Next-generation Game Consoles to Become Market Mainstays in 2007: MIC

Taipei, July 25, 2006 (CENS)--Next-generation game consoles are scheduled to be launched one after another by the end of the year, generating increasing and lucrative OEM/ODM business opportunities for Taiwan's contract suppliers, according to Market Intelligence Center (MIC) under the semi-official Institute for Information Industry.

MIC pointed out that several major new game-consoles such as Sony's PS3 and Nitendo's Wii would be debuted by the end of the year and become market mainstays in 2007. The global game-console shipment in 2007 is expected to reach 35 million units, up 28.2% from this year, according to MIC. More and more outsourcing orders are expected to flow to Taiwan companies, the center added, due to increasingly fierce price-cutting competition.

MIC said that 2006 is a year for transition from 128-bit to next-generation game-console models. Due to the sales decline of 128-bit products, the global game-console sales volume is expected to slide 5.5% from last year.

Hung Chuen-huei, senior analyst and project manager of MIC, pointed out that currently only Microsoft has debuted a next-generation game-console model, the Xbox 360, but many consumers are still taking a wait-and-see attitude due to concerns on compatible software and brand loyalties.

Sony's new PS3 next-generation model is scheduled to be launched for sales on November 11 and the Japanese company forecasted the first-batch shipment at two million units. By the end of the year, Sony aims to ship about four million PS3s, while Microsoft expects to achieve a delivery goal of 10 million units.

Sony's new PS3s bear the highest price of US$499 to US$599 among all next-generation counterparts as they are fitted with a built-in blue-ray optical-disc drive, about US$200 higher than Xbox 360.

As game-console makers sell their products at prices lower than costs, Hung pointed out, all brands are expected to accelerate releasing their outsourcing orders to contract partners, especially in Taiwan.

Wistron Corp., for example, currently contract supplies about 50% of the Xbox 360s to Microsoft. Asustek Computer Inc. and Hon Hai Precision Ind. Co. Ltd., which are already the contract suppliers of Sony's PS2 consoles, are expected to continue supplying the PS3, industry sources said.

Global Game Console Shipment
Year	Volume	YoY Growth
2004	24.74 million	-28.9%
2005	28.93 million	16.9%
2006 (e)	27.34 million	-5.5%
2007 (e)	35.06 million	28.2%
Source: MIC