Is Xbox 360 Past Its Peak?

The timing [of the Xbox 360 launch, one year ahead of the PS3 and Wii] was always intended to give the 360 a head start on itscompetitors and had mixed results: on the one hand, consumers upgradedand the 360 certainly got its lead in early (to the tune of nearly tenmillion units), but on the other the allegedly rushed testing of thehardware resulted in the infamous ‘Red Ring of Death’ phenomenon, andthe costliest warranty extension in videogame history. But more thantwo years since that launch, and now facing some stiff competition, isthe 360 in the dominant position Microsoft claims – or does the consolerule an empire built on quicksand?

But think about the figures for a moment. If 1.5 million 360s were soldby the end of 2005, 10.4 million by the end of 2006, and 17.7 millionby the end of 2007, then the Xbox 360 sold significantly fewer units in2007 than it did in 2006.

The bad news doesn’t stop there: 2007 saw its head start battered asideby the unstoppable Wii, with little chance of redress, and thePlayStation 3 reaching the 9.5 million unit mark worldwide. The onlyterritory in which it outsold the PS3 was North America, and withoutthe sales spike around Halo 3 things would have looked considerablyworse.

With its obvious attributes and its late-2007 software lineup, whydidn’t the Xbox 360 dominate the year, and the Christmas period inparticular?

Of course, hardware sales are only part of the story, and software iswhere the real money lies for platform holders and third parties: inthis respect, the 360 is in rude [?] health, boasting an attach rate ofseven games per console, far in advance of Nintendo and Sony’s figures ... Christmas 2008 should see Alan Wake, Banjo-Threeie, Fable 2, Gears OfWar 2, Halo Chronicles, Halo Wars and Too Human at the least – a lineupthat is hardly anemic. And perhaps most importantly there is a perception that Microsoft is areal challenger to Sony this time around, an opponent that is not onlyworthy of respect but capable of taking a significant chunk of thePlayStation’s business while further establishing the Xbox brand.