If you consider that the console's quality was sacrificed in order to keep the price down and rush it out ahead of the competition, I think this was actually a very smart move. Microsoft has proven, just as Sony did last generation, that game consumers don't care about product quality. They care about price, marketing, and games. If you need to make sacrifices to secure these things, product quality should be the first thing to go.

Is there any doubt that if Sony had put in a crap power supply and a faulty motherboard in order to sell the PS3 for $399/499 at launch they would be in a better position now?

That trick only works when the end product is somewhat stable, Borkachev. The failure rate of the 360 models out now is significantly higher than the original PS2 models. And more importantly, Sony resolved the larger part of the issues by the end of the second year of the console's life, just before the first price drop.

Nintendo Best: Selling Rare

Microsoft Worst: Buying Rare.

Considering Rare made more games for Nintendo system than MS systems after the sale and they even sold more, it was like Microsoft paid Nintendo to make a profit off a dead weight studio.

Sony and Nintendo really haven't made any serious blunders this console generation. Nintendo built an affordable console around motion control, which doesn't need HDTV to shine, so lack of HDTV isn't a blunder. The high price of the PS3 isn't a mistake, either, it was a very good biz decision - you don't want to prematurely kill off the PS2, and the high price point meant high build quality and a design which will last 10 years. Sony delivered on its integrated media strategy, and Nintendo delivered on its blue ocean strategy.

Microsoft, on the other hand, really needs new management, because they made several mistakes. I think the single worst decision they ever made was to prematurely kill off the Xbox. Microsoft now has nothing to sell to 2.5 billion increasingly wealthy Chinese, Indians, Brazilians and Russians just entering the gaming market. A close second: not building in next-gen DVD capacity into the 360, and generally scrimping on the 360's media playback capabilities.

@slorgnet: If you really that Sony didn't make any mistakes then you've been living under a rock for the last year or so. You don't go from massive domination of the entire industry to last place and behind the 2nd place by almost 50% by doing everything perfectly.

This thread will be a good for a laugh.

Microsoft's best business decision was that they designed the XBox and XBox 360 to have a similar development environments to the PC which ensured a lot of support from PC developers. Their worst business would be purchasing Rare, they were (fairly) expensive and have produced so few games that the purchase will never be justified.

Sony's best business decision was taking the Playstation (which they were developing with Nintendo) and launching it against the over-priced Sega Saturn. Sony's worst business decision was launching the PS3 at over $300.

Nintendo's best business decision was to go against the flow of the market and target the broader non-gamer and "casual" gamer market while everyone else was focused on the core gamer. Their worst business decision was the producing the Virtual Boy at a time when the technology was to immature to actually do it well.

Edit: I misread the initial post.

I would argue that it did work for Microsoft, and that the absurd failure rate of the 360 is only further proof of how little consumers care about product quality. Microsoft turned the 360's fortunes around spectacularly compared to the first Xbox, and I doubt they could have done it if they'd kept the machine under development for another 6 months to fix the issue, or raised the price to improve the build quality.

I've also heard a lot of people say that the design flaw was fixed within two years of launch, right around when they introduced the improved warranty program. Take that for what it's worth -- MS was getting a lot of bad publicity over it, but I'm honestly not sure it was hurting their income much.

Another smart move by Microsoft (and I guess a bad move by Sony by contrast) was to split up and spread out the cost of their console's functionality. Charge $50 a year for Xbox Live, $200 for the HD movie player, $100 for the harddrive... it all adds up fast, but all customers care about is the price on the shelf. People love installment plans, and even if it's kind of annoying in the long run, it makes good business sense.

Borkachev said: Microsoft Worse Poor quality design / control allowing RROD If you consider that the console's quality was sacrificed in order to keep the price down and rush it out ahead of the competition, I think this was actually a very smart move. Microsoft has proven, just as Sony did last generation, that game consumers don't care about product quality. They care about price, marketing, and games. If you need to make sacrifices to secure these things, product quality should be the first thing to go. Is there any doubt that if Sony had put in a crap power supply and a faulty motherboard in order to sell the PS3 for $399/499 at launch they would be in a better position now?

 You might also consider how pissed off people get when they have to return their console 5 times because it keeps breaking.

 And that it took two years for the 360 to become profitable to Sony's one. So who made the smarter decision there? (Again, I hate when people say the 360 is doing better then the PS3, ITS BEEN OUT TWICE AS LONG GET THAT THROUGH YOUR HEAD, YEAR FOR YEAR THE PS3 IS DOING BETTER THAN THE 360)

darconi said: @slorgnet: If you really that Sony didn't make any mistakes then you've been living under a rock for the last year or so. You don't go from massive domination of the entire industry to last place and behind the 2nd place by almost 50% by doing everything perfectly.

 Yet another idiot, Sony's "3rd" position isn't really third, its 2nd, and Microsoft is last if you consider the 360 has had twice the time to sell, and had an entire year to itself. Last time I check 16 divided by two is 8, not 9.5.