This is a rather unique position we are in. The E3 is nearing, and yet we've got just about the biggest surge we've had the past couple of months. Okay, that might well be an exaggeration, but still. You gotta agree with me when I say it was a busy past week, yes? Rumors, confirmation of rumors, and surprising - yet at the same time not-so-surprising - NPD results for this month all proved to be the cherry on top for this game-filled, fun-filled week. Hmmm.. imagine all those cherries on top.... Dig in, then.

Sony's PlayStation 3 may pick up its pace this year instead of ambling along like it did for the most part of 2007. According to research firm iSuppli the PS3, which they considered as a "great bargain", may enjoy a surge of increased installed base by the end of this year. Do hit the full article for iSupply's predicted 2008 sales numbers for the three main consoles: PS3, Xbox 360, and Wii.

As many previous articles have reported, we all know by now that the Wii has achieved a level of success  in console gaming arena over the other leading console platforms, the Sony PlayStation 3 and Microsoft's Xbox 360. Another group of analysts, iSuppli, agrees and provides proof that Nintendo's success managed to spread into the software gaming market as well.

iSuppli reported that Nintendo managed to gain US$ 1.2 billion in worldwide revenue for the Wii and DS in this year's third quarter. On the other hand, Sony's combined third-quarter revenue for the PS2, PS3 and the PSP games amounted to US$ 1 billion, and Microsoft managed to net US$ 317 million for their gaming software.

Somehow echoing the results of current gaming polls such as Japan's Media Create, iSuppli said that a "lack of compelling titles" hurt PlayStation 3's software sales. Meanwhile, Nintendo managed to win gamer's hearts (and pockets) with their chart-topping titles. However, Sony is moving to fix this problem by trying to win over third-party game developers.

If iSuppli is right, Nintendo's winning streak isn't over yet. The analyst group expects Wii software revenue to reach US$ 1.1 billion in next year's fourth quarter. "Nintendo is likely to maintain its lead in this area, as it expects by the end of 2007 to ship about 200 additional titles," said iSuppli's vice president of multimedia content and distribution, David Carnevale.

While gamers all over the world are crying for a price drop, our friends over at India buy their PS3 and Xbox 360 at US$ 980 and US$ 600 respectively. Even with such expensive consoles, analyst group iSuppli believes that the industry will reach US$ 125 million on 2010, from last year's US$ 13 million.

Milestone Interactive Software distributed the PS3 at almost a thousand bucks, but 1,200 units have been sold so far. Year end goal of 10,000 units sold will be hard according to the group, because of Xbox 360 and its "major price differential compared to its competitor."

Having to pay for duties doesn't help, which is almost 35% the product price in India. Microsoft's box also have the earlier release advantage, and localizing support that iSuppli calls "its commitment to customizing its titles for Indian tastes."

“The console gaming segment is not very sizeable in India. However, future growth expectations and consumerism are prompting companies to establish themselves in India," said analyst Ashish Thakre from the group. That means there shouldn't be any wars - we should be happy that the industry is booming in more countries.

 

Microsoft and Sony are both aggressively preparing to migrate chief components of their latest consoles to 65nm silicon-on-Insulator (SOI) technology production in order to help shrink the gap between retail prices and production costs.

iSuppli's research shows that at present, manufacturing costs of the 20GB and 60GB PS3 are around US$ 306.85 and US$ 241.35 more than current retail prices. iSuppli also notes of Microsoft's situation saying that the Xbox 360 Premium package priced at $US 399 actually costs the company US$ 525 to produce. The DigiTimes reports that:

during a recent Sony investor conference, the company said that it has already started production of various sized chipsets on 65nm node and noted that die-size could be shrunk by 40% in comparison to 90nm process, indicating that corresponding costs could be reduced along with the reduction in die size.

On the Microsoft side of things, they've announced last April that they would start producing Xbox 360 CPUs on 65nm SOI technology in the first quarter of 2007. However, DigiTimes does note that rumors suggest that the move to 65nm might be delayed to mid-2007.

A recent Chinese-language Commercial Times report comments that if 65nm manufacturing is introduced, three key Xbox 360 components - the CPU, northbridge, and graphics chip - may see their prices reduced by 30% to 40%.

On the Sony side, they add that they also plan to reduce the number of parts in the PS3 in an attempt to see "drastic" cost reductions.

When it comes to business, we don't know much. Okay, we know zilch except for one thing: you go into business to make money, not lose money. So can someone please explain why Toshiba is losing approximately $200 or more on every HD-A1 HD-DVD player it sells?

That's what the published report from analyst firm iSuppli (not related to iPod or anything with "i" in front of it) said anyway. According to the report the components needed to assemble the HD-A1 came to approximately $674. This is higher than its estimated retail price of $499 set by the company. If you add the testing, cables, remote control and packaging, the cost goes up to more than $700.

Why the losing price? Probably to establish a toehold in the next-generation DVD market over the more expensive Blu-ray (about $999). This is where the pay-off could come. According to the Consumer Electronics Association, in the U.S. alone, estimated DVD player sales totaled about 16 million units in 2005, not counting PC sales and game consoles. iSuppli says:

"It's unusual to find this level of subsidization outside of the video-game console and mobile-phone markets. Presumably, Toshiba anticipates making back any initial HD-A1 losses with subsequent products. There is little question that Toshiba had to use a high-cost design for its first model. But there is a big question as to whether pricing its player so much less than Blu-ray is worth the financial risk."

iSuppli also forecasted that shipments of both HD-DVD and Blu-ray CE devices will rise to 65 million units in 2010, up from 1.6 million units in 2006. And who will win the Next-Gen Format War? The firm predicts both formats will win ground in the marketplace and it will be too close to call.