Exactly.

For example, we can say with an almost absolute level of certainty that Napoleon's empire would have lasted much longer had he not invaded Russia. We can say that Nazi Germany would never have become such a threat had France and England taken a more assertive and agressive stance towards Hitler instead of trying to appease him. We can look at the facts and see that there is substantial evidence to support this.

The same goes for this console generation. The overengineered design of the PS3 is what caused it to be so expensive and lose market share. Had the Blu-Ray drive and cell processor been yanked, the PS3 could have launched at a price of $300, the Euro launch would not have been delayed, and the state of the economy would not have hurt it so much this holiday season.

If MS tries to challenge Nintendo they'll be crushed

Take away Halo and what does it have? That's right, a whole lot of nothing, which is why it's the only franchise you can list.

On the other hand, Sony would still have the aforementioned RFOM and Killzone in addition to Uncharted, Ratchet & Clank, God Of War, SOCOM, Gran Turismo, Little Big Planet, I could go on and on, but I'm sure you get the idea. Sony owns MS's internal talent in number of studios alone.

@Lord N

Don´t forget Team Ico as well :)

lol sony fanboy.

That one studio and I.P alone is worth more than half of Sony's first and second party efforts to date. Middling games are irrelevent, they don't move consoles and they don't make at all that much money for their publisher if they don't lose money themselves.

LOL... don't get me wrong, I really admire what Nintendo has done this generation as well.  They truly are beastly.  But no one is indestructable.  Nintendo as laid plenty of eggs as well (i.e., N64) so they aren't untouchable.  Not that MS is either... but my point is that no one is untouchable, and no company can expect victory just of because who they are.

Damn well put. Iwata kept telling everybody exactly what they were doing but everyone knew poor little Nintendo was "Game Over" and treated it all as a big joke, funny name, no HD, they've gotta be kidding.

Even when they revealed the Wiimote everybody still took it as a joke. Go back and read the magazines of the day if you want a good insight into hubris and blindness. 

Interestingly, one Sony executive did "get it". He apparently picked up the Wiimote and actually blurted out to a reporter something like, "if they actually have this little son of a bitch working, they just ate our lunch!"

As Squilliam says, it was already over, the people that had just been shot through the heart just didn't realize it for a few more months.

What can Sony and Microsoft do now against Nintendo who is making money like they printed it. Whose stock is still at 300% over launch day, even after the crash, Is worth more (capitalization) than Sony. And only has a payroll of < 5,000 workers to carry instead of Sony's 160,0000 and the Microsoft Army. Nintendo is spending money on R&D at the rate 5-8 billion yen/yr and have an uncommited  cash reserve of  something between 12 -20 Billion US$.

In comparison Sony is essentially broke and in survival mode and MS probably has  more cash BUT not that they will sink into video games.

If MS moves aggresively towards casual they will just drive the hardcore back to Sony. I doubt that MS has the first clue how to begin to compete with a lean, innovative fast moving company that can completely reinvent itself as required.

It's hard  to imagine two culture's more opposite than Iwata's "keep it simple, make it reliable" and the "push it out the door now"philosophy that lead directly to RRD.

What you say is true for systems with chaotic attractors. Is gaming market such a system? Or not? Or perhaps is it a sum of different functions of which maybe some are chaotic, but that have only a partial influence on the whole, adding variance but up to a certain degree? As amongst the few things we know, there is that "real" economy (not the speculative one) has a quite slow growth, in the best years it grew in the order of tens percent, so we can say that also the possible chaotic components have BIBO stability, the potential market is limited with limited economic resources.

One has to assume at this point that if all else remains equal the Wii and the Next Wii will remain on top. Next up you'll have 2 console makers who have to decide whether they want to out-Wii Nintendo or seek a profitable niche. Since Nintendo will be practically unstoppable in a status quo situation, the only stable position in the console market is to unseat Nintendo from total domination. Microsoft can however buy $$$ themselves enough time to remain viable, Sony however cannot. 

I doubt there will be any stable niches left once Nintendo gets around to the next generation, the weaknesses that are present now kept the HD consoles in the game by a large part with sheer luck. I believe the next generation we will see a divergent strategy between the different players. The "Me too" approach has proved to be a failure too many times in the past for it to be considered viable now.

Of the two, between Microsoft and Sony - only one has invested R+D dollars into fields which may bear any relevance in besting or justifying co-existance with Nintendo and that is Microsoft. You can see with their surface computer and their smaller Iphone applications that they are infact world leaders in many forms of interface development inspite of what you may hate about Windows. Whether they actually apply any of this is another question entirely unfortunately.

Microsoft from what I understand of them will probably move in two key directions in the next generation. The first and most obvious is onwards and upwards, they know Nintendo won't sell a console for a loss and Sony cannot likely follow suit even if they want to. Its a strong position to be in only if you're the only one doing it, otherwise it turns into a pissing contest and you and them both lose most of the time.

The second will likely be going beyond gaming, turning the console into a useful appliance is where Microsofts strengths lie. They cannot be sure to beat Nintendo on gaming, but they can best them in making their console useful. To make it useful, they have to make it usable for average people. The question is really how, what technologies will they leverage? I don't expect them to make a better interface than Nintendo, they can play that Windows card they've had in their pocket all this time.

P.S Where did you get that figure for R+D @ $5 Billion? I don't see how they can spend $1,000,000 per employee!