The 2 - generation - change rule

[auroragb]

I think that the moral of the story is that the market is receptive to and thrives on innovation. What we've seen from each established vendor is that they will innovate until they achieve dominance. After they achieve dominance, they try to consolidate the market by deliver more of the same (literally more, as in a bigger version of the previous gen). This leaves an opening for a competitor to come in with a new strategy. Atari created the home console industry, dominant by default NES revived the VG industry, SNES was more of the same, N64 again Sony took the opening and succeeded with PSX, whose disc drive drove down the media cost and really opened the market to 3rd parties. They followed with PS2 and PS3. Tho PS2 owed a large part of its success to the innovation of backward compatibility, which was unheard of in that generation of consoles. Nintendo wrestles back the market with a new innovation in the Wii. Nintendo's Sega innovated every gen because they never achieved dominance (eventually, they gave up). MS has a solid niche, but has yet to achieve dominance. Their biggest weakness is that they don't have compelling innovation. Their biggest success is in the on-line integration, which is an adaptation of a PC formula as opposed to innovation. MS is growing their niche, but has not really innovated in this generation I think that the real moral of this story is that a winning formula in the VG industry is only good for, at most, two generations of dominance. Each generation starts afresh and is an open to a new dominant player. The current dominant player stays dominant by default. But if a compelling innovation is offered, the market will reward it with dominance.