http://www.associatedcontent.com/article/1591496/why_microsoft_is_afraid_of_sony.html?cat=19

Why Microsoft is Afraid of Sony

 March 25, 2009 by Otter 

 The Xbox 360 is currently second place in the console wars race. Microsoft, however, seems more concern about the Playstation 3 than the leading Nintendo Wii. They even went so far to discredit the Nintendo Wii as not being in the same market. So why is Microsoft so afraid of Sony and the Playstation 3 despite the comfortable lead? Let's take a look at several factors.

Context

The Xbox 360 had a year head start on the Playstation 3. As a result on being on the market earlier, Microsoft was able to get a first-mover advantage and got a nice lead before the Playstation 3 launched. If Sony didn't delay the Playstation 3, the situation would have been a whole lot different. Sony's high-definition video game system would have outsold the Xbox 360 (even with the higher price tag) based on hype alone. Not to mention that many of the games the Xbox 360 is getting might have become Playstation 3 exclusives. In reality, the Playstation 3 is selling about even with the Xbox 360 if you don't account for the year head start (even more in Europe). Furthermore, the Playstation 3 cost a lot more and had to face stiffer competition than the Xbox 360 did when it launched. As much as Microsoft like to brag about beating Sony, the difference between the two isn't all that great if you take in the context of the situation.

Grand Scheme

The Xbox 360 is outselling the Playstation 3 handily. However, Sony has more than one video game system. The PSP is selling solidly while the Playstation 2 is maintaining a steady pace. Therefore, Sony actually has a bigger market share than Microsoft. So while Microsoft only likes to concentrate on winning the battle against the Playstation 3, they lack the punch to compete against Sony (and Nintendo) in the grand scheme of the gaming industry.

First-Party Support

Microsoft is growing heavily reliant on third-party support. They recently shut down Ensemble Studios (Halo Wars), let Bungie (Halo 3) go independent and did not attempt to buy Bioware (Mass Effect). Since third-party gaming companies can switch alliances at any time, Microsoft is walking a tight rope.

Sony, on the other hand, is quietly building up the biggest first-part development core in the gaming industry. Their studios span all three major regions (Japan, North America and Europe) and feature tremendous talent. First-party Playstation 3 games are gaining praise and popularity. With more third-party opting to release multiplatform games, exclusive games on the Xbox 360 and Playstation 3 may ultimately determined the battle between the two high-definition systems. With less fire power, Microsoft should definitely be concern about Sony.

Free Online

Finally, Xbox Live paid subscriptions are one of the biggest revenue streams on the Xbox 360. The Playstation 3 offers free online play over the Playstation Network. Since the differences between the two networks are superficial, Microsoft should fear for their pockets if the Playstation 3 ever caught up to the Xbox 360 in sales. Not only will they lose market share but they will also lose out on extra revenue since many people will rather pay online for free than pay for it.

The Xbox 360 is only dominating the Playstation 3 in North America. The two systems are just about even in Europe while the Playstation 3 is leading handily in Japan. Because of that and the above factors, Microsoft has every right to be concerned about the Xbox 360 lead over the Playstation 3.

We always get these editorials when it's dry time for new game announcements.

Because they are in the same market.

That's all it needed to be.

Good article.....he has some valid points

Pretty lame article if you ask me. The online point is worthless unless maybe if the person has a xbox360 and ps3. Just because more ps3 are sold doesn't really mean anything for xbox live membership. Also, the hype of the ps3 would have been greater if it was released earlier? I see no point in that statement either. There would be less hype I would imagine because it would have been released. Hype builds up over time before something is released and once something is released the hype usually starts to go down.  Pretty much all the arguements are just half assed or streaching it.  They could have probably picked out a lot better points than these such as Microsoft doing recent price cuts while Sony hasn't or something like that...

A couple things I disagree with on the article.

First off, I don't like the word "afraid".  It's more like Sony is the company they can most directly compete against.

Under the heading "Context":  I never did like the work "high-definition" because it is loosly defined and implies that all games on the XBOX360/PS3 are 1080p.  This is not the case with many popular games on the system.

That is besides the point, the article seems to imply that the XBOX360 is not high definition where the PS3 is.  Maybe they are talking about movies, but they don't say that.

They also seem to imply that Sony could have magically released the same PS3 at the time of the XBOX360 release for the same price it is now.  That would not have happened, they would have either weakened the system or upped the price durastically.  Probably both would have happened.  If they had release a console more along the lines of the PS2 at the same time the XBOX360 released, then maybe things would have been different.  All of the PS2 fans would have ran to the PS3 in that case.  As it is now, it seems the XBOX360 is the PS2 of this generation.

Under the heading "Grand Scheme":  The XBOX360 is not competing with the PSP.  Even if the PSP took over the entire handheld market, it wouldn't make that much difference to the XBOX360 market share.  The PSP has no place in that article.

As for the article as a whole, I think Microsoft has proven that they can compete in the gaming industry.  I seriously doubt that Nintendo, Microsoft or Sony will go the way of the Sega any time soon.

Nothing wrong with that article, nothing we didn't know already either.

I guess those are some valid points. Although I dont think that MS would be upset with the situation they are in if the PS3 did happen to catch the 360. They would have still sold alot more consoles than their last gen did. Plus, arent they making good money and profit?

Let me have a word about that bold part : bwahahaha...oh, Mr. Wii , I didn't notice you were there.

You seem to have the Microsoft mentatility disregarding the Wii! Ooooh the irony!

So, you don't have anything constructive to say.  Instead, you make fun of me because I own a Wii.