How Microsoft, Nintendo, and Sony can win the console war

How can Microsoft, Nintendo, and Sony stay on top? We give each console maker recommendations for 2007 and beyond.

It's a critical time for the Big Three console manufacturers. As the second holiday season rapidly approaches, Nintendo, Sony and Microsoft will do all they can in an effort to win consumer dollars and solidify their mark in gaming.

"This is the most competitive holiday season in the history of video games," says Pacific Crest analyst Evan Wilson. Indeed it is. Fortunately, the increased competition spells increased choice and value for gamers.

But what does each console maker need to do to stay ahead of the competition? We'd like to answer that very question, assuming we were in charge of each respective company. And though it's a lot easier to gamble with other people's money, it doesn't make it any less fun. So come along and backseat drive with us!

Microsoft, Xbox 360

What a year the Xbox 360 has had, for better (the games) and for worse (the negative publicity). After launching to a great start in November 2005 and throughout 2006, the company's momentum quickly deflated with the introduction of Nintendo's Wii and the surfacing of 360 reliability issues in 2007. What will it take for Microsoft to end the cycle on a high note? In order of importance:

1. Release more reliable hardware. My fellow GamePro colleague Vicious Sid worded it best when succinctly describing the Xbox 360: "Great games, lousy hardware." While the extended warranty saves gamers from incurring additional repair fees, it's still a tremendous hassle to box up and ship back your broken console... not to mention the processing time, which can take weeks. Furthermore, the estimated 25-33% failure rate is sure to keep people from buying the machine, as evidenced by waning sales this year. People are waiting for better 360 hardware. Microsoft needs to oblige.

2. Reevaluate the Xbox 360 value proposition. My college economics professor told me that when you drop the price of something, regardless by how much, demand for said product will increase. That's a fact. Sadly for Microsoft, the current $50 price drop when coupled with its later-than-expected concession will do little to boost 360 sales. Microsoft would be wise to reduce the price further still this holiday in an effort to reflect historical cuts; say upwards of a 40% drop to $240 by its third year as was the case with the original Xbox. Additionally, the Xbox 360 lacks a high-definition movie player, wireless networking, and free online multiplayer, something PS3 owners can get for a mere $50 more (10 percent) than the Xbox 360 Elite. That said, it's clear Microsoft should do something to make the Xbox 360 more appealing in terms of its valuation.

3. Make Xbox Live free. Microsoft guessed wrong with the belief that most gamers are willing to give away at least $50 a year in addition to Internet costs to play others online. Especially when you can already do that for free (minus Internet costs) on PCs, Wiis, PS3s, DSs, and PSPs. Yes, Xbox Live is superior in some regards, but "the get what you pay for" argument has run its course. Microsoft needs to drop its Xbox Live service fees by next year. In doing so, we're confident many more gamers will "jump in" causing similar effects to that of social networking sites such as Facebook and Myspace. Why charge a fee when you could make more money by advertising?

Microsoft might not turn a profit on their Xbox business until next generation. In understanding that, the company will be in a better position to follow our above advice and aggressively expand their install base, something that is sure to add several more games to their already stellar lineup. That strategy is hardly a failing one, rather one with greater perspective that could easily put Microsoft on the path to becoming the formidable giant in console video games. Good things come to those that wait.

Likely outcome: Microsoft observes recommendations one and two, but early reliability issues and their reluctance to ditch Xbox Live service fees amid increasing competition from Sony and Nintendo keeps the 360 from "winning" this generation. Still, the console goes down in history as a huge success with gamers as Microsoft readies its third attempt to knock one out of the park with the "Xbox 720."


On to Nintendo's Wii (page 2/3)

Comments [0]

post a comment

Post a Comment