When the Xbox 360 came out, it was portrayed as something everyone wanted, the amazing new console that was selling out everywhere. Yet the next week, when I walked into Costco they had a pallet piled high with the things.

When the Wii was launched, it became the console that was really selling out everywhere. But by then, Microsoft had moved on to their new story, that the Xbox 360 was the biggest selling next-gen console.

Except that it isn’t.

If you read the small print on Microsoft’s announced sales figures, you find that they’re not actually lying; but they count a console as sold as soon as it leaves the factory. Sony and Nintendo do the same, but there’s a big difference in how that figure relates to the number of consoles actually sold to gamers.

If you walk into any electronics store, you’ll probably see several dozen Xbox 360s piled up in the main store. You won’t see anything like as many PS3s, and you probably still won’t see a Wii. Think about that. Also, think about the fact that electronics stores don’t actually like to pile expensive items up in the middle of the store inside their boxes; it usually indicates that they’ve got even more piles of the things in storage out back, and have run out of space and are trying desperately to shift them. Have you ever seen a big pile of digital cameras in their boxes in Best Buy? A stack of dozens of Denon receivers in Circuit City? Nope. But you’ve probably seen a big stack of $30 Chinese DVD players on clearance…

Someone has put these observations together with some hard sales data. It turns out that the channel is absolutely bloated with unwanted Xbox 360s. Not only that, the 360 was almost matched for sales by the PS2, except during Halo release month, which is clearly visible as a statistical anomaly. When the release of a single game skews your sales that much, that can’t be a good thing either, can it?

In fact, Xbox 360 sales peaked in 2006. And with the PS3 now having a solid library of good games, I don’t see it improving. Also interesting is the analysis of how the 360 is actually more expensive than the PS3, once you factor in the add-ons to make it equivalent in capability.