Both MS and Sony are much more powerful companies than Nintendo they both have more assets and  engage in other business ventures in which they are extremely profitable in. MS and Sony would be both worth over 200 billion dollars. Nintendo relies solely upon being profitable in the video game console industry. Sony is the leading electronics company in the world. MS is the leading Computer software company in the world. Sony and MS can afford to make initial losses when introducing a new console to the market. Nintendo could not afford to adopt the same business model as MS or Sony.

Losses are expected for a new console, R&D, advertising and other expenses to get the new project up and running. One or two billion dollar loss a big deal to MS or Sony? lol. That is mere loose change to MS and Sony. If Nintendo took a couple of billion dollar loss to introduce a more powerful console onto the market they would being financially ruined.

Welcome to the site and well done.

The next generation will start as soon as either the second or third place console starts to see its sales drop off and/or lose third party support.

Typically, a console only sees a lifespan of more than five years if it's extremely popular/dominant (NES, Game Boy, PS2) because there is no reason to hurry another one to market when the current console is seeing so much success and making so much money. This is clearly not the case with either the 360 or the PS3. For one thing, they aren't popular in all markets. For another thing, they aren't exactly raking in the cash, either. Maybe MS's Entertainment and Games division posted profits, but that division also includes several other products and services, and the quarter before last, it only posted a profit of 89 million dollars, which seems very odd if the 360 itself is indeed profitable. Last quarter, it actually posted a loss of 188 million dollars.

Lastly, while the sales of the PS3 and 360 are up from last year, they are still nothing to write home about. To sum things up, neither the 360 or the PS3 have the mass appeal nor the profits to last for an exceptionally long period of time, so one of them will release a successor by 2011 at the latest.

Sadly typical replies to an informed post lie herein. The short of it is that a company cannot continue on a business venture that's losing them money if the people funding them won't let them. Which is why, even if they technically can afford it, Microsoft and/or Sony may well not take the risk of another console since this generation has been so unprofitable and since Nintendo's said multiple times that they have no intention of giving up the industry easily this generation or the next.

If you don't believe that an unprofitable generation can scare a company out of this industry, then take a look at some of the contenders that have dropped out over the years: Panasonic, Bandai, Phillips, NEC, Casio, Amiga, Magnavox, RCA, and Mattel. All of these companies were and still are big players in the international marketplace. And all of them quit making consoles after they had a rough generation or two.

Rock_on_2008 said: Both MS and Sony are much more powerful companies than Nintendo they both have more assets and  engage in other business ventures in which they are extremely profitable in. MS and Sony would be both worth over 200 billion dollars. Nintendo relies solely upon being profitable in the video game console industry. Sony is the leading electronics company in the world. MS is the leading Computer software company in the world. Sony and MS can afford to make initial losses when introducing a new console to the market. Nintendo could not afford to adopt the same business model as MS or Sony. Losses are expected for a new console, R&D, advertising and other expenses to get the new project up and running. One or two billion dollar loss a big deal to MS or Sony? lol. That is mere loose change to MS and Sony. If Nintendo took a couple of billion dollar loss to introduce a more powerful console onto the market they would being financially ruined.

 

Although there is an element of truth to what you say, Nintendo is still a massive company and can easily afford the  R&D to produce a console that is as (or more) powerful than what their competition produces; with the exception of the NES, every previous Nintendo console was (at least) roughly as powerful as their competition.

Nintendo can also engage in losses (the Gamecube was estimated to lose Nintendo $20 when it launched) and a massive warchest of money (it was $8 Billion before the Gamecube was released, and between the DS and Wii it has to be massive by now), and they have the revenue streams and to be able to support losses on the scale that Sony and Microsoft have; it is not good business though.

 

My expectations for their next system (put in terms of hardware that could have been used in this generation) would be something similar to Nintendo launching the Wii with a PowerPC 970MP at 1.5 to 2.0 GHz, with a GPU similar to a Radeon X800 or Geforce 6800 ... In other words, it wouldn't be as powerful as it could be but the ratio between the processing power and cost to manufacture would be (roughly) the best on the market.

If I was translating this back to to hardware that I expect will be available in the next generation it would be a Power7 based processor running at (greater than) 6 GHz, and a GPU with a similar architecture to the HD4800 with 1600 or 2400 stream processors. The cost to manufacture this system will be (roughly) $300 but Nintendo will still pack in a simple (Wii Sports like) game.

 

Very good OP and first post, though I disagree with some things like MS going out of the market.

Of course, MS is in a very bad position. We have to keep in mind that in order to post a profit, they had to do the following:
- Take a preemptive $1 B of repair costs for RRoD. MS didn't make this in a vacuum, they are knwon to apply every single trick they know of to make their speadsheets look good.
- Have Halo 3 released in this annual report. To think that most of the money made in this annual fiscal year is thanks to Halo is alarming.

So common wisdom would lead us to believe that from now on, MS will be profitable. But given their little tricks, the fact that MS is a slow moving dinosaur and their past behaviour, I'm actually not so sure they will continue the trend. We'll know along their next fiscal year.
Given their dire situation (analysts are no longer recommanding their stock which fell a lot, this and their cash reserve that is melting at alarming rates, surely caused by a hidden pyramid fraud that they had to eliminate at all costs) nowadays, if they don't make a profit next fiscal year, I'm not sure they can sustain the XB360 for long. Also, I won't understand if they can't post a profit.
A console should make you money, not be a money losing venture.
Sure, the purpose of a business is to acquire and keep customers, but if you can't make profit or at least constantly break even, you won't go far.

 

So, I agree that none of them is in a position or has the will to end this generation.

None of the HD ones can do that with their major losses that they have to recoup first. Also, they have to understand Nintendo strategy before doing their next console, as it's very clear that they didn't understand one single bit of it yet.

As for Nintendo, the fact that the 3rd parties were so slow to start supporting the Wii correctly only add an incentive for them to make their console last longer. Also, they're moving too fast and they know it, as their competitors are not even succeeding in being birdmen 1.5 years after Wii launch. SO I bet Nintendo will slow their games release, and make their console last more than forecasted initially.

3rd parties were specially stupid in this gen, and their case is very interesting. They started a war of attrition on Nintendo, not making good games for the Wii, hoping for it to die. Unfortunately, the Wii went on selling more and more. So they actually made a war of attrition on themselves. That's because Nintendo was correct that the HD games are too expensive, and 3rd parties have a hard time making profits with them. You can see that by them making increased revenue, while profits decrease (except for some occasional hits, but none of these are assured). This is a very bad trend, but mostly, shows that 3rd parties actually made a war of attrition on themselves.

It's funny actually.

ookaze said: 3rd parties were specially stupid in this gen, and their case is very interesting. They started a war of attrition on Nintendo, not making good games for the Wii, hoping for it to die. Unfortunately, the Wii went on selling more and more. So they actually made a war of attrition on themselves. That's because Nintendo was correct that the HD games are too expensive, and 3rd parties have a hard time making profits with them. You can see that by them making increased revenue, while profits decrease (except for some occasional hits, but none of these are assured). This is a very bad trend, but mostly, shows that 3rd parties actually made a war of attrition on themselves. It's funny actually.

Damn funny and true XD I can imagine them thinking "naaaah that cannot be..in a year it will die as they alwys do" 2 years later "what were we thinking?!" XD

 

Nintendo will ride this train for aslong as possible until either the developers get bored of the hardware or it stops selling or one of the Two of the Big Three launches early.

Sony will not release the PS4 until atleast 6 or 7 years after the PS3 launched unless they are forced to again by another company, they will however keep the PS3 on the market after they release the PS4 to keep profit rolling in like they did with the PS1 PS2 transition and how they are now with the PS2 PS3 transition.

Microsoft will either release when Nintendo or Sony plan on releasing, due to the mess of RRoD on the X360 which to be fair they recovered from rather well but it was $1billion they could have spent else where. The X720 (as it has been dubbed) might never exist as even though MS is making a profit now they still have roughly $5billion of debt from Xbox one and X360 R&D and Xbox Live servers which now pay for themselves.

Next-Gen computer entertainment systems released December 2012 - November 2014, I know that is a big time frame but with 3 different companies all operating in very different ways you can never be sure about things concerning all 3.

If Microsoft leave the console industry who will take up the torch to the 3rd Membership of the Big Three?
Sega doesn't have the funds at the moment.

EA does have the funds but it would void all their deals with FIFA, NASCAR, Madden etc (they have to be released on all systems otherwise they lose the dealeership)

Apple is another likely contester as they seem to be diving into every other market now.

Or it could stay Nintendo and Sony and be the Big Two which doesn't have the same ring to it... and would probably be quite a civilized generation with Nintendo appealing to the casual gaming market and Sony appealing to the "hardcore" gaming market, it would probably end in a nice 50-50 split with both earning good profits and with atleast 100million consoles sold each.

After hearing Microsoft say that they will follow Sony into the depths of the 10 year plan, the message of this thread rings true even more :)