Armchair Analysis Midterms: Microsoft

by: Peter Skeritt -
This is the first in a series of three columns that will discuss hardware sales results and trends for the first half of 2011 as well as offer predictions and things to watch for the second half of the year. Bear in mind that these sales figures are from NPD all discussions pertain to United States sales numbers only.

It's impossible to argue that Microsoft has maintained and strengthened its grip on the top of the console hardware sales charts so far in 2011. The Xbox 360 platform has led in sales of home consoles in every month of 2011 thus far while posting positive YOY (year-on-year) results each month. A combination of solid third-party software, word of mouth from a growing installed user base, continued interest in the Kinect sensor, and attractive hardware pricing have contributed to Microsoft's run. 

Let's look at the sales numbers for Microsoft so far in 2011:
  • January 2011: 381,000 units sold (1st place overall, +15% YOY, only console to show positive YOY results)
  • February 2011: 535,000 units sold (1st place overall, +27% YOY, best non-holiday sales month ever)
  • March 2011: 433,000 units sold (1st place overall, +28% YOY)
  • April 2011: 297,000 units sold (1st place overall, +60% YOY)
  • May 2011: 270,000 units sold (1st place overall, +39% YOY)
Analysis:

The numbers listed above are impressive. Even in a tighter Q2, the Xbox 360 has shown strength with strong YOY gains and there's no sign of that changing when numbers for June become available in a couple of weeks. Microsoft rectified its supply issues that seemed to somewhat limit potential growth late last year and into Q1 of this year and sales have been helped by a steady supply of solid third-party titles. The alliance between Activision and Microsoft to make Call of Duty downloadable content a timed exclusive for the Xbox 360 platform has been a boost as well, as this week's release of the Annihilation Map Pack will mark the third DLC release for the immensely popular first-person shooter. Knowing that Microsoft gets the content first steers potential consumers to the Xbox 360 in order to avoid waiting. 

Microsoft has been fortunate that interest in the Kinect sensor has not faded in spite of an exceptionally weak and rather sparse lineup of software for the peripheral so far in 2011, and it's really the biggest criticism to touch on so far this year. After storming out of the gate last November with quality software offerings like Dance Central and Kinect Sports, the 2011 lineup for Kinect has lacked punch and quality so far. Poor software support, no matter the reason, contributes to any potential weakness for the peripheral and to the platform. As we've seen with the 3DS, little-to-no software support can be a factor in decisions to avoid certain platforms within the first year. 

Armchair Analyst Midterm Grade: A

Predictions:

Microsoft should continue its run of dominance for the remainder of 2011. Although some critics point out a lack in quantity of exclusives to drive sales versus the PlayStation 3, the Xbox 360 should still benefit greatly from the release of Gears of War 3 in the September time slot and then releases of third-party multiplatform titles like Battlefield 3 and Modern Warfare 3 should keep hardware sales steady right through the end of Q4; first-person shooters dominate the Xbox 360 landscape and this year gives consumers two AAA options. If Sony proceeds with a rumored price cut in August, Microsoft will have the ability to match it and keep the PlayStation 3 from the top of the sales charts. Modern Warfare 3 will be the console's best-selling game of 2011, and Gears of War 3 should post consistently strong results from September through November thanks to an aggressive marketing campaign both in advance of and slated for during the launch period.

At a glance, Xbox 360 hardware sales should remain steady through August before the annual release of Madden boosts sales at least slightly in August. From there, expect unit sales to rise steadily for the rest of the year with impressive numbers in September and again in November. 

Q4 2011 finally shows a bit of promise for the Kinect sensor as follow-ups to Dance Central and Kinect Sports are due to hit retail and there's potential for Kinect Star Wars to sell well with proper marketing and pre-release buildup. Sesame Street: Once Upon A Monster could quietly become a hit, given the targeted family demographic. There aren't enough games at retail that appeal to the younger game player, and, based on what was shown at E3, Once Upon A Monster could really capitalize on this. One other retail Kinect title, The Gunstringer, is a wild card. Sales of this title, unless Microsoft really steps up the marketing for it, could be quiet. It's reminiscent of the lukewarm support given to Alan Wake in 2010, and that's not a good precedent. 

Your questions, comments, and predictions are always welcome. Please feel free to comment below. Midterm grades, analysis, and predictions for Sony and Nintendo will be individually posted during this week. 
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