State of the Console War: Sony Outsells Microsoft, but is the PS4 Really Ahead?

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By David R – 12th February 2014
State of the Console War: Sony Outsells Microsoft, but is the PS4 Really Ahead?

Here it is, your latest news for the greatest console war in the last twenty years. This is the first of a series of posts I’ll be leaving each week that will document any on-going changes that may turn the tide of battle between the Xbox One and rival PS4, ultimately deciding who currently resides in the lead.

And for those of you wondering, my criteria for who’s, “in the lead” is simple. It will be who ever is profiting the most from their console’s success. Notice the key word there, profiting. This isn’t about who sells the most consoles or brings in the most money, contrary to popular opinion. It’s about who’s making the most money. As a man who invests $1,000,000 and brings in $1,000,0001 is bringing in more physical money, but increasing his value less than a kid who invests 50 cents and brings in one dollar and 51 cents.

The Process

Each week we’ll take a company’s cost to make a console and subtract it from all revenue they’ve earned in the process, resulting in their documented net-profit. I realize that there are articles sprouting up all over the Internet with, “ reportedly sells x amount of consoles in the Philippines” and, “ claims to have sold x amount of ′s on the dark side of the moon last quarter”, but these stories, while interesting are useless to me until they’ve been verified.

Also, I’ll be keeping track of past data with line-graphs that will hopefully allow us to analyze trends, determining if a winner is emerging over time. So for you graphic whores out there, you’re welcome.

And without further adieu, let’s head to the front lines and see what’s taking place.

Cost to Make

A recent teardown of both consoles revealed that the costs 90 more dollars to make than its counterpart, with the console requiring $471 to construct vs the ′s $381 worth of hardware. This is crucial in determining who’s profiting the most with their console’s success, as it means that is making $28 per-sale vs ’s $18, a difference that may haunt the gaming company going forward.

Sale Numbers

Going back to what I said earlier, I’m going to stick with the current information that has been verified, namely, that sold 3 million consoles world-wide through 2013 vs an impressive 4.2 million units sold for its staunch rival. These numbers are telling, but not quite as much as every article across the Internet would have you believe (mine excluded, of course!).

While selling a unit is imperative if one is to make any money for all their hard work, it’s not as simple as that. An analogy, getting shot with 4,000 nerf gun bullets isn’t quite as damaging as getting hit with 1 real one. It’s all about the impact that each sale makes, and the Xbox is bringing in $10 more in profit than every united sold ($28 vs $18). So, with this information in place, it’s a simple matter of crunching the numbers.

Net Profits/Results

Knowing that sold 3 million units through December, at $499 a piece, we can quickly calculate that they brought in a total of $1,497,000,000, trailing the ′s 4.2 million total which, when multiplied by their own cost comes in at $1,675,800,000. While this seems to put in the lead, it simply isn’t the case. Reiterating what was said before, this number is irrelevant. It’s impressive, but from a competitive standpoint it means nothing, as the net-profit is what will reveal who’s increasing their company’s worth (and therefore power within the industry) the most.

So, given that is making $28 per-sale, we can quickly see that they’ve profited an impressive $84,000,000 for their investment, with improving their worth by $75,600,000.

So there you have it, folks, currently holds an $8,400,000 lead over in-terms of money made. While leads their rival in units sold, it doesn’t really matter, as they’re profiting a substantially lower amount per-sale.

Trends Through December 2013

console war - Sony has sold more units, but microsoft is making more money

has sold an impressive 4.2 million s vs 3 million for rival and its .

Console war results - Sony is selling more, but microsoft is making more money

But has made more money, thus making them the winner in this first round of analysis.

Conclusions

will have to out-sell by 64% if they’re to take a financial lead, given the 64% less money they’re bringing in for each console sold. This is a tough hill to climb, but the old-school powerhouse has a reputation for coming out on top whenever their backs are against the wall. Don’t forget, it was who managed to sweep the rug out from former Undisputed Console Champion Nintendo in the late 90′s with their innovative discs that Nintendo said wouldn’t catch on. So, before anyone starts making predictions as to who’s going to win or lose this ongoing struggle, sit back and shut up. This war’s just getting started.