Re: Microsoft
As has been mentioned elsewhere, the dominant console cycle for the past few decades has been about 5 years. Microsoft released the 360 four years after the original Xbox probably for two primary reasons: 1) losses associated with the manufacture of the Xbox, and 2) to get the jump on Sony. The cost of that strategy has been record-setting poor quality, and they have had to compensate with a $1 billion 3-year limited warranty replacement/refurbishment system to stay in the game. So far from their current market share of about 30% (if one includes the Wii) or 60% (if one only includes the PS3), they are still very much in the game, but I wonder about the long-term effect on customer loyalty. Maybe I am completely wrong here in questioning this aspect of their business, and we should look as this whole RRoD (and E74) experience with reverence?
Re: technology and costs
As the videogame medium contains a very significant technical element, it is probably prudent to consider where performance is heading for the next generation. Realism as style in this medium has been very influential affecting everything from real-time ambient lighting, physics-based animation, precise collision detection, industrial design in modelling, and detailed, organic entity design. All of this detail can make for a more involving experience, and I believe it is essential for maturing the medium. The market for games has grown significantly, and so it makes a lot of sense that the industrial systems that produce films (with all those producers, directors, writers, actors, designers, and expert consultants) will also move into the creation of videogames, which of course carries with it significantly increased costs. The console as a device for creating these virtual experiences should provide as much capability as possible, as efficiently as possible. Currently the hardware designs most suited to processing the vast amounts of data required for constructing these virtual worlds involve many cores coordinating access to a very fat bus. Sony has overwhelmingly demonstrated that they understand these relationships, and appear to be set to launch a low-cost version of the PS3 sometime this year that will probably give them parity in the marketplace with their competitors.
I expect backwards compatibility to be more important for the next generation, especially considering the increased investment in software and services. I'd be surprised if any current player can again afford to start from scratch. As others have mentioned, Microsoft is likely to launch first probably in 2011, with Sony not too far behind. I believe Nintendo sees themselves as more of a toy company, and so occupy a different part of the market, but will still probably follow the 5-year-cycle.
Re: Motion control
Sony is obviously positioning themselves to both relate to the market that Nintendo created, and to offer a new experience to their customer base. Microsoft is attempting to break new ground by creating something entirely different, but I am not so sure that their technology gives them an advantage that Sony cannot largely replicate with some clever software, their motion and PSEye peripherals.
Re: OnLine
OnLive is interesting as the Cloud Computing/Timeshare model for gaming, but of course it depends on some pretty wide, low-latency pipes (which most of us can expect at some point in the future). It could offer a unique MMO experience where thousands of users could be in one shared virtual environment, but it is unclear whether this will be a compelling experience any time in the near future. OnLive's suitability for any serious gaming of course comes down to the latency and image quality issues, and I question whether this is a viable business in the near-term. But of course, I have not seen the demos, and I am not an investor, but I doubt any of the other console players are seriously concerned as of yet. When this model becomes viable, what prevents the other players from doing the same? Or will they have some arrangement with OnLive's service?
