PlayStation 4 Sells Twice as Much as Xbox One in January

Sales data from NPD Group has the PlayStation 4 enjoying a substantial momentum advantage in North America. What does this mean for the future of the Xbox One?

Feb 22, 2014 at 7:00AM

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Now that the launch hype for the Sony (NYSE:SNE) PlayStation 4 and Microsoft (NASDAQ:MSFT) Xbox One has begun to settle, it's possible to gain a clearer picture of the momentum behind each system. Despite being largely similar in terms of available software and hardware architecture, the two consoles were put forth with largely differing product visions. The Xbox One was introduced with a substantial focus on media features and television integration. Meanwhile, the PlayStation 4 was positioned mostly as a dedicated gaming device from the get go. The most recent sales data out of North America suggests that one of these approaches is finding much greater success than the other.

North American hardware tracking by industry research company NPD Group shows that the PS4 outsold the Xbox One by an approximate 2:1 margin in January. Sony's system has also been enjoying a substantial momentum advantage in Europe. What does this data suggest for the latest round of the console wars? Will Microsoft be able to reverse these trends and solidify its bid for market leadership?

PlayStation 4 explodes out of the gate
At the end of 2013, Sony had sold 4.2 million PS4s to consumers while Microsoft had sold 3 million Xbox One consoles. Interestingly, Microsoft's system posted the best North American numbers in December. Sony's statements indicate that it is still selling close to every system that it manufactures, while reports suggest that the Xbox One is much easier to find. As such, it's possible that Microsoft's December advantage had a lot to do with the PS4 being supply constrained.

Xbox One's price problem
The most recent NPD tracking is a worrying sign for Microsoft and an indication that it will need to take drastic action in order to compete with Sony's latest console. The $100 price difference must be viewed as a driving force behind the sales lead that the PlayStation 4 is building. Both systems have similar third-party lineups alongside quality (but not blockbuster) first-party titles. Exclusive content will play a larger role in driving consumer purchases after the launch windows, but it's not as though the choice between Sony's Killzone: Shadowfall and Microsoft's Ryse: Son of Rome is a major factor at this stage.

A large lead in a small month
Estimates based on Microsoft's PR put sales of the Xbox One at approximately 140,000 units for the month. Obviously, this would put the PlayStation 4 somewhere in the neighborhood of 280,000 units sold in the same time period. These numbers look pretty weak coming off of the explosive holiday season, but January is typically a slow sales month and both systems carry substantial price tags.

The Wii U's ongoing stumbles

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There's more to the value equation than price, however. Nintendo's (NASDAQOTH:NTDOY) Wii U is proving that cheaper consoles do not necessarily enjoy an advantage. While Nintendo's latest hardware retails at an official MSRP that is $100 cheaper than PS4 and comes with a variety of bundled games, the system has proved so fundamentally unappealing that Nintendo's President has admitted that further price cuts will do little to spur interest.

Statements from Nintendo have Wii U software sales up 16% over the corresponding period in 2012, but this is not indicative of platform health. While sales of the system have been disappointing, its user base has approximately doubled since its first holiday period. Software numbers would have to be much better to make the platform viable going forward. 

Xbox One has a software problem
The most recent sales data is problematic for Microsoft on multiple levels. Third parties are seeing better sales on Sony's new platform, sometimes by substantial margins. Tomb Raider: Definitive Edition from Square Enix is said to have sold better on PS4 by an almost 2:1 margin. Ubisoft has revealed that Assassin's Creed 4 is also selling much better on Sony's system. The PlayStation 4 versions of these games enjoy graphical advantages, a fact that has generated beneficial press for its multiplatform software and the console at large.

A big game and a big change

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Sales data from around the globe makes it clear that Microsoft's console has a value problem when compared to the PlayStation 4. The March 11 launch of TitanFall from Electronic Arts could do a great deal to improve Xbox One's prospects, but other elements of the system's value proposition will need to be addressed.

Rumors have surfaced suggesting that Microsoft would either ship an Xbox One that does not include the Kinect 2.0 camera or, more radically, a version of the console that doesn't feature a disc drive. The company's other option would be to incur substantial losses on a price cut. Of these three choices, ditching Kinect is the move that makes the most sense given the current state of the industry. The smart money is on Kinect-less Xbox One happening before the end of 2014.

So who's going to take over your TV?
The console war is just one one of the ongoing competitions to control the living room. You know cable's going away. But do you know how to profit? There's $2.2 trillion out there to be had. Currently, cable grabs a big piece of it. That won't last. And when cable falters, three companies are poised to benefit. Click here for their names. Hint: They're not Netflix, Google, and Apple.

Keith Noonan has no position in any stocks mentioned. The Motley Fool owns shares of Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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Jun 12, 2015 at 5:01PM

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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