Xbox One's 3m vs. PS4's 4.2m - Sales numbers don't always tell the whole story

Editorial: The polite PR war between Sony and Microsoft, and the resulting frenzy, ensures that both companies come out on top.

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As part of the ongoing sales numbers/chest-beating competition between Sony and Microsoft, the two companies have both showed their latest sales figures: 3 million for the Xbox One, which is ever so slightly behind the 4.2 million of the PlayStation 4. For those, like me, who take a bit too much pleasure from watching giant corporations wage a polite PR war against one another through executive blog posts and big stage talks, the frequent back-and-forth over the last few weeks has been particularly enjoyable.

I'd argue I'm not alone. The accompanying stories on GameSpot always ratchet up a healthy number of comments, there's a sizeable amount of chat about each sales milestone on Twitter, and the figures generally spread out through the non-specialist media, too. It might make good corporate theatre, then, but pushing these sales numbers out into the public is a safe move, namely because hardware figures have historically been divulged during company financial reports and, with so many units shifted, neither Sony nor Microsoft come out of it looking bad.

But what you shouldn't do is take those sales numbers at face value, declare that Sony is rocketing ahead, and immediately go out and get the PlayStation logo tattooed onto your forehead.

First off, there's the cost of building each one. Console teardowns from research firm IHS speculate that Microsoft makes $28 from each Xbox One sold, whereas Sony only gets $18 from each PlayStation 4. The two companies, IHS concludes, roughly break even when the leftover money is used to pump into distribution or offsetting R&D costs. Doesn't sound like too much, until you realise that could be $84,000,000 for Microsoft compared to $75,600,000 for Sony. While there's nothing to conclude from all these imprecise mathematics -- there are no official figures, crucially -- it's important to remember that things might not always be how they seem.

There's also the matter of territories to consider. The PlayStation 4 is available in considerably more countries than the Xbox One right now, and neither console has launched into the lucrative Japanese market yet. Both companies claim that their consoles are selling faster than people can buy them, which also severely impacts the ability of a true picture of consumer interest to form right now. I'd also say keen, long-time gamers are more likely to favour the all-in gaming philosophy behind the PlayStation 4 right now than Microsoft's gambit of turning the Xbox One into a media swiss army knife. But who knows just how many people will place the latter console under their living room TV as the price inevitably falls over the next couple of years?

And let's not forget the real prize, lurking unsaid beneath those whopping sales numbers. What both Sony and Microsoft want is an impressively commanding install base -- this gives them enough brute force to entice third-party publishers into signing exclusives and platform-specific bonuses, and an increases the likelihood of making oodles of cash out of customers buying games. The exact figures aren't public, but I've often been told that both Sony and Microsoft take a good, sizeable chunk of the revenue from the sale of each game. If everyone went out tomorrow and bought a dozen EA games on PlayStation 4, then, we'd be injecting enough money into Sony's accountancy department for them to have enough capital to recreate the fiscal decadence seen in The Wolf of Wall Street.

It's looking good for both Sony and Microsoft, I'd say. The single most crucial thing for both companies right now is to keep up this perception of success. That's why, in this game of sales figure tennis, pinging these numbers back and forth works to the benefit of everyone. The zeroes keep ticking up, the announcements keep happening, and the vital perception that both consoles are in good health is ensured. And with all these announcements, well, both machines certainly sound successful enough to keep the momentum going with early adopters. The specialist market, especially, is of crucial importance right now -- it's those early adopters that inform the later purchasing decisions of friends and relatives, and the damage caused by the image of a poor launch for a new piece of tech can be almost impossible to fix.

Just ask Nintendo.

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