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Software industry

Next-Generation Consoles: A Trojan Horse in the Living Room

Strategic Insights

— 1 min read

Microsoft's Xbox 360 and Sony's PlayStation 3 are about more than just high-definition gaming - they represent a strategic move into the digital living room. Both consoles serve as Trojan horses, carrying new capabilities into the home that their companies hope to profit from. Microsoft aims to expand from home computers to the TV, while Sony seeks to control the next-generation optical disc format and reap millions in royalties.

Key Takeaways:

  • The Xbox 360 doubles as a media center extender, allowing users to view content stored on their PC on their TV via remote control.
  • The PlayStation 3 includes a Blu-ray Disc player, which will create an installed base of several million households capable of viewing movies on Blu-ray Disc.
  • Both consoles will act as broadband Internet appliances, giving Microsoft and Sony direct relationships with millions of customers and the opportunity to sell downloadable content and advertising.
  • Microsoft has a more aggressive strategy than Sony in using its latest game console for things other than gaming, with features like videoconferencing, text messaging, and TV recording.
  • The Xbox 360 can connect to Windows Media Center PCs, allowing users to access content stored on their PC while in front of their TV.
  • Sony will reap millions in royalties if Blu-ray Disc wins out over rival HD DVD.
  • Microsoft and Sony see their consoles as a focal point for other types of entertainment, with analysts predicting growth in this area over the next generation of game consoles.

Statistics:

  • 5 years from now, people will use network-enabled game devices for more than playing video games, according to David Cole, an analyst with DFC Intelligence (Cole, DFC Intelligence).
  • The Xbox 360 doubles as a media center extender, allowing users to view content stored on their PC on their TV via remote control (Microsoft).
  • The PlayStation 3 will create an installed base of several million households capable of viewing movies on Blu-ray Disc (Sony).

Sources:

  • Microsoft
  • Sony
  • Yankee Group (Michael Goodman)
  • DFC Intelligence (David Cole)

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