We met with Sony Playstation's senior European executives today for a performance update and to hear plans for 2010 and beyond. After what the company described as a challenging 2009 the PS3 nevertheless appears to be in a strong position as we enter 2010. I can't release any detailed European market data yet, but we will be publishing our own estimates and forecast for console sales very shortly. But the general global outlook for the current generation of home consoles appears to be clear. In terms of annual sales volumes Nintendo's Wii is entering a period of decline, although its global performance in 2009 held up well. The Xbox 360 has peaked in terms of annual sales, while sales of the PS3 are still on an upward trajectory. So while the PS3 still ranks third globally in terms of installed base, this situation may not last much longer. Much depends on assumptions about the longevity of these platforms. As we have always argued, the PS3 was designed with longest term vision in mind, and that is now being demonstrated by global sales patterns. However the uncertainty surrounds the impact of system upgrades such as Natal and Sony's motion controller. These are likely to give renewed impetus to both platforms. We'll release our conclusions together with market data projections in the next week or so. Client Reading: Consumer Imperatives for Digital TV Media Browsers

Toshiba's press conference focused almost exclusively on the launch of Cell TV in the US market. We have followed the progress of Cell technology for nearly the past decade, since Toshiba, Sony and IBM began its development. As a reminder, it lies at the heart of the PlayStation 3 system, and Toshiba has always made its intentions clear to launch a range of other consumer devices using the processor technology. Cell TV will use Cell for various capabilities: to deliver 3D pictures from 2D sources; to upscale video, including video from internet sources; and to support “Autoview”, which sets the TV picture automatically and adjusts for the room’s colour temperature. I did not get the chance to examine the performance of Cell in these tasks – I hope to see detailed demonstrations later this week. Cell TV will be Toshiba’s flagship model this year. It will also feature a range of connected TV features, including wireless HD (the WirelessHD standard), 802.11n, DLNA, USB movie, Net TV channels and videophone. Yes, like LG and Panasonic, Toshiba is also entering the rapidly emerging big screen videoconferencing space. The launch of Toshiba’s first Blu-ray player was mentioned more or less in passing, and it will be upgradeable to 3D capability. However, we question Toshiba’s commitment to BD given the company’s belief that “the future of video is online, and discs are in decline”. It seems the bitter legacy of the HD-DVD saga has not been easily forgotten. Client Reading: HDTV: Standards Muddle Clouds Outlook For Wireless Displays

Sony announced a major restructuring today. This is a vital step forward for the company, which has tried for years to bring coherence and unified direction across its various technology, device, media and service interest groups. Bringing all connected devices - Playstation, mobile and Vaio - under one group - Networked Products and Services - shows the company understands the importance of online capabilities across all its products and services. Existing TV and video products remain in a new Consumer Products Group. The challenge for Sony will be to develop a unified technology and product strategy across these various entities, and that will not be easy for groups that, in spite of progress in recent years, still do not work well together. Sony is not going as far as Cisco's familiar "the network is the platform" theme, but the development of PlayStation Network is clearly going to underpin a lot of Sony's developments across many of its product lines. Overall this has to be seen as a positive development at a time when the traditional consumer electronics market is in decline. If Sony executes successfuly and truly unifies behind a common objective, it will go a long way towards retaining the leadership position it has held for so many years. Twitter: twitter.com/dmercer15

Over the last few years there have been numerous IPTV conferences and events springing up all over the place, but the IPTV World Forum appears to have become the most important in Europe, and attracts visitors from all over the world. The exhibition features stands from major and smaller vendors alike - enough to more or less fill two floors of London's ancient Olympia venue, and many familiar faces were seen wandering the aisles. I hope the organisers manage to find an alternative venue for next year - visiting Olympia is a bit like emerging from Doctor Who's Tardis some time in the 1950s, and the local hotels are not much better... A few highlights worth mentioning: Vividas is giving an impressive demonstration of HD video streaming over the Internet, showing a 720p clip of Paramount's upcoming Transformers movie streamed at 1.2 Mbps. Vividas' solution involves analysing the user's PC and sending only the player elements necessary to support that particular device. In this way it reduces the payload to a fraction of the typical media player, and claims also to increase content security because there is no trace of the media file on the user's PC. Visiware, the French gaming company, is demonstrating its own solution to multi-platform gaming, so that a subscriber can access the same game on digital TV, broadband and a mobile phone, and even resume playing from the same point of the game on a different device. Visiware began life in the interactive TV space more than 10 years ago, and is one of the few survivors from that era with a global presence. Nortel's deal with NDS made most of the headlines, and Nortel is demoing the usual types of voice/TV application such IM, caller ID and video telephony on the TV screen. It's good to see Nortel positioning itself for these potential IPTV applications, but I can't help thinking it is somewhat late to the party - most of these ideas have been around if not on offer from competing vendors for some years. Industria is an Icelandic company with a focus on IPTV middleware and solutions. It has significant deals with Irish and Bulgarian operators and is planning further expansion as well as partnerships. I expect to see one or more major telco vendors bidding to work with Industria over the coming months. Oregan has built its business with Sony's PlayStation but is now branching out into CE retail through partnerships with Philips, Nokia, Samsung and others. It has high hopes for connected device solutions using its Media Browser software. It is demonstrating accessing CinemaNow and the BBC's video clips on a TV screen. They have had most success so far in Japan, but we expect to see significant movement in European and US markets over the next year or so. Finally we were treated to a demonstration of Ruckus Wireless' WiFi solution. Ruckus has created a stir with its unique antenna technology that guarantees quality of service for video streaming, including HD, over home wireless networks. It has significant deals with PCCW and Belgacom (Strategy Analytics clients will receive a report on Ruckus shortly).

Nintendo helped create the modern videogames industry, and the company remains a leading force and is financially successful. In spite of this, Strategy Analytics’ games reports over the years (in which I have been the principal contributor) have cast doubt on the company’s fixed console strategy, and we were proved largely right with the GameCube, which was a major disappointment and drastically missed all Nintendo’s own projections.

I try not to let my personal preferences influence my professional analysis: I admire the passion displayed by the dedicated followers of the various systems, as indicated by the copious flames that fill my inbox every time my name is attached to a particular pronouncement. For what it’s worth, I have only ever bought Nintendo’s consoles (fixed or portable), for myself or my children. But this has not stopped me taking the view that in the fixed market, Nintendo stands little chance of market leadership in the battle against Sony and Microsoft.

Latest reports of Nintendo’s recent results in the specialist and business media have an unswervingly positive slant. Financially, the company continues to be extremely strong, and this is supported principally by the company’s domination in handheld gaming (where Sony’s PSP is rapidly losing ground). But surely even Nintendo cannot pretend that its Wii console is meeting expectations. It sold 3.2 million in the first quarter, 20% below its target. But from all the press reports you would think the Wii was already market leader and set to sweep the world.

Take this from Business Week: “Nintendo's Wii console has blown away Sony's PlayStation 3 in the early stages of the hotly contested battle for next-gen gaming consoles.” Putting journalistic hyperbole aside, the facts are that Nintendo missed its target for global Wii sales by 20% while Sony was within 10% of meeting its own (admittedly reduced) target. And while consumers spent $800m on Wii consoles, they spent $900m on PS3s. Blown away, indeed?

I have mentioned before that Sony’s games PR is dire. Whatever Nintendo’s PR people are doing, Sony should learn from it, and fast. The PS3 certainly has major challenges ahead, but it’s nowhere near the disaster the press and some financial analysts are painting it. And the world’s leading console platform is still, wait for it, the PS2. By contrast, Nintendo still has a lot to prove if the Wii is really going to revive the company’s fortunes. If its commercial performance is a good as the PR spin, it has every chance of success. The bottom line is, this is a battle that will be fought over years, not in a few weeks before Christmas.