Sony will win next-gen war, says top analyst

Wedbush Morgan's interactive entertainment industry analyst Michael Pachter has produced a report on the next-gen console war, predicting that the new cycle will not begin until the PS3 is released in late 2006.

Although a September launch date looks increasingly likely for Microsoft's new machine, Pachter believes that the current cycle "will continue long past the launch of the Xbox 360," according to his Interactive Entertainment Industry Preview.

"We do not view that Microsoft's pending announcement will have significant near-term impact on the US publishers," the report states.

"We think that many investors have misinterpreted the launch of the Xbox 360 as the beginning of the next generation, and expect rapid sales growth in 2006.

"In contrast, we expect the launch of Sony's PS3 (expected in late 2006) to mark the beginning of the next cycle, and think that rapid sales growth will not materialize until 2007."

Speaking to US site GameDAILY Pachter compared the launch of Xbox 360 to that of the PSP, saying "It's not going to cause PS2 owners to buy less software."

He went on to predict that were Sony and Microsoft to launch their new consoles at the same time, market penetration would be 50-55 per cent and 30 per cent respectively, with Nintendo picking up the remaining share.

However, Pachter said, "If Microsoft launches first, they're going to get sales for a year 'for free'. So if they get 30 per cent market from the day of the PS3 launch plus whatever they sell the first year, they're going to do better than 30 per cent."

Pachter predicts that game purchases by both Xbox and PS2 owners will slow down as the release date for each next-gen console draws near and that only the hardcore fanbase will purchase them in the months immediately following launch, making 2006 transitionary year. But 2007 will see "the ramp", says Pachter - "the PS3, the Xbox 360 and the Nintendo Revolution and PSP all out and starting to mature."

Which means that even though Microsoft is launching its console early, predicts Pachter, Sony will retain its position as market leader. "In 2010, Sony's going to have 55 per cent, Microsoft's going to have 35 per cent and Nintendo 10 per cent, with all three of those having plus or minus five per cent," he concludes.

Pachter ended by adding that the Xbox 360 was likely to be backwards compatible with original Xbox games, and that if Microsoft decided against this he would be "question their judgement."

Microsoft was unavailable for comment at the time of writing, but is set to reveal all in the next-gen console MTV special scheduled for May 12 in the US. The programme will be broadcast in the UK on the following day.