Not just prototyping - the supply chain in itself is a daunting task to undertake.

• Sales and Marketing 
• Product Development 
• Sourcing
• Manufacturing
• Quality Assurance
• Shipping and Logistics
• Warehousing
• Customs and Clearance
• Legal

This is something that takes thousands, not hundreds, of people to accomplish, across multiple offices scattered around the world. Most development houses only employ a fraction of the staff required for such an undertaking. Even EA, arguably the largest publisher and developer, would have to virtually shift their entire staff to create a new console - which leaves their development efforts in ruin! 

Something tells me that EA will recover from this major shortfall. The videogame business has always been one of immediate investment and delayed return, especially in the infancy of a console. Oftentimes the first couple games a developer makes for a new system costs them the most because of the need to learn the architecture of that system. Couple this with the fact that the installed base of the consoles is extremely low and I think it would be amazing or down right impossible for EA to be seeing money right now. But what happens when the Wii hits 20 million users in its first year? What happens when the PS3/360 is a combined 17 million user base at the end of this year? Major profit increases for EA.

All I'm saying is that while it looks like EA is hemmoraging losses right now, I don't think that will continue. Would Peter Moore jump Microsoft ship unless he thought EA had the resources to survive the next-gen shift?

And companies like EA will always keep the multiplatform structure alive. They like creating the same product 7 times. While it does cost money to create ports, it doesn't cost nearly as much as a ground up development.

So I think the EA example certainly doesn't put a nail in the coffin for multiplatforming in the future. Rather, the investment that EA has put into this generation shows taht the videogame market can support billion dollar business, just like the movie industry.

Honestly, I think Sony is the one that blew it. Not to single them out but... However great they may be for gaming, Cell and Bluray have put imense pressure on the price of the console. Coming to market a year later, and on a $200/50% premium over their most expensive competitor doesn't help at all. Then can announce 10 year life-cycle all they want, but that's really not their choice to make.

Microsoft's design is pretty much in line with their business - that thing is an everyday computer in disguise. And from there, they can sell their unified tools for both their platforms - 360 and Windows. The only problem they've run into is reliability. It doesn't make sense that Sony could, even if artificially, lower their price after less than a year, and they couldn't. If it weren't for that, they should already be at $200 for the Core with a memory card, or maybe $250 for a bundle with a card and a game. And that's not really pricing themselves out of the market. It's coming first to the market, at an slightly higher price ("slightly" when compared to Sony), get a good head start in units and games, and then dropping to your other competitor's prices (Nintendo) when they come along. They almost did it in America, but reliability can mess it pretty bad.

@your mother,

Just to add one more thing to that list that a company cannot really buy...they don't have people with the experience and more important they don't have the contacts needed to make this stuff happen. Most of the things you listed requires working with other companies and you need people who know how to deal with those companies and when to grease the wheels so to speak. All in all, I feel confident in saying that the barrier for entry into the console market is one of the highest barrier's for entry of any industry. You need to be willing to lose money by the hundreds of millions (and probably billions) for the first 2 years of development...and all of that is well before you have any realistic idea of your market risk since you won't be able to see how well your investment is going to perform until its out there (just look at this gen, people had no clue how these consoles would do until we started to see mostly complete prototypes of the consoles etc...).

Anyways, I think I may be kicking a dead horse here, so I'll leave it at that.

Wasn't the 3DO console like a conglomeration of third parties trying to make a system? Or was it just a bunch of other random electronics companies?

 I had a feeling someone might bring this up.  The company was actually founded with the goal of making a CD based console but it had a debut price of like $700 which very few(especially then) were willing to pay.  At that time you also have to realize the barrier for entry into the market was much lower than it is now.  As far as I was able to search out they were not a merger of companies, but just some company that basically come out of the woodwork and tried to jump into the fray.  They were ultimately put out of their misery by the PSX and eventually sold the rights to the console.

They were in fact a 3rd party developer in addition to a console company but they were created to make consoles.  In my mind at least it is far more feasible for a hardware company to make software than a software company to make hardware. 

Au contraire.  I agree that Sony focused on cutting-edge hardware so much that it shot itself in the foot.  (Cell may be costing them a lot -- I don't know the numbers -- but Blu-ray was a total clusterf*@# for the first few months.)  But Microsoft's sin was much, much greater, and carries more potential for long-range negative impact. 

Sony's console is expensive -- duh.  Sony's console is very expensive -- inarguably.  Sony's console is too expensive -- debatably.  But one thing that even Sony's detractors agree upon is that, once the sticker shock passes, the PS3 is a very solid, and even user-friendly machine.  I've said it before, but the number one thing IMO that Sony absolutely nailed was the standard, easily-swappable laptop hard drive.  Anyone with rudimentary computer hardware knowledge who isn't terrified of tinkering can put in ANY 2.5" hard drive they want to.  (Not like Microsoft's tiny proprietary $100 ripoff, damn them.)  Without voiding warranty.  And then they can put Linux on it. 

But the things Sony got right are nothing compared to what Microsoft got wrong.  You all know what I'm talking about -- RRoD and disc scratching.  We all talk big about Microsoft the Evil Empire, but no one actually holds a grudge until they date-rape you with a faulty product.  Microsoft apologists can talk all day long about how Microsoft is doing everything they can and we should be happy they're deigning to extend the warranty on RRoDs at all, but the simple fact is that the company put severely flawed hardware on the market and pretended that it was fine until they were about to get gang-raped by class-action lawsuits, at which point they did the bare minimum to address only the most serious of the system's flaws.  I think that Microsoft underestimates the amount of permanent damage this episode does to their reputation among gamers.  Sure, we keep playing the 360, but when the next gen rolls around, are you really going to be so quick to buy their system? 

People are reluctant to buy the PS3 because of the price tag, not because they're afraid it will catch fire when they're not looking.  When the price drops, Sony's problems will disappear and be forgotten.  The wounds inflicted by the RRoD will not heal so easily. 

Of course the problem is that "when the price drops" part.  I agree with you about Microsoft, but I think the price is a much bigger problem than people think.  When the price drops?  So far we haven't even seen one price drop, just a clearance sale on the 60GB.  People can say "oh well the 80GB will obviously be dropped to that price" all they want, but so far Sony has said nothing even slightly suggesting they intend to do this (not that the would).  What price level will be reasonable?  With an arguably much better library of games before the RRoD issues were known the 360 was still selling pretty badly at $399.  Do you expect the PS3 sales to double when they get that low?  $299?  How long will it take them to get down that far?  Will the 360 and Wii just constantly match those price drops stealing away most of their possible positive effects?

The other major problem for the PS3 is it's game library.  It is almost completely out of 3rd party exclusive games, and most of the good games it has are dual platform with the 360.  IF reports of RRoD are gone after these new heatsyncs are installed, you can suddenly play a much larger library of exclusives AND multiplatform games on the 360 for much cheaper than on the PS3.   Honestly I think Sony has positioned themselves so badly with that initial price that they have very little chance of anything but 3rd place.

I agree with Naz. Very few people argue that the PS3 is a weak or poorly designed system (and the few who do are wrong). I think what people do say is that it was marketed incorrectly in almost every way imaginable, and that those marketing errors may be even more costly than actual hardware failures for the 360. I will list the marketing errors off the top of my head:

1) Literal advertisements. A baby doll crying in reversed film is just simply awful. It scares people. People have said they had nightmares about it. That's not what you want... unless your target audience is exclusively and only 16 year old boys, who think horror movies and creepy stuff like this positively badass. In which case, congratulations! You've just captured the 14-18 male age bracket, and scared away everyone else in the entire world.

2) Developer friendliness. The hardware is robust, but it's clearly not very developer-friendly. You can call this a "hardware design flaw" if you'd like, but I think it fits under marketing equally well; it's Sony's job to market their hardware to software designers, and they did a very poor job of marketing it.

3) Price, price, price, price, price. The problem isn't just that it's too expensive for people to afford -- although that really is a momentum killer, consoles that sell poorly from the start have never suddenly shot forth and sold way better later on, even with drastic price cuts -- it's that there happens to be a very similar competitor that offers their system for 100-200 dollars less. In effect, anyone buying a system for cross-platform titles (for example, if your games of choice for the generation are Resident Evil 5, GTA IV, and Devil May Cry IV) will have the choice between two systems with near-identical versions of the games, except one system can be bought for 200 dollars cheap. These make these game, in effect, 2/3 360 and 1/3 PS3, as most people buying systems to play these games will obviously choose the cheaper option.

But behind all these marketing errors, the PS3 really is a very solid system in almost every respect; it doesn't break down frequently, it's fairly quiet, it has a multitude of easy-to-use, customizable, aesthetically appealing options. It just doesn't have a lot of games, and it's nearly completely lacking in momentum.

naznatips, you make a good argument. But:

A clearance sale is, in effect, a TEMPORARY PRICE DROP. In this case it may or may not be temporary.

A $400 console that is $100 and $250 more expensive than its competitors is still much more appealing than a $500 console that is $100 and $250 more expensive than its competitors. So price drops will help Sony even if some of their thunder is stolen by counterdrops.