprising to video game industry analysts, who have said that Sony faces challenges in manufacturing enough consoles. They have also questioned whether the price of the PlayStation 3--$600 for the high-end version--would scare off mainstream consumers. Analysts had expected Sony to ship 4 million to 5 million consoles.

"It sounds like they really are ramping up production," said Paul-Jon McNealy, an analyst with American Technology Research. "They've gotten their feet underneath them."

For its part, Microsoft, which introduced its Xbox 360 in November 2005, said Sunday that by year's end it had shipped 10.4 million of the consoles worldwide. That is 400,000 more than Microsoft had estimated it would ship over the last year.

Microsoft also said that over the holidays it had sold 2.7 million copies of Gears of War, making the game the first major hit for the new generation of consoles, which also includes the Wii from Nintendo.

The announcements, which were made at the Consumer Electronics Show in Las Vegas, provide a look at the early stages of what is destined to be a multiyear battle among Sony, Microsoft and Nintendo, whose latest console has won over many new fans.

Nintendo, which introduced the Wii in November, declined to disclose how many consoles it had shipped. It said earlier that it had expected to ship four million worldwide by year's end, with roughly half of those to the United States.

It will take time for the market to decide which company will dominate, but Sony was quick to toot its own horn about its performance during the holiday season.

"You can declare us a winner right now," Peter Dille, senior vice president for marketing at Sony Computer Entertainment America, said in an interview. He said he was basing his declaration on the performance not just of the PlayStation 3 but on continued sales of software for the older PlayStation 2.

David Hufford, director of Xbox product management at Microsoft, countered: "That sounds like spin. PlayStation 3 stumbled out of the blocks."

Of course the number of consoles shipped could be considerably higher than the number actually sold, which is why a report expected on Thursday from the NPD Group, a research firm, with figures for December retail sales of the consoles and their games will be closely watched. The industry and investors are hoping to see not only which console maker is leading but whether the game business as a whole has emerged from a slump.

The industry had another early indicator last Thursday, when GameStop, a video game retail chain, said that its sales for the nine weeks ended December 30 were up 23 percent over the same period a year earlier.

"Clearly, it was a very strong holiday in the video game sector," said Colin Sebastian, an analyst with Lazard Capital Markets.

But Sebastian said that he saw challenges ahead for Sony and Microsoft, which sells the high-end configuration of the Xbox 360 for $499. "I would expect there will be a price cut for the 360 and the PS3," he said, referring to the PlayStation 3.

Dille of Sony countered that the company was selling out all of the PlayStation consoles that it could supply, price notwithstanding.

"We never saw any resistance to the price point," he said. "We get beat up on price, and the very next question is: 'How come you can't ship enough?' Something's got to give."

That equation might be changing. Daniel A. DeMatteo, vice chairman and chief operating officer at GameStop, said Thursday that for the first time last week there were PlayStation 3 consoles in stock at hundreds of the company's 3,700 outlets. Not so for the Wii, which costs $249 and is still flying off shelves.

"We got some in yesterday in really limited supply, and they virtually disappeared," DeMatteo said.