Why do hardware manufacturers do this?  Stupidity?  Arrogance?  A company can be on top of the world and then for no good reason hurt themselves. Who was or will be the dummest?

Contender 1:  Nintendo.  Nintendo dominates video games for two generations.  SNES boasts unrivaled 1st and 3rd party support.  They need to do nothing but sit back and enjoy the endless flow of money till the end of time.  What do they do?  Make a cartridge system when everyone else switches to CD's.  They do it for control, they do it because they can.  Third parties move to Sony and dramatically change the market.  Playstation would have been a footnote in gaming history if not for the support of Square, Capcom, Konami and others. Instead, they took over the market.  Nintendo gets extra points for doubling down on the stupidity by making their next system not compatible with DVD's and topping it off by painting it purple.

Contender 2:  Sony.  PS2 builds off the great success of PS1 and absolutely dominates the market.  No one else is close.  Seeing the opportunity to have a complete industry monopoly and thinking that goes against the ethics of good captialism, Sony decides to ram Blu-Ray down gamers throats and sells a $600 PS3.  The system tanks for a couple years before gaining strength later when the price drops.  However, the damage was done.  3rd party exclusivity was lost and the Playstation brand went from 75% market share to 30%.

Contender 3: Microsoft.  XBox 360 launches first, launches cheap and pushes MS market share from 12% to over 30% gen over gen.  Sales climb from 25 million to 75 million and counting, and amazing 200%+ improvement. Even more important the XBox brand becomes the more and more the "standard" game system for the core gamer in the US and parts of Europe.  How could MS mess up that momentum?  Release a system that pushes the unloved Windows 8 on unwanting consumers and requires internet connections to play games.  How could this possibly go wrong?

The Always Connected NextBox is just an often repeated rumor at this stage, but could it be the biggest goof up yet?

I hate the misconception about Nintendo and CDs. Nintendo tried incredibly hard to get CDs incredibly early. The reason PS1 beat them to it is that Nintendo ended up with horrible negotiations every time they tried to get CDs (which is what resulted in the PlayStation in the first place). This was completely not their fault in terms of wrong market strategy.

Being incompatible with DVDs doesn't mean anything, either. Nobody buys Nintendo consoles to watch movies and inability to play DVDs didn't hurt the Wii. As for the purple, well...

Because DVD players were cheap and everyone had one by that point. But being able to double as a DVD player was a huge selling point for the PS2 early on.

OT: Motherfucking hubris.

No. Micrososfts biggest MISTAKE ever was Windows M.E. - Vista, Windows 8... All gold plated in comparison, in the console market it has to be the RROD.

Sony's was easily the exploding battery fiasco, console wise, the PS3 launch was one giant mistake, it could have been allot more elegant and smoother and cheaper.

Nintendo... Virtual Boy. Enough said.

These companies have all equally made stuff ups, none is better than the other, they sure as hell didn't send me cake and flowers when I bought their respective consoles.

Im starting to see the point of the Xbox Online connection. Your phone is always connected to your providers network, your cable box is always connected, so why not Xbox?

Since when do we care what less developed countries can or can't do with Xbox, so long as we ourselves have it? Since when did selfish and fan centric gamers care about less fortunate? lol please....this is yet another excuse to bash MS when the issue doesn't effect people here...since we all have internet to be able to post here.

MS can easily do a firmware update or make it optional in countries that have spotty internet anyway.

Is your real name Adam Orth by any chance?

MLD is my initials, first, middle and last. My name is Mark :)

This. No one's internet ever goes down unless they live in Uganda or Mississippi or something (why on earth would I want to live there?), and it's not like the Halo 3 launch kept people from being able to sign into Xbox Live or anything.

Nothing could possibly go wrong with this plan!

I knew xbox fans would start defending the always-connected thing, granted it is still just a rumor and i HIGHLY doubt it's true. It was only a matter of time. It's a stupid,no matter how you spin it, don't fool yourself.

Gamers just seem adverse to change, unless it has a first impression "wow" factor.

Again, MS can easily do a firmware update which enables games to be played offline.