It seems that when Microsoft decided to enter the console business, they had a pretty basic plan.

Xbox 1: Enter the industry

Xbox 2: Become competative in the industry

Xbox 3: Dominate the industry.

Despite the fact that it lost Microsoft billions of dollars, the original Xbox was a success. It did exactly what Microsoft wanted. It established the Xbox brand and gave Microsoft a feel for the industry. It's pretty obvious that Microsoft is in it for the long run seeing as how they didn't expect to turn a profit on the Xbox 1 or Xbox 360 (luckily they will on the 360).

With the Xbox 360, Microsoft became much more competative in the industry. They took what they learned from the Xbox and they put it into practice. They partially own the IPs for the hardware inside of the Xbox 360, meaning they can produce it without paying royalties out the wazoo. They got hit hard with the RROD, but luckily Sony also had a few blunders of its own. Nintendo came out of nowhere and awed the entire industry. Microsoft tried to respond to it but simply couldn't.

Now for the moment of truth: do you think Microsoft will take everything they learned from the Xbox 360 and create a console that will dominate the industry?

- The RROD fiasco showed them that being cheap will cost them in the long run.

- They were in a hurry to beat Sony to the market and were unable to get the CPU they wanted from IBM. They had to settle for the Xenon CPU, a CPU much weaker than Microsoft wanted. IBM simply couldn't engineer such a chip at the time.

- They had to settle for DVD9 as neither HD-DVD nor Blu-ray were practical at the time.

- They did not consider the casual audience

- Xbox Live wasn't as mature

What are the odds that Micosoft will release a console that pleases everyone? High quality, bleeding edge media features, most powerful console, revolutionary online/social capabilities, affordable, mid, and high end SKU, etc.

These are some of the reasons why I think it may be plausible

- Microsoft seems to like having the most powerful console. Xbox 1 was the most powerful console in the generation. Had IBM been able to engineer the CPU Microsoft wanted, it would have outperformed the Cell CPU in games.

- With a dominate console, Microsoft pretty much ensures that DirectX is the *only* serious graphics API. OpenGL 3 is nice but it is very dissapointing. PS3 and Wii don't use OpenGL, but they don't use DirectX either. In the future, Sony and Nintendo may be forced to go to Microsoft for DirectX due to pressure from developers.

- The line between console and PC is blurring. In the future consoles may very well be underneath each TV, something which Microsoft definetly wants.

What do you think? Realisticly, I see Nintendo owning the next generation of casual gamers, but I also see Microsoft owning the next generation of hardcore gamers.

...epic wall... paragraphs please...

edit: woah, the paragraphs didn't show for me the first time... will read now.

Sorry, pasted from an editor to here and it got all messed up. Should be fine now.

Pretty well-reasoned--I hadn't thought about some of that stuff before. That said, Sony definitely won't repeat this generation's blunders, either.

i think they will do well next generation.

Although I agree that both companies will be smarter, Sony is stuck with the Cell processor whether they want to or not. Switch CPUs and backwards compatability is impossible due to its architecture. Also, if they switch, developers will be ticked off that they spent so much time on an architecture that provides them 0 benefit for the future. 

Microsoft on the other hand is free to stick in a power7 based CPU that will provide power, simplicity, and a very large existing codebase. A console generation could very well be decided by developers, not consumers, especially as development costs soar.

Sony may have something up its sleeve though. I really don't care who dominates as long as it isn't Nintendo (unless they decide to come out with a powerful console)

I expect them to win next generation. Well done Microsoft!

i think its a toss up between all 3. nintendo has a formula for success right now and all will try and use parts of it. microsoft through trial and error, 3rd times the charm right? and sony having been at the top and fell hard with revisions to the company might make a #1 console next gen.

who knows, its all up for debate right now.

Personally, I think Nintendo will absolutely have a console that can go head to head, graphically, next generation.  The DS was a beast at its' time of release, and with the Wii being in uncharted waters, they had to make sure they made a nice pofit right off the bat.  Also, I don't think Microsoft and Sony will go totally balls-out  with the graphics next generation.  They'll still have substantial upgrades (much bigger than Gamecube-->Wii), but I don't see them trying to outperform PCs like they're trying to do now.

I also think Nintendo has the next generation in the bag, but this generation has taugh us not to assume anything.

whats wrong with the cell processor? the processor is going to pay off in the long run, whether its in the later years of the ps3 or in the next generation ps4. once developers start getting the hang of the cell its going to be just as easy to develope for than other consoles.