Never thought about it that way. If not monopoly power, why are MS and Sony throwing money at the problem? It's certainly not that they don't know how to make a profit. Perhaps (see other post), they are willing to spend huge if it means they can get a foothold in the future home network, one box controls all tv, movies, music, games, comp SW, etc. Speculating.
Personally, I would consider 6 years still near-term (maybe up to 10 years), but you make a good point that eventually this strategy of outspending the competitors blows up in your face if you can't get the monopoly power. Although it may be worth it in the end (read: worth losing money relative to Nintendo) for Microsoft/Sony to be able to get into people's living rooms instead of just on their computers. I'm guessing Nintendo really isn't pursuing the holistic home network approach MS is targeting.
More niche strategy, not niche strategy. I should have phrased, "differentiated strategy". Didn't mean to imply Nintendo's product was worse than Sony's or Microsoft's.
"In other words, the more a company focuses on beating its competitors, rather than on the bottom line, the worse it is likely to do."
My understanding is that Microsoft and Sony are not in the gaming business for short-term profits. In spending like crazy to try to beat eachother to a pulp, they believe that this is a winner-take-all market, like operating systems. The network effects of increased market share (more share -> more developers -> more & better games -> more share, repeat) point to a clear winner and equally clear losers. Nintendo realizes it can't spend with Microsoft or Sony, so they're wisely bowing out of the bigger fight, going for a more niche market. In the end, if the companies are proven right, their massive long-term profits from acting as a near monopoly (ala Microsoft in the OS market) will make Nintendo's near-term profits look downright embarrasing.
Slashdot Mirror
Never thought about it that way. If not monopoly power, why are MS and Sony throwing money at the problem? It's certainly not that they don't know how to make a profit. Perhaps (see other post), they are willing to spend huge if it means they can get a foothold in the future home network, one box controls all tv, movies, music, games, comp SW, etc. Speculating.
Personally, I would consider 6 years still near-term (maybe up to 10 years), but you make a good point that eventually this strategy of outspending the competitors blows up in your face if you can't get the monopoly power. Although it may be worth it in the end (read: worth losing money relative to Nintendo) for Microsoft/Sony to be able to get into people's living rooms instead of just on their computers. I'm guessing Nintendo really isn't pursuing the holistic home network approach MS is targeting.
More niche strategy, not niche strategy. I should have phrased, "differentiated strategy". Didn't mean to imply Nintendo's product was worse than Sony's or Microsoft's.
"In other words, the more a company focuses on beating its competitors, rather than on the bottom line, the worse it is likely to do."
My understanding is that Microsoft and Sony are not in the gaming business for short-term profits. In spending like crazy to try to beat eachother to a pulp, they believe that this is a winner-take-all market, like operating systems. The network effects of increased market share (more share -> more developers -> more & better games -> more share, repeat) point to a clear winner and equally clear losers. Nintendo realizes it can't spend with Microsoft or Sony, so they're wisely bowing out of the bigger fight, going for a more niche market. In the end, if the companies are proven right, their massive long-term profits from acting as a near monopoly (ala Microsoft in the OS market) will make Nintendo's near-term profits look downright embarrasing.