PS2 News: Analyst: Hardware Sales Down, Software Sales Up For 2006 - PS2 News

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Analyst: Hardware Sales Down, Software Sales Up For 2006

Even the most suspicious analysts are being swayed by better-than-expected 2006 numbers, and Lazard Capital Markets' Colin Sebastian is the latest to adjust his predictions.

In a note to investors today, Sebastian altered his initial expectations for the industry's annual software revenue from falling by as much as 5% to actually rising by 6%. In regards to reasons for the change, the analyst based his new predictions on stronger-than-expected sales results reported by the NPD Group so far this year. The reports have shown solid Nintendo DS and PS2 sales, as well as a great software tie-in rate for the Xbox 360: there have been about 5 games sold for every 360 sold since last year's November launch.

But while the software is exceeding Sebastian's expectations, the hardware itself is slowly falling off the pace. Early market predictions pegged Microsoft to sell 5 million 360s in 2006, but Sebastian said system sales indicate the distinct possibility of Microsoft falling a half-million short. He also lowered his expectations for the overall number of hardware units sold in 2006. The DS is doing better than he expected, but to offset that, there is the expected slowdown of the Xbox 360, PSP, and GBA.

Lastly, he increased his Nintendo Wii expectations by about 500,000 to 1.2 million, perhaps due to the anticipated better availability of the console this holiday system. So what wasn't changed in Sebastian's predictions? The PS3 sales estimate of 750,000 units by year's end.

10/24/2006 Ben Dutka

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