I talk about the 360 a lot when I speak of games, not because I am a "Xbox fanboy", but because that is the system I own. I do own a Wii, well my daughter owns a Wii, and I don’t own a PS3 (feel free to help me get one). That said, I was thinking about the 360 and I realize that Microsoft is slowly giving this little bit of success they are having away.

Lets look at my interpretation of what has been happening so far…

Microsoft decided to be first out of the gate, get a headstart on everyone and hopefully get enough of a lead that by the time everyone else is in the game, Microsoft will have a steady flow of games and features to maintain that lead. For the most part things worked as they planned. 2 things surprised them, the Wii and many waited on the PS3. Even though Microsoft had a successful first year, It was no where near the success they were shooting for, or should’ve been shooting for. By the time the rest of the consoles were introduced, Microsoft’s lead wasn’t enough to think that Sony, with its past history and momentum couldn’t surpass it within a year. Luckily, Sony slipped. The high price of the PS3 kept people from rushing out to get it and it wasn’t exactly the runaway hit that it could’ve been. On the other hand, the Wii was a runaway hit which leads us to today, the Wii is the Worldwide leader.

Does that bother Microsoft? Wii being the worldwide leader? No. I know a lot of Nintendo fans (and Anti-Microsoft people) will deny this but if you are honest with yourself, and have played both the Wii and the Xbox 360, you know that the Wii is not really catering to the same audience. They are 2 different categories of game systems.  So while the Wii taking the worldwide lead, doesn’t really hurt the Xbox 360, Microsoft does want in on some of those numbers.

The PS3 on the other hand is still in third place, which is in direct competition with the 360. The other thing is that the PS3 is slowly gaining on the 360. Microsoft seems to be ignoring the PS3…for the most part. The way things look, the PS3 could potentially catch the 360 this holiday season, or sometime in the first half  of 2009.

Another interpretation of what I think Microsoft’s mindset falls.

Microsoft is having a lot of success, don’t let the unit numbers blind you. They have over 5 million Xbox Live gold subscribers at $50 bucks a year (or higher if you pay month to month). They are oneof the largest online Movie/TV show download stores on the web. They have the highest attach rate (games sold per console owner) than any of the other consoles by a good amount. Microsoft is indeed winning this console war, first place in unit sales or not.

Microsoft knows this and they probably feel like it doesn’t matter if they are in 2nd, or 3rd place. The rest of their business is in 1st place. To be honest, if nothing else changed, the 360 could fall to 3rd place and still be winning this console war. The things they are concentrating on looks like that is the goal. To keep people buying stuff on Xbox live and buying games. The thing that is going to happen if they don’t make some needed changes is going to be a completely different story.

If the PS3 surpasses the 360, which they will, these things will also happen.

  • The PS3 will fill out their Movie and TV show download service and eat away at Microsoft’s lead until they finally beat them.
  • The PS3 will start to get more games because of the install base lead, and will start to have a higher attach rate, eventually outdoing Microsoft.
  • With those 2 things accomplished, the PS3 will eventually be the "go to" place to play console games online, forcing some 360 owners to either buy PS3’s to play with their friends, or cancel their Xbox live gold account and start playing games on their "already purchased for Bluray" PS3’s FREE PSN service.

There will be a complete flip flop and Microsoft will start talking about the Next iteration of the Xbox, which will probably upset a lot of people. The way the original Xbox was abandoned, people are just not going to be too happy with that happening with the more expensive 360.

This is actually a 2 part post so check back in a day or 2 to see what else I have to say on the subject