We'll start with Nintendo, as they are the first of the four to enter into the next generation of console gaming. The Wii U is out, and is already off to a good start. Nintendo again is relying on having a unique capability for their console, rather than raw hardware power, to keep them afloat. This worked for the Wii when all of the doubters were saying it would fail. So much, that the Wii has sold tens of millions more units than it's competitors. All while using hardware that in some ways was weaker than the Xbox, a previous generation console.
Now they are trying the same tactic once again by releasing a console that has a unique input device, but has hardware specs that in some ways do not exceed the previous generation's consoles. This, once again, has brought a good deal of criticism from the doubters. However, this time, that criticism may not prove to be off the mark. Why is that? PS3 and Xbox 360 already have their own equivalent of the screen-controller. One may argue that the fact that neither is included with the system gives Wii U the edge, which is true, but that neglects the fact that PS3 and 360 are not Wii U's competitors. Valve, Sony and Microsoft all have new consoles on the way, and if Wii U's controller gives it any hint of success, you can bet that those new consoles will have it as well.
Call of Duty: Black Ops 2 PS3/Wii U Comparison (PS3 on left). Credit: Lens of Truth
Then we have Sony. Known for always releasing the most cutting edge technology, always being the most powerful console on the market at launch. This really hurt them with the PS3. They released such an expensive system that they couldn't afford to build it and we couldn't afford to buy it. The end result, billions lost. Pretty much erasing all of the profit gained from the previous generations of being number one in the console market. As such, Sony is in nowhere near the same position when it comes to building a system that is hands down more powerful than anything Microsoft or Valve has put together. This generation, Sony's executives/shareholders are likely going to be concerned with profit, not power. They will not tolerate these divisions bleeding any more red ink. The strong Japanese Yen is another factor that hurts both Sony and Nintendo, increasing their export costs.
While it is no doubt that the next Sony console will be powerful, they simply do not have the money to be burning through like they did when PS3 launched, and are not keen on repeating those mistakes made with PS3. We will likely end up seeing more of a focus on other features that make the next PlayStation unique, rather than just raw CPU and GPU power. With PSN still lacking behind Xbox Live! in many features, they also have a lot to do when it comes to structuring their online system. With Steam, a very well respected PC online service, now entering the ring, Sony's competition just got a lot tougher. Steam will give a seamless integration with the PC community, much like we saw with Steam on PS3's version of Portal 2... but for all games. Microsoft also has a massive advantage over Sony in this area, with their ability to integrate their next Xbox in seamlessly with Windows. If we have both the next Xbox and the Steam Box offering that kind of PC cross compatibility, Sony and Nintendo may be left out in the cold when it comes to online gaming.
Sony boss Kaz Hirai posing with the PlayStation 3
That brings us to Microsoft. In addition to the criticisms from their core base that they are investing too much effort into casual gaming with Kinect, they have the most to lose out of all 3 with Steam Box coming into the picture. Steam is a direct competitor to Xbox Live!, which they give away free rather than the $59.99 per year Xbox Live! users have to pay for the same thing. Not only that, but as Player Essence points out, Microsoft's dependency on third parties will severely hurt it when trying to compete with Valve's console. Valve already has a good relationship with most of those third party companies. While Microsoft may be willing to buy exclusive map packs for the next Call of Duty game, they're still going to be hard pressed to convince a core gamer to pay extra to even play those online maps. In the end, Microsoft may be forced into making Live! free because of this, which is the beauty of competition. We win.
Microsoft, despite having as much money as they do, are also is in a tough financial spot with Xbox. after losing billions on the RROD disaster and losing $3.931 billion on the original Xbox, the entirety of the Xbox program (or the divisions that have housed it) currently has a negative balance of $4.926 billion lost. Microsoft's shareholders are also likely going to want to see a move towards profit rather than power. This helps level the playing field a good bit for Valve when it comes to what kind of specs the Steam Box will need to compete.
Cute, cuddly, casual fun with Xbox Kinect.
Valve is a threat to Nintendo's sales pretty much just by being in the race at all. Wii U doesn't have much to compete with this generation other than Nintendo's beloved first party games. Valve is a threat to Sony because it may end up launching a similarly powerful system that has online features Sony cannot touch, such as crossplay with PC on all Steam games. It poses a significant threat to Microsoft as well, by giving away what they have been charging for with both Xbox and Xbox 360, and also removing Microsoft's advantage of being the only console manufacturer with the ability to easily integrate it's online service with the PC world. It lacks Sony and Nintendo's untouchable first party capabilities, or Microsoft's multi-billion dollar advertising/exclusivity budgets they are willing to throw at their consoles. However, even though it's specs are still a mystery, the concept alone has enough potential to turn Valve's new console into a major player this next generation.
Valve also has one other advantage with the Steam Box. PC games like those on Steam are designed to be scalable. This means that Valve can release as many iterations of Steambox as it wants without confusing the consumer, they all will be compatible with the same software within a certain time period. The software can just be configured to run at different settings. This also solves any issues with backwards compatibility, unlike the other systems who operate in a much more closed environment, and who's architecture changes from one generation to the next make backwards compatibility difficult if not impossible.
Rumored photo of the Steam Box. Photo credit: Kotaku
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