During the 2013 holiday season, Sony's (SONY 1.10%) PlayStation 4 sold slightly better than Microsoft's (MSFT 0.37%) Xbox One, according to industry analyst NPD.
Since November 2013, the month both consoles went on sale, PS4 has been the sales leader by about a two to one margin, though neither company regularly reports units sold. Microsoft, however, has shown some signs of life since June when it stopped bundling its system with the Kinect motion sensor and cut the price of Xbox One by $100. When that happened, it brought the base price for both gaming systems to $399 and allowed Microsoft to narrow, but not eliminate, its monthly sales deficit.
"Since the new Xbox One offering launched on June 9, we've seen sales of Xbox One more than double in the U.S., compared to sales in May," the company wrote on the Xbox blog.
That was still not enough for it to catch Sony as the PS4 continued to be the top-selling console in June, July, August, September, and October. But since the $100 price cut, Xbox One sales improved and that should have been a warning to Sony. Maybe people hadn't been picking PS4 over Xbox by a two to one margin because they liked it more. Instead, perhaps price was the biggest factor.
Microsoft certainly believed so and it aggressively cut Xbox prices for the holiday shopping season, dropping the base cost for the system to $349 starting Nov. 2, then cutting it another $20 to $329 from Nov. 27-29, and then again on Dec. 1 for Cyber Monday. Plus, the console was sold at those prices bundled with top-tier games and other extras. Microsoft gave its console a huge pricing advantage over Sony, which stuck to the $399 price tag, but did offer some bundles, which included a game, at that price.
Estimated cumulative console sales
| Console | Nov. 2013 | Dec. 2013 | Jan. 2014 | Aug. 2014 | Nov. 2014 |
|---|---|---|---|---|---|
| PlayStation 4 | 1 million | 4.2 million | 3 million | 10 million | 13.5 million |
| Xbox 4 | 1 million | 2 million | 3.9 million | 5 million | 10 million |
Source: Microsoft and Sony public statements
Aggressive pricing may have finally won the day for Microsoft as one industry analyst, InfoScout, used a huge pool of sales data to show that the Windows maker dominated its rival on Black Friday.
Microsoft has offered a number of different holiday bundles. Source: Microsoft
What does the data say?
Xbox One had a huge lead in Black Friday sales, according to InfoScout, which pulled data from more than 180,000 receipts from top retailers over the course of Black Friday. The data showed Xbox One with 53% market share compared to 31% for PS4. That's great news for Microsoft, but it's not definitive proof that Xbox One has overtaken PS4, because despite the consistent lead Sony has held since the console's launch, InfoScout showed it losing on Black Friday in 2013 as well. Last year, the shopping research company had Xbox One at 31% share while PlayStation 4 came in at 15%.
Gaming console sales on Black Friday Source: InfoScout
It's a trend
While the 2013 numbers clearly reflected a one-day anomaly, this year's seem to be a reflective trend as Microsoft has been getting closer and has cut into Sony's two to one sales lead. Microsoft's most recent sales claim on Nov. 12 had it selling 10 million units "shortly," while Sony reported having shipped 13.5 million PS4s by the end of October, Ars Technica wrote.
It's also worth noting that as of 1 p.m. on the the east coast on Cyber Monday, an Xbox One holiday bundle, which includes the latest Assassin's Creed title for $329 topped Amazon.com's (AMZN -1.64%) video game consoles and accessories sales chart while Sony's $399 Black Friday Bundle with Grand Theft Auto V stood at third place. Wal-Mart's (WMT 1.32%) website also showed Xbox One as the top-selling next generation console with three Xbox One bundles appearing on the list before any PS4 offer.
"Price certainly played a role Black Friday weekend, as 71% of Xbox One purchasers cited 'price' as major influence on their purchase versus just 48% for PlayStation 4 consumers," InfoScout co-founder Jon Brelig told the Fool via email. That number, the email explained came from a second survey the company did to understand purchase decisions.
Microsoft has a longer track
Both consoles are actually well ahead of the previous generation at this point in their life cycle, but Sony and Microsoft are in very different positions as companies. Microsoft has been profitable and has tens of billions in cash reserves. Sony has reported widening losses that reached $1.2 billion in the second quarter, which ended Sept. 30, and likely cannot afford to get into a price-matching game to win console customers.
While it may be too early to definitively say that price is going to be a driving factor toward which console eventually wins the sales war, the early evidence is hard to ignore. Microsoft can keep Xbox One cheaper than PS4 and can afford to lose money in order to capture market share. Sony likely can't do the same and, despite its dominance during the first year of the competition, may ultimately end up the loser.
This is a case where both consoles are similar, as are the game offerings. A hot title could change the trajectory of sales, but that has yet to happen and Microsoft can outbid Sony for any exclusives.
If Sony does not find a way to make PS4 a better perceived, if not real, value, then Xbox One will likely become the default choice due to its cheaper price tag. Microsoft doesn't need to be better, it needs to play defense and make sure it has an equal share of top titles while keeping its console cheaper.
