When will the Xbox 720 (or whatever) come put? Post your predictions here.

[Generic Username 01]

starcraft said:
I'm going to give a quick lesson in economics to MikeB, Captainpreferences and nine0nine.

Sunk Costs: Sunk costs are irretrievable losses (investments) made at the beginning of an expansive venture (in this case, Microsoft's investment in consoles). Economics dictates that a Chief Financial Officer should NOT take sunk costs into account when deciding the future direction of a company's venture.

The reason for this is simple. The money has already been spent, no action can retrieve it. The best possible course of action a company can take is to examine the current cash flow situation, current deployable assets and finally future growth and profit opportunities.

There is no conceivable reason why a competent economist would instruct Microsoft to leave a growing industry in which they are currently profitable and have large amounts of available assets (physical in terms of manufacturing facilities, but also in terms of developer and publisher relationships). If there ever was a reason, it would NEVER be that they have already accumulated too many sunk costs.

Furthermore, anyone that thinks Sony will launch the PS4 more than a year after the Xbox 3 is a fool. The Xbox launched a year after the PS2 and look what happened. The PS3 launched a year after the Xbox 360 and resulted in the likely permanent crippling of Sony's gaming dominance. The only exception is the Wii which adopted a disruptive strategy, the kind that only pays off occasionally.

 Disruptive strategies always pay off. In every generation except one, the winner has been disruptive. The exception is the 16-Bit Generation, which resulted in the destruction of Sega and the crippling of Nintendo. Every other generation was won by the disruptor.

The Atari was disruptive because it was cheap and the first.

The NES was disruptive because it was easy (compared to computers) and fun, and didn't require complex knowledge (like the computers then).

The Play Station was disruptive because it relied on quantity of software and hardware and third-party support, rather than low quantity and high quality. It was also untarnished by the console war.

The Play Station 2 was disruptive because it relied on low price rather than high specs and also on domino effect: the popularity of console boosts sales. Its time of competition only with the Dreamcast gave it all the third parties and ensured a huge quantity of software.

The Wii is disruptive because it is the only system that evolves gaming. The PS3 and 360 can claim improved graphics and processing, but they are not radically different to the PS2's and Xbox's in the same way that the 64-bit N64 was not noticably more powerful than the 32-bit Play Station. There is a huge graphical difference between the PS1 and PS2 compared to the difference between PS2 and PS3. Also, people have now experienced 20 years of the same since the last major shake-up (the NES). They want something new.