Over the past year, Sony (SNE 1.54%) has trampled Microsoft (MSFT +1.62%) when it comes to unit sales of next-generation consoles. Sony had some early advantages, with the most important one likely being a $100 lower price tag. Sony also had clear messaging about its gaming-centric value proposition, while Microsoft has tried to expand the Xbox to broader media usage.
Well, Microsoft is slowly starting to catch up, and has now announced that Xbox One unit sales are about to hit 10 million.
Reading between the lines
Earlier this month, Microsoft launched a promotion that brings the Xbox One price down to just $349. Combined with other promotional offers, Xbox One sales are "on the rise." Microsoft also said that the Xbox One led console sales over the past 2 weeks, and expects to hit over 10 million consoles sold to retailers "shortly."
For reference, Microsoft's news comes exactly three months after Sony hit the same milestone. But even outside of timing, there's a big difference here. Microsoft is reporting "sell-in", while Sony was reporting "sell-through." As of Sony's August announcement, 10 million PS4 units have reached their final destinations within people's homes. On the other hand, Microsoft's figure represents units sold to its retail distribution channels. By definition, many of these units are still sitting on shelves waiting to be purchased.
Microsoft is undoubtedly holding its own in the console war, but Sony is still ahead in more ways than one.
Xbox matters
Despite analyst estimates that the Xbox One may have outsold the PS4 in September thanks to some enticing bundles, market researcher NPD still awarded Sony the win for the month. That's the ninth month in a row that the PS4 has bested the Xbox One.
Microsoft has a long ways to go before it can truly catch up to Sony, if it ever can. The Titanfall exclusive hasn't proven to be the Halo of this console generation, as much as Microsoft had hoped it would. Somewhat surprisingly, NPD said that Destiny (made by the same developers as Halo) sold better on Xbox One than on PS4. That's impressive given Sony's exclusive marketing deal with Bungie.
Microsoft CEO Satya Nadella has made it clear that he's primarily concerned with 3 core products -- and the Xbox is not one of them. With the Xbox One selling for $400 to $500 depending on its various promotions, those 10 million units translate into $4 billion to $5 billion in revenue. The Xbox business absolutely matters to Microsoft in many strategic ways, but at the same time it still has bigger fish to fry.
