Make no doubt about it, Microsoft will be profitable this generation. Will it make up for the loses last generation? No. Will ever recoup it's 7 billion losses on the XBOX business? It remains to be seen as, as those 7 billions would yield pretty good interests as well.
The following is clear:
The rush to come out first this generation has yileded an Xbox 360 that is weaker and much more unreliable than the PS3. The first year advantage cannot overcome a 4-5 year disadvantage in CPU power, console hardware features, and console reliability.
Microsoft will seek profitability over install base. The price cut didn't really make the 360 cheaper it only add 40 gigs for the same price. The cheaper consoles will be discontinued.
By making the 60 gig a standard, supporting Blu-ray this generatio is pretty much out of the question because Blu-ray plus a 60 gig is simply too expensive. It's very unlikely that 360 owners will ever experiece the next generation movie format that is Blu-ray. It's a big loss.
Microsoft has chosen to continue with their strategy of charging for LIVE. It's simple psychology to understand that doing so will scare away the casuals especially considering what the Wii offers and what the PS3 offers in terms of Blu-ray and free PSN. An additional problem is that Sony is taking the battle over online supremacy very seriously. Whether it's because of the P2P nature of LIVE or because of the weakness of the 360 console to handle larger multiplayer games, LIVE's weakness is beginning to show and Sony is taking full advantage of it. This E3 really shows that for large multiplayer gaming, or for user-generated content (Unreal Tournamen 3, and Little Big Planet), LIVE is clearly weaker than PSN. HOME is a nice bonus that the LIVE lacks as well.
For games, Microsoft has opted to use money as incentives for 3rd party timed exclusives. While it worked in the short run, it is a weak strategy in the long run. Good multiplats that first appear on the 360 are now coming to the PS3 with better graphics and extra features. To name a few, these games include Oblivion, Bioshock and Eternal Sonata. While a year or 2 ago, fans can say multiplats were better on the 360, this is no longer the case. I expect as more games are ported to the PS3 with improved graphics and features, multiplats overall will look and play better on the PS3. But the real battle will be between first party exclusives, and Microsoft is very weak in this area, especially since Bungie is no longer first party. Sony's strategy of investing heavily in first party is beggining to show. These games makes excellent use of the PS3's superior technology and as such will make 360 games look smaller and more outdated.
That Microsoft didn't realy show 2009 games this E3 is a big cause for concern. Without a doubt this is due to the lack of early investment in first party games. The future of the 360 looks bleak compared to that of the PS3.
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