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No end to current hardware cycle - analyst

By David Jenkins

Thu 28 May 2009 10:10am GMT / 6:10am EDT / 3:10am PDT

E3 will "provide some signs that the industry is alive and well"

Signal Hill analyst Todd Greenwald has stated that the current console cycle is "not even close to nearing an end", in his preview of the upcoming E3 expo.

With the current cycle in its third or fourth year, Greenwald suggests that fears of a decline in hardware and software sales are unwarranted and that E3 itself will "provide some signs that the industry is alive and well".

"We think it's highly premature to be thinking of the cycle ending until all of these consoles are well below the USD 199 mark," says Greenwald. "Furthermore, Microsoft and Sony have invested so much in their current hardware line, as have third party publishers, that we don't think any party is seriously interested in throwing away these investments and starting over from scratch."

"For all of these reasons, we think this cycle will last longer than those in the past, and don't see new hardware coming until 2011 at the earliest, and 2012 to 2013 more likely (if at all if new services like OnLive take off, or if Xbox Live and PlayStation Network become more and more robust, there may not be a need for another console cycle)."

Greenwald also took the opportunity to update expectations for three publishers, predicting that Activision Blizzard will see full year sales of USD 4.9 billion (up from previous estimates of USD 4.8 billion). Estimates for EA have also been raised slightly to USD 4.3 billion, with THQ up from USD 780 million to USD 812 million.

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