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Pachter: Wii's advantage will be eroded by competitor price cuts

Analyst also predicts DS is losing sales to iPod Touch

The PlayStation 3 and Xbox 360 could see further price cuts this year, analyst Michael Pachter has predicted, which would lead to the Wii losing the price advantage it has over its competitors.

Following Nintendo's release this week of its Q3 financials, Pachter said that the company's performance had been largely in line with expectations, with solid holiday sales for the Wii and strong performances by Wii Fit Plus and New Super Mario Bros Wii - both of which sold over 10 million.

However, he predicted the console could lose its advantage next holiday as the PlayStation 3 and Xbox 360 come down further in price.

"The Wii enjoyed a $350 price advantage over the PS3 at launch, and a $150 advantage until September. Now, the gap has narrowed to $100, with the feature-laden PS3 a tempting purchase for prospective console households," he said.

"The holiday Wii sales boost was primarily attributable to a $50 gift card promotion offered by Wal-Mart; while we expect similar promotions at holiday next year, we expect the other consoles to be lower-priced by then, further eroding the Wii's competitive price advantage."

Furthermore, the analyst said the DSi's relatively high $169 price point could put it at a disadvantage to the $199 iPod Touch - a more versatile device and one with a "coolness" factor that is difficult to overcome.

DS software was tracking slightly below Nintendo's 150 million unit guidance, he added - and that guidance was significantly below last year's 197 million units.

"It appears that piracy in Europe and some substitution of iPod Touch games has impacted DS software sales more than we expected, and we have adjusted our estimates for FY:11 to account for further pressure," he said.

Sales of DS hardware were also underperforming on expectations, but Pachter predicted the March launch of the DSi XL would allow the company to ship sufficient numbers to meet targets.

Nintendo reported a 9.4 per cent decline in profits for the nine months ending December 31, 2009 and blamed falling revenue on a slow start to the first half of the year and appreciation of the yen.

Holiday sales in some regions however outperformed those of the previous year.

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