LCM: Wii Production Up, PS3 Production Down?
The latest report from Lazard Capital Markets suggests that Wii production is close to 1.5 million units per month. More importantly, PS3 production in Asia appears to be "temporarily" slowing down, leading analyst Colin Sebastian to believe that a price cut may not happen this year after all.
Following Nintendo's recent media and analyst summit in Seattle this week, Lazard Capital Markets analyst Colin Sebastian has made some interesting observations in his most recent report. Perhaps his most significant comment was on the production rates of the Wii and PlayStation 3.
Sebastian thinks that despite increased Wii production, shortages could persist. And he sees slowing PS3 production as a sign that a price cut on the console may actually not occur this year.
"We believe that Nintendo may be near its targeted monthly Wii production of approximately 1.5 million units per month, based on comments made by Nintendo, as well as retailers such as GameStop. Based on our retail channel checks, demand still appears to exceed supply, and we believe that shortages could persist through the remainder of the year, including the key holiday period," he said. "Reports from Asia also suggest that Sony has reduced production of PS3s, at least temporarily, which may suggest that a price cut is less likely this year. We continue to believe timing of Sony's first PS3 price cut is likely to accompany a stronger software release lineup as well as further cuts in production and component costs."
Also, contrary to Bank of America's recent analysis, which suggested that the Wii's success could ultimately hurt publishers, Sebastian believes the balance of Microsoft and Sony focusing on the core gamer with Nintendo attracting more casual types could work out nicely for publishers. "With Microsoft's Xbox 360 and Sony's PS3 more focused on the core gamer market early in the console cycle, we believe that an expanding audience for Nintendo platforms could ultimately benefit third-party software in addition to first party sales," he said.
Sebastian also noted that based on his observations from the summit, Nintendo would appear to be "making more aggressive overtures to attract strong third-party support on its platforms." Clearly, the Wii already has some great third-party support, and the more the Wii continues to sell, the better that support will become
