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Soundwave said:

Microsoft entering the industry was really the problem for Nintendo.

If it was just Sony and Nintendo left post-Sega, Nintendo could have comfortably sold as a no.2 home console for a while, but Microsoft coming in just over crowded the market.

There's really never been a time when three consoles trying to basically do the same thing had much success. The Super NES and Genesis did, but the Turbo Grafx 16 found no market in the West, in Japan, the Super NES and PC Engine did alright but Mega Drive (Genesis) lagged behind. With the Playstation and N64 the Saturn fizzled out in the no.3 spot. 

If there was no XBox, I don't think the GameCube is some massive success but it probably does considerably better just because it's the only alternative and as such it's strengths (better graphics than PS2, easier to program for, Resident Evil exclusivity, exclusive MGS remake, Tales RPG, etc. etc.) would stand out more. I think it could have sold 40-45 million units or so, not far off from the Super NES, and then they probably could've made significant inroads against the PS3 at $600.

Really in a way it's kind of too bad that Microsoft couldn't just work together with Nintendo and stay out of the hardware business but make software like Halo and Forza for Nintendo in exchange for Nintendo using Windows OS. That was the whole reason for them coming into the industry, they were scared Sony would have a bunch of devices that didn't have Windows on it, not so much that they cared really about the game business itself. But instead you have a situation where the no.2/3 spot was essentially split and really the only one that was a good thing for was Sony. 

If there was no Xbox people would've just stuck to the PS2 and ignore the GameCube. The GC selling twice as much more is a huge exaggeration. People were getting an Xbox cause of Halo, great online and the best performance on Multiplats games. GameCube wasn't offering any of that, didn't introduce any major FPS, online was non-existent, and the GC still missed out on many multiplats the Xbox was getting. Even if Multiplats ran at better performance on GC, the leap between PS2 & GC was much smaller than the gap between PS2 & Xbox in graphics that a GC multiplat running slightly better than PS2 wouldn't mean much. I'm sure most people who brought an Xbox wouldn't bother getting a GC even if Xbox never existed cause GC didn't offer anything they were looking for. The GC selling 40-45M lifetime without Xbox is pretty much implying that nearly every single potential Xbox owner would've purchased a GC, which is unreasonable.

Same goes for the generation before, if Sega didn't exist, it's unlikely Nintendo would sell much more units with the N64. People brought the Saturn mainly for arcade fighter ports and RPGs in Japan, which is what the N64 lacked heavily and those players likely wouldn't have switched towards a system with very few of the generes. They would've just stuck to the PS1, and even if somehow every Saturn owner became a N64 owner instead, the N64 would still be a only 42M, barely anything more than the 33M they sold and still very far from the PS1.