The 360's Position in the Next-Gen War

An anonymous reader wrote to mention a great article on the Elite Bastards site looking at the Xbox 360's positioning in the next-gen market. In the first of a three part article series, the author looks at the lessons Microsoft learned from its first hardware outing, and what he feels the company's strategy will be in the near future. From the article: "Clearly my impression of the Xbox 360 is that it is positioned to compete significantly better in the next gen console race than its predecessor. The difference this time around is that although Microsoft will no longer have the decidedly most powerful console, they also won't have the most expensive console, and believe me, they will compete on price. The Xbox 360s media (DVD) and input device (gamepad) are safe choices and the CPU may be merely adequate, but the GPU is quite potent and should go far in keeping Microsoft's box in the same league as Sony's overall despite the disparity in time to market."

Comments

My Take

[American AC in Paris]

I'm gonna go out on a limb and say that the XBox 360 is in for a rough future.

The Launch: Microsoft did a decent job hyping the system, but the launch was, on balance, weak. You had your brief hysteria of $5,000 systems on eBay, but it died down fairly quickly. You had serious supply issues--to the point where it hurt more than helped. You had the whole power supply issue. You had decent games, but no "killer title" that made you want to go out and get it.

Today: The games are still pretty pedestrian--the operative word is "prettier", which will only get you so far. Now that the insanity of the launch period has passed, there isn't much about the XBox 360 that appeals to the average consumer--it's expensive, it has decent games but nothing "must-have", and finally, it's expensive. $350 for the system and $50-60 games is simply too expensive for the casual gamer.

Tomorrow: As Thanksgiving approaches, I'm willing to bet that the 360 hits hard times. Unless they can come up with a bigger hit than Halo, all the chatter is going to be about the Revolution. Nintendo is going to have the luxury of not needing killer games at launch; the new user interface alone will likely drive sales, and if they can put out a few decent games that take advantage of this, they'll be set.

Basically, to your average consumer, there's little reason to get an XBox 360 right now. It's a big enough investment that most people won't consider it as an impulse buy, and it's enough like the last generation of consoles that it won't generate enough interest--again, this is unless they can get a truly must-have game out before, say, September.

The 360's position in the next-gen war is that of the gung-ho kid who vaults out of the trench and bursts ahead of the rest of the charge: he's out front right now and will bask in glory if he can survive--but he's also the first target to come in range.

Or, from another angle: Sony and Microsoft are working hard to field the finest cavalry regiments ever seen on a field of battle. Nintendo is working hard on building a tank.

Re:My Take

[Soporific]

$350 for the system and $50-60 games is simply too expensive for the casual gamer.

What new systems are going to sell below that on launch? And I seem to remember paying upwards of $75 for Sega Genesis games, I don't think $50 or $60 is unreasonable.

~S

Re:My Take

[aardvarkjoe]

And I don't remember ANY SNES/Genesis games costing over $60. The vast majority released at $50.

Well, to be fair, due to inflation, $50 in the SNES era is worth about the same as $60 today, perhaps a little more. So by that measure, the prices haven't really changed. You would do better to compare them to previous-generation games (most of those started at $50, too, so the price goes up by $10.)

I suspect that those who were willing to pay $50 for the latest games a year ago will be willing to pay $60 now. Those of us who are more money-conscious aren't paying fifty dollars for a game anyway; we wait a year for them to drop to twenty.

Re:My Take

[American AC in Paris]

Fanboy? Until I got a DS--my only piece of Nintendo hardware--I hadn't purchased anything from Nintendo since the SNES. I've been a PlayStation man for close to a decade now.

The simple truth here is that of the three major console producers, only one of them seems poised to do something beyond "what we did last time plus five years". It is my honest opinion that Nintendo will come out on top this round because they're willing to take a sizeable risk, while the other two are playing it safe--and "safe" isn't going to be exciting enough to justify the historically high price tags.

What they conveniently overlook is Nintendo's lack of HD support is going to be awful for them.

I think you are vastly overestimating the importance of HD to the average consumer. The people who really care about HD have already purchased their XBox 360. Remember that many, many people still jack their current-gen systems in with a freakin' coax line, despite the availability of composite and S-Video on the TV they already own..

Then again, perhaps I expect too much from an individual who posts:

"Even if they don't have such a TV, families will walk into the store next Christmas season and see PS3, X-Box, and Nintendo screens side by side in demo areas, and next to the other two, the Nintendo will look like something from a 1980s arcade machine."

"the Revolution will have.... what? A "para para" game to take advantage of the new interface, and maybe a puppy simulator? Wow. That will still be dazzling people ten months from now, eh?" (emphasis mine)

Which of the two of us has a bone to pick, here?

Re:My Take

[archen]

Not just girls but everyone who isn't your conventional "gamer" demographic. The PS2 seems to have attained the widest audience just because it managed to be sitting as the fat cat at the top the longest and has the largest library. The Xbox seems to be targeting college age males extensively. Then MS seems to go after the same target audience again with the 360. I doubt Sony really has much of a comprehensive plan on a target market aside from throw out as much hype as possible and try to dazzle everyone you can.

Sony and MS seem to be missing the really big picture here, and that's that there is a HUGE untapped market that's going to be emergeing - everyone ELSE. My wife likes to play various games, but is quite dismayed at the fact that very very little seems to appeal to females at all. When you're talking about kids, family-oriented stuff, WOMEN, and possibly other segmants not considered - that adds up to a huge potential MS has already over-looked, and Sony will probably gloss over as well.

Re:My Take

[Saige]

Xbox Live Arcade. Bejeweled, Hexic, Hardwood Backgammon/Spades/Hearts, Zuma, etc. More PopCap games and other casual and puzzle games on the way.

I've heard quite a few cases of guys that bought a 360, showed their wife the arcade games... and found themselves having to wait to get on the console. So they're getting the market for the casual women gamers that way.

(Of course, the serious female gamers don't need those sorts of games, though we do play them. I'm much more interested in other games - DOA4, Full Auto, PDZ, etc)

Re:My Take

[TimboJones]

X-Box... with a bigger library of available games

Except for that whole downloadable library of games from earlier Nintendo systems. That's a pretty big library. But I suppose those games are too primitive for your sophisticated HD tastes.

Well, duh!

[babbling]

Of course it's going to compete significantly better! It has no competitors now, and won't have any for months yet. The 360 has a huge head-start.

Yeah, here's why I think they're positioned better

[Richthofen80]

Clearly my impression of the Xbox 360 is that it is positioned to compete significantly better in the next gen console

Could that be because the Xbox360 actually exists, and isn't just an idea. Does PS3 even have a launch date yet? People keep saying this and that about PS3, but Microsoft actually anticipated their existing product's shelf life accurately, and planned for it. I have been dying for some of the stuff the xbox 360 does, like HD gaming, a consistent online experience, and OEM wireless that comes with the system. Sure, xbox has issues, namely a lot of bugs made it through. But since I'm online they're patched pretty quickly and things are working out pretty well.

I'll take HD gaming now versus something that doesn't have a launch date yet.

I think more of this depends on Sony...

[Siguy]

I own a 360. I like the console a lot. There's definitely a dearth of good games right now, but there are at least two that I really want coming out next week, and I did really enjoy some of the ones I got at launch.

Having said that, I think your opinion of what's going to happen in this console race depends on your opinion of Sony. If you think they're gonna have a great launch with tons of titles lined up and in great shape and lots of available consoles and on time this year, then you have to think they're gonna cream Microsoft's anemic launch. If you think Sony is gonna be in the same boat as the 360 with even more complicated components and an even tighter release schedule that might get pushed back, then you probably think it'll be a pretty even battle with maybe a slight edge going either way.

Personally, my bet is that Sony runs into the same problems Microsoft did. I think they sell more consoles, but by then the 360 has a decent amount of games and it's a fairly even race for a year or two till the 360 fades about 6 months earlier than the PS3 does. Then we get the next next gen, and so on, and so on.

Early Launch

[Silence86]

The XBox 360 is doing well now. This is unsurprising, as it has no competition at the given moment. The true test for Microsoft and the 360 will be its staying power and ability to compete against the more-powerful, better-backed playstation. Because it had a headstart, the 360 made a good bit of money due to the cool-factor of being the first next-gen console. But the question we have to ask ourselves is "will these graphics even be on par in 3 years?". The answer to that, probably not. I know that as the developers get a feel for the platform the graphics will improve, but they can't outreach the limits of the hardware itself, which frankly are mediocre. When the Playstation relases, I predict that it will have slighly less "burst" profitability, but will have much greater staying power. Sony has traditionally had better backing from game developers, and I don't really see that changing. I was a proud owner of all three consoles of the previous generation. Most of the games I bought for XBox were on other systems as well. I bought them for XBox because it was the most powerful. Now I'll buy them for Playstation because it'll be the most powerful. Gameplay is important, but if you can get the same game on two different consoles, which would you choose. Most people would choose the one with more power.

Re:Early Launch

[justchris]

You know, I did that once. Bought a game that was available on all three consoles for the Xbox cause it had better graphics, shorter load times and online play. It was an FPS. Last time I make that mistake.

As it turns out, as much as I hate load times, a lousy, stiff, horribly inaccurate controller is an even bigger annoyance. The 360 controller is leaps and fucking bounds above the original Xbox controller, but if the PS3 or Rev have better control yet, then I won't be getting my cross platform games on 360. Control beats graphics hands down.

The games make the console

[RodgerTheGreat]

Whatever console has the best games will come out on top. Hardware alone will not win this war.

Personally, I hope that the new power of Next-gen consoles will let game developers explore new ideas in games, an area mostly limited to PCs due to processing power and licensing issues, such as the groundbreaking Garry's Mod, a physics-based sandbox in which you can build mechanical contraptions, vehicles, etc, and make them really work. Hopefully the revamped systems should give game makers room to forge new genres.

I wouldn't be surprised if sony is 'rallying'

[Anonymous Coward]

It was a bit of news on consumer hardware enthusiast sites recently that nVidia has been 'caught' promoting their products on message boards without disclosing their affiliation. Which isn't surprising to me. I just can't help but wonder every time I see some shill promote the Playstation Three like it will be a 'paradigm shift' in gaming that they are in fact of the same nature. I imagine a lot of companies do it. It make sense to create a large base of rabid morons who infect every corner of the intranet with their specious claims about the awesomeness of blu-ray & sony's,^W IBM's Cell processor. I can't fathom how one could be stupid enough to actually believe the videos of the 'ps3' in action are anything besides prerendered CGI. Have any consoles even been produced for developers to test on? As far as I know they were just using commodity hardware as an approximation.

I think the prudent decision here is a 'wait & see.'

Re:Yeah, here's why I think they're positioned bet

[pythas]

I agree 100%. Look at all the promises Sony made about the PS2. How many of the came true??? Is the PS2 tying everything in your house together? Are you downloading movies (legally) and watching them on the PS2? Where's all the online services that Sony promised?

Sony has the position now of being able to sit down and say anything they want about the PS3.

Development Tools

[mrm677]

Talk to game developers and many/most will say that Microsoft has better developer tools, documentation, and assistance.

The awful truth

[Y-Crate]

It's far too early to tell how this generation is going to pan out. That won't generate traffic to any gaming sites, so they have to go off into the realm of mindless conjecture.

So far, the PS3 has been nothing but a smoke and mirrors show. The reason being, Sony needed to do something to blunt the 360 announcement long before the PS3 hardware was ready, so they sent the FUD machine into overdrive and spat out the same drivel they did when trying to kill off the Dreamcast. Not surprisingly, people lapped it right up, despite the previews being little more than mockups and "real time demos" rendered at 1FPS prior to the show and sped up. I'm not saying the PS3 is going to be a disappointment, nor am I saying that it will be comparable to, or lightyears beyond the 360 or Revolution. We simply know far too little substantive information about its capabilities and exactly what its game library will look like.

The Revolution was being heralded as the only good console of this generation - even before there was a single feature announced. Other than the controller and the back-catalog being rereleased for it, we have seen nothing of what it can do or what it will bring to the table.

Let's have this conversation in a few months, after E3.

I don't know why

[bored]

Everyone seems to think the PS3 is going to be so much better than the Xbox3. It seems to me to be a repeat of the xbox vs ps2. Originally everyone said the Ps2 was going to blow the doors off of the xbox, but then it turned out all that wierd hardware didn't really perform as well as everyone expected. There is a distinct posibilty the same thing will happen this time around. In a couple years we can decide which was better, right now i'm leaving my opinion up in the air, and I wish everyone else would too.

Re:I don't know why

[snarlydwarf]

Cool hardware doesn't sell systems.

Games do.

And the PS2 did "blow the doors off the xbox."

Sony made billions on PS2. Microsoft lost billions on Xbox.

Re:Yeah, here's why I think they're positioned bet

[Anonymous Coward]

but Microsoft actually anticipated their existing product's shelf life accurately

I really don't understand where you get this idea. All of those things you listed are available for the Xbox today (HD, online gaming with Xbox Live, and even wireless). Most gamers would agree that the Xbox still has at least a good year or two left in it. I imagine that most Xbox developers would say that there's still a lot of potential in the machine that's unused. Microsoft even admits that they did a preemptive launch to chill Sony's launch plans.

I think this is more of the PC gaming mentality where you upgrade every other year or faster because you can't play a great game unless it's running on the latest processor with the latest graphics card.

I really hope consoles stay with their 6 year life span instead of Microsoft's hopes to shorten it. Not only is it cheaper on the individual, but IMO it really allows more innovative gameplay to shine because all the development toward the best graphics is over with and there's more concentration on the actual game.

Get realistic...

[7Prime]

Oh come on, I've heard this arguement more than a few times, only from slashdot. But the other 98% of the population doesn't even know what a "rootkit" is. And "so much attention" is only relative. It got quite a bit of attention on tech sites, but if it wasn't on NBC Nightly News or on the front of a section of the NY Times, it won't even make a dent in sales. I would say, even if it DID make headline news, you might see a 1% sales drop. Most people use consoles for playing games, not viewing media, anyway, most of what Joe Sumer will be hooked with is fancy graphics, a lot of buzz, and news of must-have games. I have little doubt that Sony will be able to deliver those three things just fine, as it did on their last two releases. So no, the rootkit issues is not going to bite Sony.

View from a disinterested observer

[jmorris42]

Having not bothered with any console since the Atari2600, here is how I view the landscape.

Xbox 360

Pro: Out first, never discount the advantage of getting on shelves first.
Fairly solid design, nothing too daring.
Massive marketing push

Con: Fairly solid design, nothing too daring.
Early mover advantage all but negated by supply issues, Xmas '05 was a bust.
Only a DVD Drive

PS3

Pro: Backward compatibility with PS2 and PS1.
Proven ability to churn out titles appealing to key 16-24yo male demographic.
BlueRay, especially if it wins in the broader next gen DVD war.

Con: Late arrival

???: Cell. If it can be harnessed it will be a major plus, otherwise another Itanic fiasco.

Revolution

Pro: Widest range of software covering the most catagories.

Con: From teh prelim info available it appears to be woefully underpowered.

???: New input system is a total wildcard much like Cell.

I'd say Nintendo will survive this round simply because it will mostly be fighting for ground not coveted by the other two contenders. If the new input system permits new catagories of gaming the others can't port it could gain major ground.

However there really isn't room for both Xbox and the Playstation since they both target the same demographic and neither is likely to be able to slide into the media center/tivo market with their current generation hardware.

If Xbox suffers another lackluster second place finish to Sony it will be hard to convince the instituitional investors who hold vast quantities of Microsoft stock in pension plans to piss away billions more on a third try. Sony on the other hand can probably afford to lose a round and come back with another try so while the pressure is on Sony to deliver a knockout and end the war they probably can better survive a loss while for Microsoft it is probably "win or go home" time. Expect them to realize that and play for keeps, slashing prices at the first hint of erosion in sales, knowing this brief period before PS3 & Revolution launch is their best opportunity to lock in customers.

MS screwed em selves over launching too soon...

[Zantetsuken]

IMHO, Microsoft really screwed themselves over by launching too soon. The reason they did it was mostly to get a product out significantly sooner than Sony so they could get 1) people that owned nothing but the original XBox to buy a 360, 2) get the people that did no console research at all to buy a 360, and 3) so people with money to burn would have something to tide them over until the PS3 launch.

In order to get this signicifantly earlier (than the other next-gen consoles) launch date, they had no choice to sacrifice product quality of including vastly improved technologies - and the problem is Microsoft apparently (as the 360 launched this way) didnt give a damn about being worlds better than the current (PS2, Xbox) consoles.

These are the features and improvements I think are obvious MS ditched to get a 1st launch

1) They went with DVDs, which in the media market are becoming fastly outdated - they didnt even go with HD-DVDs, which wouldnt (as I understand it) required *nearly* the renovation of manufacturing facilities that BD-discs would have

2) IBM designed and made/is making the CPUs for all 3 next-gen console companies - Microsoft, Sony, and Nintendo - and they have *very* apparently put much more of their company towards developing the Cell chip - which has other applications. MS did what Apple did with IBM, they wanted a good chip, but they wanted it for *JUST* desktop/PC gaming level applications - whereas IBM wants to build super high end supercomputer and server chips, which Sony's contract lets IBM do, produce a high end server level chip.

3) One of the hardware issues I had read about the 360 when it was in production - the software companies developing for the 360 had to *REQUEST* 512 megs of RAM to be put in the system - MS was gonna put a measley 256 in the 360! If virtually every PC game (made to run on the OS Microsoft made, mind you) has a minimum of 256 and a recommended of 512 RAM, wouldnt it apply to consoles also? When a system launches, it should hav *no* problem playing launch games, and then towards the end of that console's ability to provide an abundance of GPU and CPU power, the truly KILLER apps get released for it (note on the PS2, Killzone, the soon to be released "Black", ect) - If MS had launched the 360 with only 256 RAM, the 360 wouldnt have a chance in hell of this type of killer app developement, mostly because it wouldnt have had the power to get through the launch games, let alone the end-of-system-life killer apps.

But then again, those are *just* my personal thoughts on the 360...

My opinion on the Xbox 360

[krunoce]

I purchased one, and the 2 games I have are pretty fun(PGR3 & Call of Duty 2), but not addicting. 99% of the time I use my xbox 360 is for DVD playing.

I was expecting to have more titles available, and it sucks to see long periods of time seperating release dates for the new games. Actually, the only game I'm looking forward to is Burnout that comes out in March. Sure you can play old Xbox games, but I want to play games in full HD.

For MS's sake they should put out more titles soon, because the PS3 will dominate if the Xbox 360 game selection still sucks like it does now.

Now that I think of it, the cause for this bad game selection is probably because of all the nonsense that companies require to make modern games. I mean shit, a symphony orchestra is needed for the sounds. Maybe if the SDK/MS licensing was cheaper, developers that aren't as rich as EA can afford to make/sell games too.

::Dusts off NES and Mario 3::

Re: The Machine

[Osty]

They will try to kill off innovative games on other platforms

Microsoft doesn't really have much control over other platforms, you know. Aside from purchasing development houses (which they've done twice in the past five years. How many developers have EA, Take Two, or Ubi purchased since then?), they have no way to stop developers from making innovative games on other platforms. All they can do is try to get developers to make innovative games on their platform, and they have a perfect opportunity to pull in the indy folks via XBLA. That's already happening with games like Mutant Storm, Outpost Kaloki, Wik, and Ultra Marble Blast (some of which have appeared on the PC or original Xbox, but all of which are from small-time developers -- I left out Geometry Wars because it's from BC, and I left out arcade ports because they're arcade ports). Maybe getting these developers to innovate on the XBLA platform is a way of locking them into the 360, but I don't think it'd be difficult for those developers to publish their games online for the PC as well (as I already mentioned, many do that now).

try to tie people to Xbox Live with restrictive licensing

What? I mean, really, what do you mean by this? Are you saying that they'll using licensing to prevent developers from making their games interoperate with other platforms (false -- Final Fantasy XI does just that)? I just don't see what licensing has to do with this at all. And besides, what do you think Sony's going to do with their Xbox Live clone, the HUB?

try to cut into the home theater market profits

Cut into those profits from where? DVD players? What profit can there be in a market where you can buy a $30 progressive scan DVD player that's perfectly adequate? If anything, the 360 will be a compliment to a home theater, because it works as a Media Center extender right out of the box. Since Vista will include media center functionality in every version, you won't be able to not buy a media center PC in a year if you want Windows (and if you don't, this doesn't apply to you anyway). The 360's media center integration has been called one of its greater strengths by most reviews, along with XBLA. The way I see it, MCE integration and Arcade are the 360's "backwards compatibility", where "backwards compatibility" is defined by it's functional purpose -- "A way to get some valuable usage out of a system during that first 9-12 months of its life when the number of good games just aren't there." Sony did this with PS1 games on the PS2 (which had an even worse launch line-up than the 360). The 360 does this by providing fun arcade games and media center integration.

And so, in the console market, I predict* that their games will be clones of previous successes, that Xbox Live will degenerate into the same kind of experience as you get at msn.com, and that the home theater market will largely ignore them as being way too expensive.

And I predict that there will be a mix of "old faithful" games (Halo 3, EA's sports regurgitation year after year, another Splinter Cell, another Ghost Recon, etc) and innovative games (whether full titles or on XBLA), Xbox Live will continue to be a great service even when the 12 year olds continuously drop the N-bomb and question your sexual orientation, and the home theater market will only care about the 360 as a game machine or media center extender (because it's not meant to be a top of the line DVD player, and even if it was the home theater market segment will always prefer stand-alone units).

Correction

[Anonymous Coward]

Talk to game developers with a PC programming background and lack of experience in embedded systems and many/most will say that Microsoft has better developer tools, documentation, and assistance.

That's not surprising, as the xbox is largely a box with a PC inside.

Ok, lets take a new perspective

[Jfarro]

Wow. Time and again I see the same things...Nintendos controllers going to do wonderful things, Sony's graphics are going to do amazing things. As someone thats played games since the 2600, I'm really thinking that people aren't 'getting it'.

You dont factor winners by how strong a launch they have. But you do factor losers. If they dont sell (we're looking at you Gizmondo and those sidetalkers) then you have problems. If you sell them as fast as you can make them, well no prob, make more, move on.

Long term, its the possiblities that matter. I can watch and stream HD content to my 360. NOW. TODAY. I can download games. I can download trials and demos. A 360, out of the box, is more fun than any past console. The xbox arcade is the thing that should be most talked about. Sure, theres only a few titles out there, ranging 50 to 70 bucks. But on xbox arcade, theres titles from 5 bucks to 10, and theres a ton of them. Noone talks about them. But damn, I know I spend more time on them than anything else.

Game demos being downloadable...I've played the demo for Fight Night longer than I'd played many of my older xbox games. For Free! Today...not tomorrow, not promised, not vaporware. MS delivered that experience, and it was fluid.

I can purchase games for the arcade via xbl with points. I can download trailers and watch them. I can play music from my computer. The XBL functionality is upped tenfold. Achievments make arcade games fun again.

Now that stuffs not a big deal...except when you look at tomorrow....

I can see tomorrow bringing downloadable movies (netflix via the net style)
I can see an online music service. The technology is there, in my living room, working
I can see downloading full games, and purchasing them online. No more go to the store and be sad if they're out. Just go browse, buy, download, play (steam for consoles..but without the suck)

Yes, bigger harddrives would be needed. Yes, dashboard updates would be needed. But MS has shown with the first xbox they can update live and add amazing functionality. And I'm thinking the removeable hard drive wasnt just a ploy to have two versions, but so that future use wouldnt be tied down to 20 gigs.

On top of all this, being out a year early allows the developers to play with it, so that even though the hardware may be lacking, it'll give the devs a head start on learning the tricks, so that MS can have second gen 360 games go against first Gen sony games. But honestly, playing the games, I really dont think graphics matter. Its about fun...Sony showed this by creaming the xbox with the PS2. I think that they're going to have to deliver on something more solid than just 'wow 9 cores'.

They need an online story to compete against live.
They need a living room story to compete against the media center extensability
And of course they need thier first party titles to sell.

Knowing Sony, they're up for this task. They know the living rooms of the world well, they've been there forever. But MS made sure they'd have thier challenge cut out for them.

Nintendo? ah...Nintendo. I think Big N is just going to kick back, have fun, do thier thing. IT wont be a 3 way fight. It'll be people will pick up thier PS3/360, and on the way out pick up that little revolution box for 'the kids' since its small, cute, cheap. The fact that that box may take over the living room later is just the trojan horse nature of how they work. In the end, they'll probably stand with higher sales numbers than the ohter two in units...but I think there are more 'behind the scene dollars' here to consider. (Online movie rentals, Live/sony online sales, downloadable games sales (though N may have this too), etc.

Just my opinion, noone elses, not my employers, any game companies, any game stores, my wifes, or my dogs. My opinion, FWIW

Re:X-Box 360: Great Console looking for Great Titl

[justchris]

I don't believe Revolution is really a major factor in the current stage of the game-- not because I'm trying to knock Nintendo, but because some of Revolutions's concepts are so radical that it is not easy to "predict" what will happen. Revolution could be the next major breakthrough in gaming, but it could also be widely rejected by customers. Because of the uncertainty, I think most of Nintendo's competitors-- while wary about what the console could do-- are now focusing on their own core strengths instead of worrying about reacting to what Nintendo does.

I think you hit the mark with that comment. The main reason everyone at both companies is saying Nintendo is not in direct competition with Microsoft is because no one's entirely sure what's going to happen with Ninty's big gamble. M$ can make some contingency plans in case it takes off, but really, with an established system out in the wild, there is not much they can do, and no reason to spend money on something that might be a colossal flop.

Nintendo, on the other hand, can't be too concerned with what M$ & Sony are doing. They're not just trying to sell us a new game system, they're trying to sell a new paradigm. If they want that to fly, they have to poor everything into it. The Virtual Console, WiFi Connect, everything they're doing is not to compete with Xbox & Playstation, it's to provide a complete experience they can sell.

This doesn't mean they aren't going to be in direct competition in the future (say by the end of this year), but right now, they pretty much have to operate independently of each other.