Xbox One Strategy Shows Microsoft Didn’t Learn from Sony’s Mistakes with the PS3

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If you’ll remember, it wasn’t that long ago that Sony’s PS2 absolutely dominated the console market. Nintendo’s Gamecube had carved out a small niche but didn’t have much market share. Microsoft’s first attempt at a console, the Xbox, had made waves bringing a more PC like gaming experience to the living room and created a model for console based online play that was light years ahead of its competition. The Xbox was a success and sold well. But the PS2 owned the early oughts, no question.

Building off of its success with the original Playstation, Sony’s console was a juggernaut that couldn’t be stopped. It claimed the Dreamcast as a trophy and never looked back. The Xbox was more powerful and easier to program for, but the PS2 had an install base worldwide and exclusive publisher deals that guaranteed its dominance. Sony was all set for a threepeat with its PS3.

But the PS3 release was a disaster, and led to a fan backlash similar to the one Microsoft’s facing now. The Playstation 3 came out a full year after the Xbox 360 and was $600 at launch, something the execs seemed to gloat about, seeing it as a luxury item instead of a mere toy.

It came with some crazy features for the time: a Blu-Ray drive, rechargeable controllers, Wi-Fi built-in, a hard drive and a PS2 processor inside for backwards compatibility.There was no cheaper option for a bare bones PS3 without the fancy extras. Then CEO, Ken Kutaragi was quoted as saying, “We want consumers to think to themselves ‘I will work more hours to buy one.’ We want people to feel that they want it, irrespective of anything else.”

Microsoft’s Xbox 360, on the other hand was considerably cheaper, offering a core system for half the price of the PS3. Also, the console was easier to program for, having essentially a PC architecture as opposed to the PS3’s custom CELL processor which promised amazing power (something I feel like we’ve only really seen in the waning years of Sony’s console, as programmers have had years to work with the system). The base Xbox 360 model didn’t have Wi-Fi, and it came with a wired controller and a DVD Drive. You could buy the bells and whistles separately.

Sony’s hubris cost the company its former console dominance last generation.

But this time around Sony, under the leadership of Kaz Hirai, has proven that it learned from its mistake with the PS3. The PS4 that Sony fully unveiled at E3 is a gaming console first and foremost. Sony’s offering other entertainment options through console but they don’t at all seem to be the focus. Also, Sony learned that pricing matters and it’s undercut Microsoft by a full $100, opting to offer its PS Move and other peripherals separately.

Microsoft, on the other hand, is looking a lot like Sony in 2007. The Xbox One’s Kinect camera marks up the console to $499 and consumers have no option for a model without it. Microsoft’s bid for living room dominance, with enhanced TV and DVR features appears to be the focus at the expense of the games, much like Sony’s choice to focus on Blu-Ray. Also, the hubris and flippancy that Microsoft execs (in particular one who’s since left the company) have responded to criticism is reminiscent of Ken Kutaragi’s dismissal.

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