Here’s an interesting (but flawed in my opinion) demand analysis of the Xbox 360, Sony PlayStation 3, and the Nintendo Wii gaming consoles over at Compete.com. I actually wasn’t going to post it here but I thought Krunker readers who hadn’t seen it would find it an interesting (yet humorous read). The point of their article was to show how the Xbox 360 basically had a something similar to a second launch this Thanksgiving holiday season. To back these claims, Compete posted up graphs laying out the consumer demand for all three consoles leading up to the week ending on Nov. 25th. Here’s one of the graphs that they posted.

Their claim? The Xbox 360 had similar demand patterns as the Wii which just launched on Nov. 19th (and greater demand than the PS3). They then followed up that graph with another graph (which you can find on their website) showing the daily demand of the three consoles – this time using the Xbox 360 $100 dollar deal as a “second” launch example for the Xbox 360. From that perspective, the Xbox 360 performed better than all three consoles and hence the Xbox 360 is in great demand right now. (One word of warning – notice the Y axis on the chart. It’s in percentages – not in actual unit counts. Hmmm more on that later)

Ok.

So having said all of that here’s my problems with the analysis.

First, what is the definition of demand? Is it someone going to a website and clicking on “Add to cart” or “Save to cart”? Is it someone going to a website and just browsing for the product? How is it that there was already demand for the PS3 way back on October 7th? The pre-orders for the PS3 had not even started at that point so how do you measure such demand? Again – is it based on how many wish list items were saved on Amazon? Where did this data come from?

Second – why did the PS3 demand drop off near the tail end of Nov 25th? There’s a very simple answer folks – there was none to buy. Period. So without stock in hand, no one could actually get any PS3s. So with that notion in hand – you must conclude that demand is people trying to purchase PS3s… in which case.. you couldn’t purchase any back on October 7th so how do you have any data for that? Flawed. Then again - you’re telling me that nearly 1 million people were demanding the Xbox 360 on Nov. 25th??? I don’t know about that.

Compete also makes the claim that the Xbox 360 demand rose simply because there were plenty of consoles in stock – that’s very true. But there are other reasons demand rose during this time period. Here are some considerations folks.

  • Gears of War launched for the 360
  • Call of Duty 3 launched for the 360
  • the HD DVD player launched in November
  • Downloadable movies and tv shows launched in November

As you can tell, tons of new initiatives from Microsoft and their game vendors helped drive sales of the 360 during this period. Yes it helped that the PS3 was low in stock but consider what else was going on. It’s not simply because there were 360 consoles around – it’s because there were a great deal of NEW reasons to purchase the 360 if you haven’t already.

OK.. now onto the second graph which I absolutely hate. The misleading thing about the second graph is the Y axis because it shows relative demand in percentages – not actual unit counts. If we were to put this in unit counts, then I bet the demand for the 360 is actually MUCH MUCH less. Sure the demand rose because of the 100 dollar deal from Amazon. Why? THE CONSOLE WAS 100 DOLLARS FOLKS!! Who wouldn’t try and buy it for $100?

Consider though - there was only 1000 consoles up for sale by Amazon for that deal. So if we are looking at a chart of only the deal – that means the deal peacked on Thanksgiving day which meant 1000 consoles were sold. In relative terms, the other days for the 360 stunk.

Yet – this is contrary to the “demand” graph depicted before it. Confused? I am.

What is my point?  I’m not bashing the Xbox 360 or the PS3 or the Wii. What my problem is how the article at Compete.com was created. There needs to be access to real numbers. Sales numbers – where are they from. Who gave them to you. Some proof in the pudding you know? Without that, these graphs are UTTERLY meaningless. If you’re telling me that the PS3 had less demand than the 360 on Nov. 25th, then I suppose the $3,000 PS3′s on eBay were not real.

All three consoles have enjoyed a good holiday season thus far. The 360 has enjoyed a renewal mostly because of the new reasons to buy the console – including an occasional sale here and there.

My point therefore is – when dealing with graphs and numbers – look carefully in the fine print and consider what they are actually telling you. Never believe stats right off the bat.

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