In the Console Wars, Sony's Clearly the Leader


Sony's PS4 is one of the company's shining stars. Source: Sony.

It's been a transitional time in the gaming industry, as consoles compete with tablets and mobile devices for casual gamers' attention. This has only increased the already hyper-competitive atmosphere among Sony (NYSE: SNE  ) , Microsoft (NASDAQ: MSFT  ) , and Nintendo (NASDAQOTH: NTDOY  ) . With and Sony's PS4 currently outselling the Xbox One, and a new report that the company also outsold Nintendo in the previous fiscal year -- there's no sign of things cooling down.

Taking the lead, twice
It's no secret the PS4 has outpaced the Xbox One since both went on sale. As it stands right now, Sony has sold about 7 million of its new consoles, while Microsoft sits at about 5 million. But Sony is stepping out once again if a new report from the Japanese news site, Nikkei, holds true. The site is reporting that for the first time in eight years, Sony toppled Nintendo in console sales for the full fiscal 2013 year.

The site said Nintendo sold 16.3 million consoles while Sony sold 18.7 million consoles. That's a pretty big accomplishment for Sony considering it hasn't held the top position since just before the Nintendo Wii launched.

But Microsoft isn't taking all of this laying down. Last month, the company announced it would sell a version of the Xbox One without a Kinect for $399 -- $100 cheaper than the current version and on par with the PS4 pricing.

More competition coming this week
The annual E3 gaming conference kicks off this week, with the companies expected to announce new gaming titles and features to increase console sales. As Sony looks to stay on top, the company will release new information about its PlayStation Now feature. PlayStation Now is a service that stores games in the cloud and allows users to stream them to their PS4, PS3, and PlayStation Vita mobile device. It's not the only thing Sony has up its sleeve, though.

The company will likely announce more details about Project Morpheus, a virtual reality system the company is building. While Sony said earlier this year that it won't release the VR headset to consumers this year, any additional information on a future release could help push demand for the PS4 as users anticipate the device.

Foolish final thoughts
Sony definitely has the advantage among its competitors right now, and this week's announcements at E3 should help push the company ahead further. With Microsoft already dropping the Kinect bundling and the price of the Xbox One, the company may not have much else to announce that could push the console ahead of the PS4.

Despite Sony's ability to outpace Nintendo in console sales in the past fiscal year, and currently beat out Xbox One sales, the company is struggling financially this year and is expecting a $489 million loss for the year. This would be the company's six annual loss in the past seven years. Sony recently sold its PC division to focus its efforts on mobile and is in the process of cutting 5,000 jobs.

Meanwhile, the PlayStation 4 has been one of the only shining stars for the company lately, and any ability to increase its success would be welcomed by investors. With Microsoft just now matching the PS4 price and Nintendo's Wii U hardly in the running at all, Sony appears firmly in first place right now in the console wars -- now it's time for the rest of the company to catch up.

One area Sony may not be ready for
While the company is using the PS4 to help prop up revenues, there's a new wave of technology coming that far exceeds the reach of console gaming -- and Sony isn't ready for it. Luckily, there's one small-cap tech company that is, and it could be a great pure-play in this coming technology shift. You can read the Motley Fool's free report on this new technological trend -- and one stock to invest in -- by clicking here now.


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