Analysts predict hardware shortages, more price cuts

With the holiday release schedule reaching a crescendo next month, a pair of analysts released new industry updates to investors this morning. Wedbush Morgan Securities analyst Michael Pachter postulated that a round of price cuts might be in the cards for early next year, while Lazard Capital Markets' Colin Sebastian warned that console and portable hardware could be in short supply this holiday season.

In Pachter's monthly industry update, he recapped recent industry happenings, including recent price drops and new bundles for the PlayStation 3, Xbox 360, and PlayStation 2. He also predicted that prices could drop even further. Pachter suggested Sony might lower the PS2 price next year in order to meet its recently raised fiscal year forecast of 2 million systems sold. He expects the PS3 to receive another price cut as well, this one to accompany a spring release slate that would include Grand Theft Auto IV, Metal Gear Solid 4, LittleBigPlanet, and Gran Turismo 5.

As for the Wii, Pachter said a price cut won't happen until supplies of the system finally measure up to demand, something Nintendo has said isn't likely to happen until next year. However, Pachter singled out the February 10 launch of Super Smash Bros. Brawl as a prime opportunity for Nintendo to tweak the Wii price.

In the near term, Sebastian said industry sales trends are "generally healthy" heading into the holidays. However, there are two factors that might result in lowered industrywide revenues for the quarter: lower-than-expected prices on new PS2 and Wii software, and hardware shortages on a number of systems.

"We believe console and handheld hardware could end up in short supply at retail stores over the holiday period with ongoing strong demand for Nintendo's Wii," Sebastian wrote, "partially alleviated by a reallocation of hardware from Japan to North America."

Sebastian also said strong sales of the Xbox 360 after the release of Halo 3 might have left retailers with lower-than-expected supplies of that system as the holiday season ramps up. Further, Sebastian expects that the redesigned PlayStation Portable and PS3 could benefit from their respective bundles and price cuts.