Microsoft is hedging its bets when it comes to gaming.

Microsoft is setting the stage for the collapse of the home console industry, or at least its investment in it. Think about it. They are building in tons of gaming features into Vista. They are bridging Xbox live into vista. They are branding PC games like console games. They have xbox controllers that work perfectly with PCs. They’ve even created an SDK for building and compiling games for both the 360 and Windows.
Why? The xbox lost Microsoft 4 billion dollars. The 360 is going to be a money loser for years to come, if it ever turns a profit. Everyone talks about the innovation of Xbox live but how is Microsoft paying for it? Let alone profiting from it. The 360 is a complete failure in gaming’s most important market- Japan. Even if they do have one million paying subscribers they still have to build and maintain a huge infrastructure, the development costs alone probably haven’t even been recouped by paying subscribers. So you have the Xbox as a money loser for a decade. Couple that with the kinds of innovation they want to accomplish that will inevitably be stifled by the 360’s aging hardware.
On top of that, they are driving Sony out of the console business as well. Probably a lot of mainstream developers too. Suddenly consumers expect $1500 hardware and games with incredible graphics and gameplay, games that provide you new content FREE! Of course theMarketplace does exist and some people are buying it, but will it cover the cost of developing and maintaining games far beyond their going “gold”?
So five years from now, Nintendo will be the king of video games in the living room. By innovating, by making games fun again, and by reducing the mental barrier to entry back to a place where young kids and old folks can actually pick it up and play. Microsoft will still be in the game, but they’ll be licensing dev kits and the right to publish games for Windows and have access to Microsoft Live, which at this point will by its all encompassing gaming and communication service.

Think about it.

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Oh yeah, anyone who *really* thinks sony is crazy for releasing the ps3 for $600 bucks is forgetting how much everyone paid for 360’s: $800 or more from December through February.

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