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Lazard: Kinect will sell 4m over Christmas

Analyst believes motion controller will have "aggressive launch" and projects non-Xbox use later

Lazard Capital Market analyst Colin Sebastian has claimed Kinect could "exceed our original expectations."

Believing that Microsoft's marketing efforts will skew towards the "better value" $299 bundle of the motion controller plus an Xbox 360 rather than the $129 standalone unit, he has increased Lazard's sales forecast.

"Our checks indicate that the Kinect build is on a pace of around 2 million units per month... suggesting to us potentially more aggressive launch plans for the device," he said in a note to investors. "As such, we are increasing our Kinect unit sales expectations for [the Christmas quarter] to 4 million worldwide, up from 3 million units previously."

Sebastian also attributes this new optimism to how he perceived Microsoft targeting its audience. "We believe that Microsoft is preparing a significant marketing and advertising campaign for Kinect, coinciding with the device launch," he said.

"Games using the Kinect sensor will initially include fitness, dance, sports and kart racing, suggesting that Microsoft is targeting a casual (Wii) audience."

Though he continued to dispute Kinect's launch price, "we believe the better value is the Xbox 360 bundle for $299. We continue to believe that $99 would be a 'sweet spot' for Kinect, and production quantities suggest that Microsoft may be leaving open the possibility for price promotions on Kinect next year."

However, he felt that Kinect as merely an Xbox add-on may be just an opening salvo from Microsoft. "Over time, we also anticipate that motion sensors will show up in connected TVs, living room PCs, set-top boxes and other consumer devices."

The analyst was less ebullient about PlayStation Move, but thought it would at least provide a signpost to Kinect's success.

"We note that Sony's Move launches in North America on Sept. 19, and although without as much 'buzz' as Kinect, Move should provide an early indication as to consumer demand for the next generation of motion controllers," he claimed.

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Latest comments (4)

Craig Burkey Software Engineer 8 years ago
Is it just me who sees these numbers as unrealistic? The best I'm expecting is on par with Rock Band or maybe Guitar Hero and they've spent alot of time building a fanbase that said a kinect based Air Guitar game would be one that may game my attention.
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David Spender Lead Programmer 8 years ago
The numbers aren't so unrealistic when you substitute 'xbox360' for 'kinect'. Given the fairly low price of the bundle, its not unreasonable that 3m+ systems will be sold. Despite the benefits/drawbacks of Kinect, most people will opt to get the system that's bundled with it if they are buying a new 360. In fact, maybe people who just have a Wii or PS3 might find the bundle attractive as a way to get into the 360.
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Matthew Eakins Technical Lead, HB-Studios8 years ago
Four million didn't sit well with me either until I started looking at the numbers. I'm going to rely on VG Chartz here for my numbers but here is my math and it looks like 4 million is quite achievable.

The 360 has sold 4.75 million, units year to date. We still have the holiday season yet to come so it's not unreasonable to say that that total will double to 9.5 million units, let's say 4 million in the November and December holiday season. That's without even considering Kinect or the new Slim hardware.

One question I have is the breakdown of sales of Elite vs. Arcade models. Now up to this point the 360 has been targeted at core gamers but even so with a recession on most people have to be fairly budget conscious. I'm just pulling a number out of my head here but let's say two thirds of them are Arcade models.

First let's look at the Arcade model consumers. Microsoft is essentially targeting the arcade users by creating the 4GB Arcade Kinect Bundle so I'll be generous and suggest that the convert most of the arcade buyers in to Kinect buyers (keeping in mind that the arcade consumer is likely to be the more budget conscious of the two), for arguments sake let's say 75% of the arcade purchasers buy the Kinect bundle. For any who are still following that results in 4M * 2/3 * .75 = 2M.

Next let's look at the Elite model consumers. I believe the price point on the stand alone Kinect hardware is just too high. Seeing as the Elite model consumers are more likely core gamers, so presumably less interested in Kinect casual games, I think I'm being generous if I estimate that 25% of the Elite model consumers also purchase Kinect. So 4M * 1/3 * .25 = .3M

So right there we have 2.3M Kinect sales but there are still two factors.

The first factor is that the 360 has an existing 42M consumer base. Even if Microsoft can only convince a small percentage of that user base to buy Kinect it would have a huge impact on sales. For the argument let's just try a 5% tie in, that would results in 2.1M Kinect sales.

A quick total gives us 4.4M Kinect sales right there.

The second factor is the buzz factor, I'll admit that I'm not a big fan of Kinect and I think I'm being conservative in my estimates so if Microsoft manages to create enough of a buzz they could easily surpass the estimates I've laid out here.
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James Finlan Studying Information Systems, University of Manchester8 years ago
Would go along exactly with what you posted Matthew, those numbers are very viable given a half decent marketing push to spark a word of mouth 'buzz'.
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