I think you're likening sony's and microsoft's strategies to be too similar.

I think blu ray played a decent part in sony's strategy as they try to ensure their success in various markets at the same time. So I think on the hardware side, Sony had part of their strategy as price the system higher than the competitors but make it provide a second service which may expand its user base, and help expand our funds in other areas.

The success of this strategy is starting to show as the PS3 is starting to pull ahead of the 360 in all regions. Whether it will be a full success depends on how well blu ray can maintain.

Microsoft on the other hand, not only wanted to halt sony as you put it, but also wanted to expand their market and to make them control your full media center. The delivery of htis can be seen with XBLA and its downloadable movie service, as well as the attempts to integrate live anywhere into pc games. Whether these strategies have proven a success or not is pretty hard to tell as I don't really know how well these services have done.

On a basic level of production decisions, they are following similar strategies. But yes, they do differ in the fine details, which is exactly the sort of thing I hoped would get discussed here.

It likely is not a mistake to say that at least a portion of the PS3's sales are going towards people looking to invest in a Blu-Ray player. However, that number who purchase a PS3 for Blu-Ray capabilities will remain small as long as the Blu-Ray format lacks mainstream appeal (as it does now due to high price and lack of any noteworthy convenience factor over DVD; video quality isn't a concern to a great deal of consumers).

Yeah... the product matters.

Which is why I think the PS2 did bad despite having a crappy buisness model.

It's a good model for your first generation when your trying to get in... but after that the risks aren't worth the possible rewards. Look how the PS3 burned through most of the PS2's money.

It was the same with Sega. It worked at first... but ended up costing them in the end.

The PS2 was so supply constrained for it's first year they likely could have charged way more early on and sold it at a profit, or at least break even point.

Loss Leading is only really good for getting market share for a follow up product in my opinion.

Sony's problems are I think their advertising model doesn't know how to handle being losers and their buisness execs don't understand how to handle things as a winner. 

I get the impression that Sony's intentions were not to become the most profitable in the gaming industry; their tactics, as you noted, don't reflect such intentions. Rather, I suspect they wanted to be the most prolific. In that regard, they were an uncontested success: there's more PS1 and PS2 systems in households across the world than any other game system. It's a rather petty goal, but it makes sense if your main goal is to become a household name for a specific type of product more than to have a large intake of profit.

One big thing to consider here is that Sony can afford to have a division that doesn't draw impressive profits. Their other divisions can do a good job of shoring up for that. Whether they want to do that (or if their shareholders will let them) is entirely another matter, and the most likely answer is "hell no".

I don't know about the others, but a clearer strategy for the Wii would be:
1. Get non-gamers to buy a Wii. (Wii Sports)
2. Get some hardcore gamers to buy a Wii. (Twilight Princess, Metroid Prime 3, Brawl, Galaxy)
3. Turn non-gamer Wii owners in to casual gamers. (Twilight Princess, Galaxy, Mario & Sonic)
4. Become winning console. (Done!)
5. Turn casual gamers in to hardcore gamers or semi-hardcore (Mario Kart Wii, Animal Crossing)
6. Over 50% market share. (Probably done by 2010)
7. Third parties shift to Wii. (2011)
8. All hardcore gamers shift to Wii. (2011/2012)

Anyone agree or disagree?

That's the thing though. Can a company that big really have a goal that is so petty?

I mean Microsofts stop Sony plan is less petty in comparison since it's to block sony from moving into an area that they feel is rightfully theirs through the PC.

I think Sony wrongfully thought that loss leading would always be successful...

Either that or they switched buisness models and had to keep loss leading as a matter of principle.

The PS3 does intergrate a number of Sony business ventures like the cell and blu-ray. In a way making sure that neither of those technologies themselves went completely useless.

Perhaps they figured they were set for success and that their brand name was so strong the PS3 would work like the PS2 and in this way Blu-ray and the Cell would gain buisness wise.

Either that or they overestimated the Cells developmental process and thought it would be cheaper by this time... otherwise i don't see the strategy behind using the cell in the PS3 rather then a 360 like setup.

After all, and i may be wrong here since it's been a while but i'm fairly certain loss leading is most effective in the mid price range of products... because the amount you can loss lead is a much larger percentage of what you are selling.

How much you can loss lead has really more to do with your company then your product. 

I'm sorry Sky Render...I'm gonna have to call foul on your business model.

For microsoft, the statement of... "Software quality is: on par with third parties overall." - I don't think so.
You said Sony is on par if not slightly higher than 3rd party companies and nintendo is well above par right?

Well I pulled metacritic reviews for all Microsoft, sony and nintendo published games for 360 wii and ps3.

Results are: 360 with 80.0625 average. PS3 with 74.5294 average. Wii with 75.4737. List of games is below.

Therefore please... Microsoft clearly leads in this category....it actually owns it. So I wouldn't say their software is not better than 3rd party games if wii and ps3 are.

Microsoft's business model also includes paying extra money for exclusive content and exclusive software. Something the other 2 companies don't do very often.

Microsoft

blue dragon 79
crackdown 83
forza 2 90
gears of war 94
halo 3 94
kameo 79
kingdom under fire 55
lost odissey 78
mass effect 91
Ninety-Nine Nights 61
Perfect Dark Zero 81
Project Gotham 3 - 88
Project Gotham 4 - 85
Scene it 73
Shadowrun 66
Viva Pinata 84


Sony

Eye of the Judgement - 75
folklore 75
Formula One Championship Edition - 74
Genji - 55
Gran Tourismo 5 prologue - 82
Heavenly sword 79
Lair - 53
mlb 07 - 77
mlb 08 - 85
motorstorm - 82
nba 07 - 63
nba 08 - 63
ratchet & clank - 88
Resistance 86
uncharted - 88
untold legends - 58
Warhawk - 84

nintendo

Battalion Wars 2 - 75
Big Brain Academy: Wii Degree - 68
Donkey Kong Barrel Blast - 46
Endless Ocean - 72
Excite Truck - 72
Fire Emblem: Radiant Dawn - 77
The Legend of Zelda: Twilight Princess - 95
Links Crossbow - 68
Mario Party 8 - 62
Mario Strikers - 79
Metroid - 90
Pokemon Battle Revolution - 53
Super Mario Galaxy - 97
Super Paper Mario - 85
Super Smash Bros. Brawl - 95
WarioWare: Smooth Moves - 83
Wii Fit - 81
Wii Play - 58
Wii sports - 76

It is rather a conundrum, isn't it. But I think it's safe to say that Sony either expected Nintendo's disruption to fail again, or didn't even realize it was coming (which clearly isn't entirely the case, since they did attempt to integrate motion control in the SIXAXIS shortly after the Wii Remote was shown off). Working on that assumption, the PS3 would be following the same basic belief as the PS2 did (that it would be adopted readily and sell enough software to make up for the initial hardware losses), but with an added viral marketing side-effect to promote CELL and Blu-Ray use.

So I did mix Sony and Microsoft up, then. I wondered if I'd gotten them backwards; my first impulse was to say that MS was above third-party qualtiy and Sony was on par to slightly below, but I couldn't remember for sure if that was the case this generation or not. Looks like it is.

Oh wow. That was a quick change. I expected Sony fans to argue with me first :)

Even if Nintendo's disruption didn't work i'd think the price point was too high. I don't think Wii's disruption is what screwed up PS3's momentum honestly, i think the price would of nearly dissauded peoples opinions just as much.

I think they priced themselves out of their market and their brand identity. Playstation consoles up until they having been a much more affordable affair.

I mean coke is the most popular soda maker in the world, yet if they made a "High class" coke that came in bottles and cost as much as the other brands like that they just wouldn't do good buisness.

Which is why companies like coke use a new brand name for such products. They tried to fight their brand identity and push something that wasn't important to them in the PS1 and PS2 eras, the graphics.

I can't help but think they're employees would be too smart to fall for that mistake unless they went that route specifically to push Cell and Blu-Ray.

I mean, it pretty much was, in the case of designing the product of "Remember everything that made us really successful, lets do the exact opposite.!"