In a 188-page report from securities firm Wedbush Morgan Securities, analysts lay out what they believe to be the state of the market over the next few years. Their projections indicate that Microsoft will hold onto their market lead for around two years, and then, as HD viewing and media formats take over the market, eventually the lead will be ceded to Sony. Not surprisingly, the analysts pick Nintendo to take third in marketshare. US and European market share for the first two years is projected to be roughly 42 percent Xbox 360, 39 percent PS3, with Nintendo following at 19 percent, giving Microsoft a scant lead over Sony. Sony’s decision to integrate HD media into their console will drive sales further after this, pushing them to a 45 percent to 35 percent lead over Microsoft. It is interesting to see the analysts’ positions on the future console war, and its hard to argue with the numbers as is, but projecting leadership out to such a large degree rests on assumptions whose accuracy could be challenged. At any rate, it looks like Microsoft will cut into Sony’s massive lead in the marketplace, surely good news for Microsoft. Knowing that Microsoft is making a large investment now to gain market share, should Microsoft fail to add to its user base after the launch of the PS3, Microsoft’s losses could be disastrous. Of course, the same could be said about Sony’s upcoming PS3 launch. The next year will be critical for all platforms’ future success.

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