Wednesday, April 27, 2005

Core Dump: New Consoles

Instead of discussing every breathless headline announcing an “authentic” photograph of the left-top-corner of the new Xbox 360, I decided to wait until the dribbles of information had accumulated to a reasonable degree. Which they have, so I’d like to do a core dump on what we know and what it might mean.

First, the Xbox 360:
--At least two shipping SKU’s; one with hard drive, one without (hard drive can be added later)--720p support for every game--Xbox Live support for every game--Full screen anti-aliasing for every game--backward compatibility via optional hard drive--wireless controllers
--64 meg memory cards

Most of this has not been officially confirmed by Microsoft, but there’s a high degree of probability that each bullet point is correct.

I’ve been contacted by two people working for companies with development kits and they are both completely blown away by the capabilities of the console. So I don’t think anyone is going to be disappointed at E3. It’s a phenomenal piece of hardware.

Second, the PS3:
--incredibly powerful Cell processor

Now both of these consoles are debuting at E3. All right, that’s not technically true—Xbox 360 is debuting on MTV on May 12. They’re going head-to-head at E3, though, and Sony must have Mr. Jack and Mr. Crap in charge of marketing, because that’s what they’re doing right now.

Look. Sony hasn’t been a great marketing company for years. They’re just not. And they’re really showing that now. Microsoft has a viral marketing campaign, a debut on MTV, and buzz. Sony’s got zero buzz right now, and they’ve backed themselves into a corner, because no matter what they do at E3, they’re not going to have a unit for sale in North America for eighteen months. Microsoft will have units in six months. So showing the PS3 now may steal some of Microsoft’s thunder, but there’s still a huge gap that they have to fill between debut and market. This wouldn’t matter much if Microsoft wasn’t an excellent marketing company, but they are, and I think being the underdog (a tremendous rarity for Microsoft these days) has energized that division of the company, because everything I see them doing is right on target.

Sony, in their public statements, has a kind of diffident arrogance about them. It’s the same thing they did before the debut of the PS2, and they got away with it, but they were also competing against two companies (Sega and Nintendo) that couldn’t execute. Well, Nintendo could, if it’s a portable. Otherwise, they’re clueless. Sega was dead the moment EA said they wouldn’t make games for the Dreamcast. In other words, the initial console wars of the PS2 generation were over before they began.

Sony announced earnings for Q1 today, by the way, and lost $533 million. Sales for the company dropped over 4% from last year. Sales in the game division decreased 6% from Q1 of 2004, and operating income decreased by 36%. PS2 shipments decreased 20% compared to Q1 of 2004.

Do you remember just six months ago when Sony was loudly proclaiming that they didn’t need a new console until 2007? Are you kidding me? They are desperate for a new console.

And there’s one more potential factor at work here: the value of the dollar versus the yen. Sure, a weak dollar will hurt Microsoft in Japan, but Microsoft’s console market share in Japan is miniscule anyway. Sony, on the other hand, has the dominant market share in the U.S., and a weak dollar is going to cause them a huge amount of pain.

I can understand how some of you would get the impression from my last few columns about this that I’m a Microsoft proponent. I’m not. I want the best games, and whoever can give them to me gets my money. I just see Sony making some familiar mistakes that I’m not sure they can afford to make this time, and I see Microsoft doing almost everything right. That could change at any time.

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