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Sony was developing an advanced console. They were also trying to push Blu-Ray
They used the same formula they used when making the successful PS2.
Microsoft convinces toshiba to keep hd-dvd and create direct competition for blu-ray

With blu-ray costing much more, sony had no choice but to release the PS3 to combat HD-DVD's lead, because unlike the console war, too much of a head start would have ended blu-rays chances.

Microsoft rushes Xbox360 out the door(with poor hardware initially) to build up install base. Since the PS3 is the new hardware, with a lower install base Microsoft tells devs they will make more money, in less time, plus Microsoft will give them a bit extra if they make certain games exclusives.

The PS3 releases at a huge cost, limited time to make dev kits, without Home or rumble, without in-game XMB. Add on to that the production mistakes made so supply of the PS3 was extremely limited, and you understand whats happened to Sony.


Microsoft single-handedly did this to Sony. They played their cards perfectly, and are still reaping the benefits. Microsoft knew they had to do something, because Sony has the brand name, and the more advanced console. Don't apply arrogance to this, when comparing a company to Microsoft. It has nothing to do with that. Sony could be as arrogant as they wanted, if they couldve had a couple million PS3's priced at $399 or lower at launch.

Really, does anyone think Microsoft's interest in HD-DVD was random? They are battling Sony on purpose, and it has worked very well.