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Is Xbox 360 Past Its Peak?

I'm not sure I agree with this, but there are some interesting, if debatable, points in this analysis:

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 its competitors and had mixed results: on the one hand, consumers upgraded and the 360 certainly got its lead in early (to the tune of nearly ten million units), but on the other the allegedly rushed testing of the hardware resulted in the infamous ‘Red Ring of Death’ phenomenon, and the costliest warranty extension in videogame history. But more than two years since that launch, and now facing some stiff competition, is the 360 in the dominant position Microsoft claims – or does the console rule an empire built on quicksand?

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

Whoa. And... what? You already explained that the Xbox 360 had the market to itself before 2007. Did anyone actually expect Microsoft to then increase sales in the year in which its only two competitors--both of whom had outsold Microsoft in the previous generation of consoles--entered the market? Really?

Look, I'm as critical as anyone when it comes to the Xbox 360--I should be, as three of mine have succumbed to the RROD--but let's not turn nothing into something. That sales of the Xbox 360 didn't fall more dramatically, year over year, in 2007, especially in light of the Wii's tremendous and unexpected success, is good news, not bad news, for the 360. Sorry, but this criticisms is bogus.

The bad news doesn’t stop there: 2007 saw its head start battered aside by the unstoppable Wii, with little chance of redress, and the PlayStation 3 reaching the 9.5 million unit mark worldwide. The only territory in which it outsold the PS3 was North America, and without the sales spike around Halo 3 things would have looked considerably worse.

The Wii's success surprised everyone. And I think the PS3's sudden resurgence (and the bizarre turnaround in opinion on Sony's decision to bundle the expensive Blu-Ray drive with the device) will surprise everyone too. So what we're left with is Microsoft doing as well as it did in the previous generation of consoles when the dust settles: Huge in North America, decent in most other markets except Japan. This isn't a disaster. It's the status quo. Now, there's no doubt Microsoft expected the 360 to outperform the original Xbox, especially in non-NA markets. But this isn't nearly as bad as the lead Sony blew in this generation, even if the PS3 ends up outselling the 360.

With its obvious attributes and its late-2007 software lineup, why didn’t the Xbox 360 dominate the year, and the Christmas period in particular?

Because people were buying the Wii. And Microsoft couldn't have done anything in 2007 to stop that from happening. How could it possibly dominate with two new competitors on the market when it didn't do so before those machines were introduced? Why is no one talking about the PS2 still outselling these new consoles for much of 2007?

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

Interesting conclusion. Seems to refute the title of the article as well. Maybe it should have been called, "Is Xbox 360 Past Its Peak? No, I Guess Not."

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