The current console war has been really surprising. If you’d asked me 2 or more years ago I wouldn’t have ever guessed things would be going the way it is now.

Currently, the Xbox 360 is the market leader. The Wii has blown the doors away from everyone, outselling the 360 on a month to month basis since its late 2006 release. The PS3, hate to say it, has pretty much been a disappointment (launched also in late 2006). Consistently coming in last place.

Over at GigaOm, I read a blog titled “is the Xbox 360 Doomed?” In that article the author talks about how he believes this year (2008) will be the year that the Xbox will fall to last place in the market, trading places with the PS3. His reasoning has some good points- Peter Moore leaving, the recently admitted hardware problems, and the growth of casual gaming (which the Wii is really enjoying right now). The biggest point he made was about the hardware issues, the “Red Ring of Death” and the abundance of high profile bloggers writing about the “Red Ring of Death” may just bring enough bad press to scare buyers away from the 360.

Even though I think most of the points made are very valid, I tend to see things a little differently. One thing I do agree with is that the Nintendo Wii will almost certainly take over as market leader by the end of the holiday season (if not any day now). That means a lot for gaming, but not too much for the types of gamers that buy 360’s and PS3’s. But the 360, I believe will not fall any lower to the success that they are having right now and this is why:

Games Games Games

One thing about the 360, the advantage of launching early, and maintaining a market lead, is that they have a plenty to play. This holiday season is pretty packed with “triple A” titles. Bioshock, Call of duty 4 and Mass Effect to name a few. All of those have shown well at the latest E3.

There are also 2 more  monsters lurking that will inevitably sell millions of copies, consoles, break records and anything else you can think of.

  • Halo 3 is that game where there are millions of people waiting for this to hit the shelves before they make their 360 purchase. You can expect to see a big jump in 360 sales.  
  • Grand Theft Auto 4. Like Halo 3, this is another game that will definitely sell consoles. But like Call of Duty 4, it is multi platform, which brings me to the next topic.
If it’s priced right it will sell

Arguably, you could say that the Nintendo Wii’s success is because of its cheap price tag. At $249, its $150 bucks cheaper than the Xbox 360’s Premium skew and as much as $349 cheaper than the PS3’s top skew. But face it, for a lot of us, there is only the 360 and the PS3. The Wii currently serves a completely different gamer. When you look at it that way, the 360 is at the perfect price point. It’s cheaper than the PS3 by a decent amount.

Let’s go back to the multiplatform games I mentioned above, namely GTA4. It will release on the 360 and the PS3 on the same day. There are going to be tons of people that want to play GTA4, they follow the franchise, and playing the game is more important than playing the game on a certain platform. So those gamers walk into bestbuy to buy the game they’ve been waiting for since San Andreas, they don’t have a console yet so they are deciding to buy a Xbox360 and GTA4, or a PS3 and GTA4…. If it looks the same on both (which it will) and plays the same on both (which it most likely will), what system is the gamer going to buy? The $299-$399 system, or the $499-$599 system?

The PS3, even with the very deceptive price cut, is still just too expensive. It will take a lot of “triple A” titles to overcome the expensiveness of the console and while they do have some in the works, they just aren’t coming fast enough.

The admitted hardware problems aren’t going to hurt as much as you’d think.

Right before E3 Microsoft made an announcemen. They admitted that there is a hardware problem with the system; they extended the Xbox 360 warranty and they announced loosing/spending over a billion dollars due to hardware repairs. A lot of people saw this as maybe the first nail in the 360’s coffin, a major misstep. The author of the “is the Xbox 360 doomed” blog post thinks this will have a huge impact causing the 360 to fall behind Sony (PS3).

I believe Microsoft made that announcement at that time for a reason. The “Red Ring of Death” is the misstep, we all knew about it. The announcement is damage control. At a time where the biggest game (Halo 3) is about to release. What you have to look at is what this announcement did

  • It made an attempt to restore that relationship with the gamer. That announcement was pretty much an apology. It let the gamers know that they are aware of the problem, they are sorry, and they are working to get it resolved. Sounds silly when you read it. But a lot of times when someone feels mislead or done wrong, a simple confession and apology makes you feel a lot better.
  • It added a bit of security. Extending the warranty tells the gamer “Hey we know we messed up, so while we try to resolve this, any problems you have is on us. You pay nothing”. We all hate to have to wait while our console is being repaired, but knowing that it will be completely free makes it a lot nicer.

So basically, due to the price advantage, and the fact that the 360 does have a decent amount of gaming goodness to back it, I can’t really see the 360 being doomed or falling behind Sony anytime soon.