Second Half of 2007: Time for the Xbox 360 to Shine

DFC Intelligence often releases forecasts in multiple scenarios that account for different factors such as price decreases, new products and form factors, and other determinants that can cause a significant change in the marketplace. So far in 2007 it is safe to say that the market has followed what we called the Nintendo Best Case Scenario. More specifically:

· The Nintendo Wii is on track to meet our Nintendo Best Case Scenario forecasts for 2007.

· The Nintendo DS looks like it may exceed our 2007 forecasts by 10%.

· The Sony PlayStation 3 is on track to match our sales forecasts for 2007 under the Nintendo Best Case Scenario. In terms of installed base it looks like the PS3 will be in third place until at least mid-2008. To move more PS3 units in 2008 we think Sony will have to be more aggressive on pricing.

· The Microsoft Xbox 360 is running behind where they should be to maintain a strong market position. However, the Xbox 360 lineup is heavily weighted towards the second half of 2007. If the Xbox 360 can have a strong holiday 2007 they may be able to maintain at least a second place position for another year.