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Microsoft benefited heavily by being first out of the gate as an HD console with the 360. They had a full year head start, made some amazing acquisitions and partnerships and pounced on the missteps Sony made with the PS3. Their biggest calculated risk that fell flat for them, though not in the short term, was hedging their bets on motion controls and the blue ocean that Nintendo had already courted and recognized as a shallow market. While this certainly hurt Nintendo as it would take them a half decade to regain their footing and reembrace the core Nintendo fanbase, Microsoft sullied their reputation as a "hardcore" platform. The Kinect (Natal) unveil was the same level level of cringe that WiiMusic had been the previous year for Nintendo, particularly the introduction of Avatars, their own attempt at capitalizing on Nintendo's Miis. Folks that had escaped the vice-like grasp of Sony the past two generations and made Microsoft their go-to platform saw that Microsoft was a corporate identity just like the others and the honeymoon was over. XBoxOne doubled down on some of these late 360 mistakes (while Sony made tremendous efforts to regain their position as market leader with the very successful PS4. Forced online connectivity, mandatory Kinect, etc. It was dead before it had even started, or at the very least, like the PS3 the gen before, severely wounded.

But I would argue that Microsoft shouldn't be concerned that they aren't the market leader. There's plenty of room in the market for a machine that sells 40-60 million units, especially when you can make a ton of money off of your online infrastructure. I think it's a mistake to hold Microsoft to the lofty expectation of competing with Sony, a company that has only sold less than 100 million units of their console in one generation, and they only missed it by 13 million. Microsoft and its fanbase should be content with being a niche, hardcore machine focusing on the needs of gamers that lean PC or love COD to the point that its the only game they play. In my opinion, abandoning that identity is where the wheels started falling off the bus and they should do everything in their power to right the ship, stay true to the core model they have always been about and don't worry about the console wars. It makes them look weak and reactionary.