Wednesday, May 10, 2006

 

The Battle of the Boxes

Read this interesting article on video game wars. It's a bit amusing to see Nintendo squeeze into the scene with a surprise machine which seems to have much less to offer (except a likely low price), in comparison to the sophisticated hardware in the Xbox 360 and PS3. The only downside to more players joining in, is the addition of more standards and platforms, which creates confusion.

I'm also surprised that Sony actually allowed Microsoft to get a year's lead (= 10 million users) on this! Microsoft, on the other hand, seems to have a good plan in place to maintain the lead, with its typical but intelligent strategy of employing network effects in its favor: it plans to link gaming to Windows PCs and mobile phones. It would be interesting to see which way these "boxes" are headed.

Comments:
Sony did not have a choice. The delay was inevitable and that gives Microsoft an opening. This is a great case to explore the importance of timing of sequenced product lauunches under network effects where customers and complementors time their decisions in a systemic way. Nintendo may be trying to go after a different segment while Sony and Microsoft fight it out at the main stage.
 
i think venkat is right. nintendo has been widely believed to have given up on the hardcore gaming market. instead they will grad onto a couple of niches (younger game players being one).

The is an article in the Wall Street Journal that implies the PCs aren't yet out of the gaming market yet. They call out Dell's acqusition of Alienware and their subsequent integration Alienware designs into the Dell XPS as an example of the PC trying to make in roads back into the gaming space.
 
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