Microsoft’s Xbox One vs. Sony’s PlayStation 4: Why Xbox's Slow Sales Aren’t the Problem They Seem

As far as conventional wisdom goes in the video game market, Microsoft's (MSFT 1.65%) Xbox One simply can't hold a candle to Sony's (SONY 0.31%) PlayStation 4.

It's a point that's hard to dispute. Ever since Microsoft and Sony debuted the Xbox One

Source: Sony

and PlayStation within a week of each other last November, Sony's PlayStation 4 has grabbed and held a commanding lead over Microsoft's Xbox One shipments and never really looked back.

This week, the dogged rivalry between these rival gaming platforms will once again be front and center at E3, one of the gaming industry's most important trade shows. And as we refocus on these competing next-gen gaming consoles, it's probably worth noting that the Xbox's sales swoon versus the PlayStation 4's successes might not be as pronounced as they appear on the surface.

U.S. shipments haven't been as bad as depicted
One of the two key narratives in the PS4 vs. Xbox One drama has been Microsoft's lagging Sony in U.S. console sales, which is beyond dispute. In fact, Microsoft's Xbox One has trailed Sony's PlayStation 4's U.S. console shipments in every month since both consoles went on sale late last year.

Sony's PlayStation 4 has outshipped Microsoft's Xbox One in all but one month in the key U.S. gaming market since they launched late last year; December was the one exception. But considering the PS4's consistent shipments supremacy, the actual sales gap in the U.S. between the PlayStation 4 and Xbox One sits cumulatively at just 500,000 units. All told the sales breakdown between the two consoles looks like this.

Source: The Wall Street Journal 

Now, that's a considerable gap as even one month's worth of console shipments for either Microsoft or Sony sits somewhere in the low one-hundred thousands depending on the month. But the real point here being that the narrative we've seen emerge in much of the reporting surrounding this console sales cycle might have blown the actual difference in business results slightly out of proportion, especially when you consider the following, arguably more important factor.

Sony's PS4 enjoys a massive international advantage
In addition to pricing, international markets have been the biggest contributor to the gap between the Xbox One and PlayStation 4. In backing out U.S. consoles sales, you can see an even wider international sales gap than the domestic one referenced above.

Source: The Wall Street Journal 

But this divergence shouldn't come as a huge surprise when you fully bake in the fact that Microsoft has been playing catch-up against Sony since they both launched their consoles last year. In its most recent update for its sales figures in late April, Sony mentioned that the PS4 is available for sale in an impressive 72 countries around the world. And even if the bulk of its Sony's PlayStation 4 sales come from a handful of key markets, Microsoft is still fast at work playing catch up to Sony's global distribution.

Source: Microsoft

But Microsoft is slowly chipping away at this Sony's lead in this department. In March, Microsoft announced that it will rollout out the Xbox One to 22 more international markets this September, including major gaming markets like Japan. So while Microsoft still has a ways to go in terms of matching Sony's vast international exposure, Microsoft is slowly working to erode this difference.

Microsoft also recently leveled the playing field in another key way by dropping the price of its Xbox One to $399, while also removing the required bundle of its Kinect hardware. So as Microsoft slowly fights to reclaim its console crown from Sony, the competition is set to heat up all the more as Microsoft has reduced several of Sony's key advantages with several recent moves.