Excellent article on market position of big 3 makers

[Diatribal Deity]

I think these articles and this thread are missing the most important factor and that is which target market is growing and which is shrinking. To say that Nintendo is targeting the same group as Microsoft and Sony would be a stretch if not false altogether. Microsoft and Sony are primarily technology driven companies that have to be at the forefront flexing their muscles. This image is important to their shareholders.

Look at Google who just announced a >80% increase in their business as well as tremendous growth in profit. Yet their stock drops 9%. This is because the expectation was not met. What the industry and investors look for in Microsoft and Sony is vastly different than Nintendo. We've known this for a while now.

Microsoft has a particular interest in market share at this point because it is swimming in money (look at their distribution of dividends in the past year). Their shareholders are not looking specifically at profits at this point, they are looking at emerging and potential markets.

We know the Sony story as they are essentially up against the ropes (in regard to their overall business model). They have the most to lose in the next generation battle.

[Nature Boy]

I like the article, but part of me reads it thinking the author *is* a Nintendo fanboy. Maybe I'm too used to people in this hobby *being* fanboys and I can't see objective criticism anymore for what it is, which is a shame...

He mentions, in part 1, that the GBA Micro was a brilliant decision and that he thought it would do *fantastic* (or something to that affect).

When comparing this sort of strategy to Nintendo's competitors, I see no mention of the PSone or PStwo, and I'm curious how much money *they* make/lose in the whole argument. It's got to have the same sort of impact that a redesigned GBA does, for the same sorts of reasons.

[Ed Oscuro]

Interesting posts between Hezeuschrist and Petewhitey.

I gotta agree with Pete; Microsoft has been throwing money around to ensure that other people don't take over a market before they can get a foothold. This is totally different than Sega, whom didn't have a leg to stand on when the Dreamcast failed. Sega had no choice but to retreat from the market.

[The author] mentions, in part 1, that the GBA Micro was a brilliant decision and that he thought it would do *fantastic* (or something to that affect).

I see what you mean In the grand scheme of things, the appearance of the PStwo was a very recent event (10/2004), but apparently not recent enough to matter for him...though I wonder how much money the PStwo would've made for Sony.

I find it somewhat ironic that the reviewer starts out the article by saying "You’re as likely to find good Neo-Marxist feminist game criticism as you are in depth analysis of the medium as a business," but is totally devoid of references for the facts and figures bandied about.

[Bronty-2]

I think people are forgetting the main point of the article - that nintendo's just doing fine financially and that there's no need for the deathwatch some people partake in when they're making a ton of money doing what they do.

Whether sony or microsoft stay or go is kind of irrelevant. The point is that while they wrestle for control of the top-end $500 console market, nintendo can do just fine in the $200 market putting out quality titles for a quality little system.

[Bronty-2]

D'oh.. triple post.

[Bronty-2]

triple post!

[Nature Boy]

Whether sony or microsoft stay or go is kind of irrelevant (to the immediate discussion, anyway). The point is that while they wrestle for control of the top-end $500 console market, nintendo can do just fine in the $200 market putting out quality titles for a quality little system.

Actually his first point is that there isn't enough discussion on the pure business elements of the industry, but then he seems to cover nothing but the fact that Nintendo turns a profit.

I agree with the former, but it's the direction he goes that makes me think he's a fanboy (plus my rule that anybody who feels they have to *say* they're not a fanyboy probably is one)

[Bronty-2]

Oh there's no doubt in my mind that nintendo is his favorite company. But most of his points are well argued.

[Bronty-2]

By the way, nintendo's financials just came out for the first nine months of the year. They made $800 million. Half of that is a foreign exchange gain, so it's kind of inflated, but still... they're on track to make a billion this year.

[Bronty-2]

oh and interestingly enough, apparently the gamecube is the hardware they make the best margin on, even at $99, from the sounds of it . They must be able to turn one of those suckers out for $60 or $70.

[googlefest1]

I, as im sure everyone else is curious about how all of this will play out in the next few years but i have a question that i would like others opinions on

Sony - being the monster company it is has a large gamut of resources to keep thier costs down - especialy R&D and i don't think Nintendo or Microsoft can compare.

so even if nintendo stuns sony with a scisor kick and microsoft tries to finish them off with a tombstone don't you think Sony has the will and confidence brought on by the encouragement from Mr. resourses siting in thier corner to try and pull a hulk hogan comeback

im just thinking that if things turned out equal inbetween all companies that sony could out perform the others in terms of profits. As an engineer i know sony as a tehnology maker. they make thier own chips, they have thier own industrial design (ID) group WITH thier own rapid prototyping machines that they make them selves. they have thier own manufacturing machines that they make them selves. On top of that what ever they come up with they try to sell every where. there are parts in the PS2 that im positive exist in other products and is sold to other companies to use in thier products so the total cost is spread out all over the place. They also make a killing takeing ideas and designes from other companies (becasue if you want to deal with sony they give you only a one year nondisclusure agrement before they start selling your ideas to everyone else)

I don't think i made any clear question here - hmm ill try another road

I watched the program on G4 about how the 360 came about - and i was horified to see all the iterations of the chassis they had (haveing an idea of howmuch it costs to hire one company to come up with one iteration). Im sure the guy talking said that each one of those designs came from a diferent company - i was thinking to my self " how many units does MS need to sell to break even". - Im sure MS has thier own ID group set up also but i dont think they have thier own prototyping capabilities so that cost must have been huge. I think its the same for nintendo also - even though i dont think nintendo goes nuts making all kinds of ideas.

since sony has the capability to spread the cost around and keep the costs low by being able to make it all them selves wouldnt you think that this company would stick around for a while even while getting slaped around by nintendo and MS

i like that there are 3 systems it makes it more fun for me -sure i would be more happier if we also had a sega system but it would be a downer to see another company go away from this market.

based on what little i know - out of the 3 companies i think MS is in the worst position. I think they spent a ton of money bringing the 360 to life and if it dosent work this time around i think they will spend alot more the next time around. Since i dont belive MS has any kind of manufacturing capabilities aside from the assembly houses they put together thier initial costs are great. Nintendo on the other hand i think is in the second worst position becaue thier inital costs are higher too but not as high as MS. I think nintendo does thier own ID but has thier ideas made outside and since nintendo has been around for a long time i think they have some kind of manufacuting capability other than assembly. Finaly, i think sony is in the easiest spot to weather out a storm becasue of thier enormus R&D and manufacturing capability along with being able to spread costs around buy using parts of products in other product lines. I think these guys are here to stay. AS much as i like MS being in the market i don't think they have good ringside manager. If MS is able spread into other tech markets quicly then i think they May have a chance but sony has a big head start.

MS and nintnedo have some catching up to do

so after reading all of this - do you think sony would be willing to keep fighting in the game market even if they have been pushed into the rear by thier competitors just becasue of the resourses they have to help absorb the financial burdens

PS. another monkey wrench - i have a feeling that if sony would indeed get beat up by MS that japanese game publishers would run to nintendo before MS - especialy if MS would still have low market acceptance over there.

[Bronty-2]

Huh? If anyone has the resources, MS does. Besides, sony's taking losses on their electronics business, so if there are such great synergies there, why are they still getting reamed on that side? Just tells me that there aren't a lot of significant synergies.

[googlefest1]

well i wasnt refering to resources as money

sure MS has money -- and it takes money to develop products - and after loosing money with out making money one may consider closing up shop earlier than one that has the ability to develop products at a lower cost - thats all im saying and asking about

I havent looked up Sony investor information but i didnt think thier buisness is lossing money - if anything they may not be meeting their projections which is not loosing money - but ofcourse in the financial world thats considered loosing money. companies cant keep raiseing thier numbers every year - there is a ceiling.

any ways back to the discusion

i only posed that view point becasue of my exposure to sony and my expectations regarding the organization of its major competitors in the video game market -- anyone care to take a crack at my question/observation/speculation

[Tan]

i find it interesting how these numbers are reflecting on just how big EA has become, Nintendo is slated to rake in 1 billion, while EA's profits dropped to only 1.2 billion this year not too mention how they've got like 15-20 games on the top ps2 list

[Porkchop]

For Microsoft it is not about video games. Bill Gates wants to dominate the software and internet business and he launched the xbox as soon as he saw the PS2 as a threat to MS's domination of the home computer market. Having millions of computers (PS2s) in houses around the world not running MS software was unacceptable. Read the book "Opening the Xbox" if you what to understand where MS is coming from.

Video games are software and some day soon MS will dominate the video game market just like it does the PC software business. Those old enough to remember the early days of the PC will remember market leaders like Lotus 123, WordPerfect, Novel and Netscape. Where are they now? Destroyed by MS!

Sony's days in the video game business are numbered.

Microsoft will get 80% of the video game market and leave the other 20% for Nintendo and others.

[kainemaxwell]

Think of it this way too: Sony has their electronics to fall back on and give them cash, MS has their PC division to fall back on. What's Nintendo have?

[Cmtz]

Here:
http://video.google.com/videoplay?do...ndo+revolution

[Griking]

Video games are software and some day soon MS will dominate the video game market just like it does the PC software business. Those old enough to remember the early days of the PC will remember market leaders like Lotus 123, WordPerfect, Novel and Netscape. Where are they now? Destroyed by MS!

Sony's days in the video game business are numbered.

Microsoft will get 80% of the video game market and leave the other 20% for Nintendo and others.

Can't wait to see the responses that comment will generate by the Sony Fanboys. It is hard to disagree with you though. Microsoft has flattened pretty much every competitor its faced so far.

Think of it this way too: Sony has their electronics to fall back on and give them cash, MS has their PC division to fall back on. What's Nintendo have?

Actually I think that Son'y is looking at things differently. I actually think that Sony is hoping that their videogame unit can bail out their electronics division which between slipping sales, shitty quality and lawsuits is hemorrhaging money.

[stressboy]

Actually I think that Son'y is looking at things differently. I actually think that Sony is hoping that their videogame unit can bail out their electronics division which between slipping sales, shitty quality and lawsuits is hemorrhaging money.

Sony's sales may be turning around:

http://www.beyond3d.com/forum/showthread.php?t=27809

[Nature Boy]

Microsoft has flattened pretty much every competitor its faced so far.

I wonder why they aren't quite smart enough to put a dent in the Japanese market by releasing games that appeal, you know, specifically to gamers there.

I don't doubt they're trying to be king of the mountain, I just wonder how they think they'll get there if they're letting their competitors dominate a rather large 1/3rd of the international market.

(I'm thinking of the market here as being US/Europe/Japan, not speaking to what % each market contributes to the overall pie).