The thing is, there are 4 main ways of differentiation: price, performance, innovation and convenience.
- Playstation, and some other Sony products, always try to differentiate from the competition by performance. This is an easy decision to Sony, since they are the one with most know-how about hardware manufacturing from the big 3.
This would mean, in theory, that Nintendo/MS have to choose between:
1) A weaker Hardware, at the same price point
2) A similar Hardware, at a higher price point
3) A similar hardware, sold at loss, so it can have a similar price point
While this does not seal the fate of a gen, it gives Sony a more tangible advantage. Albeit this HW advantage is only really important if it reachs the mainstream public (those who don't read Digital Foundry and don't watch IGN comparative videos).
- Nintendo, on the other hand, tries differentiation by innovation.
Innovation is a two-edged sword. If you have a hit, it doesn't really matter your competition performance edge over you, you are set to trounce it or ignore it (Iphone, DS, Wii). On the other hand, if you have a flop, you are probably stuck in an even worst situation than just being weaker.
And the thing with innovation is that is never easy to see. If it was easy, somebody else would have done that already, and it wouldn't be innovation anymore.
PS: i'm not saying this is the only variable of the industry, but towards a "default" aspect, i think that's how i see those companys.
