Bucking the trend of most other analysts, Merill Lynch predicts rosy future for Xbox 360

Although most analysts have said that the PlayStation 3 would maintain Sony's lead in the console market in the coming years, an analyst for Merrill Lynch is bucking the trend and is giving a nod to the Xbox 360. Sony has held the lead in the console wars with the original PlayStation and PlayStation 2, so what would prevent the PlayStation 3 from carrying the crown this go around?

There is no doubt that the PlayStation 3 will face formidable competition from its cheaper Xbox 360 and Wii rivals, but Merrill Lynch's Yoshiyuki Kinoshita says that it goes much further than a low price tag. "The winner in the next-generation console battle is likely to be the Xbox 360, which is the leader in North America, the world's biggest market," said Kinoshita.

Kinoshita points to early production problems with the PS3 and Microsoft's one-year head start as insurmountable barriers for global dominance by Sony this time around. On the other hand, production problems can be worked out and one shouldn't dismiss Sony's larger fan base. Despite this, Kinoshita predicts that Microsoft will retain a 50% share of the North American market by March of 2011 with Sony and Nintendo commanding 27% and 23% respectively.

In the overall global market, the race will be much tighter with Kinoshita still giving the edge to Microsoft overall. "We forecast respective market shares at end-FY3/11 (March 2011) of Xbox 360 [at] 39 percent, PS3 [at] 34 percent and Wii [at] 27 percent, thus overturning Sony's domination of the market with its PS2-based share of 69 percent, and doubling Microsoft and Nintendo's respective market shares."

This is a race that everyone will be watching closely. The trash talking and prodding on behalf of both Sony/Microsoft execs and respective fans have been fierce over the past year, but it will still be years before we see which console truly comes out on top.

"Paying an extra $500 for a computer in this environment -- same piece of hardware -- paying $500 more to get a logo on it? I think that's a more challenging proposition for the average person than it used to be." -- Steve Ballmer
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