It's almost time. Oh yes, it's almost time. The Xbox 360 has been available for over six months, and soon the next generation console wars will reach critical mass. This November, Sony will release the PlayStation 3 to the world, while reports indicate that Nintendo could release the Wii a month or two ahead of the PlayStation 3. No matter when Sony and Nintendo get their next generation consoles to market, this holiday season will mark the official beginning of the next generation console wars.

Over the course of the last two console generations, Sony has made it clear that they own the gaming industry. The company came out of the gate with the original PlayStation and dominated Nintendo and Sega, then it overwhelmed Microsoft and Nintendo with the PlayStation 2. But several important facts have been revealed about the PlayStation 3 and Nintendo Wii that could make the battle much closer this time around. In addition, Microsoft will have a one year head start with a strong market hold in the US and Europe. The next two or three years should be very interesting, but for now let's look at how the battle this holiday season is shaping up.

First Mover Advantage

The Xbox was a good first entry for Microsoft, but it was still no competition for Sony and the PlayStation 2. Microsoft started brainstorming immediately and thanks to a lot of hard work the company was able to release the Xbox 360 a year ahead of the PlayStation 3 and Nintendo Wii. While some may fault MS for seemingly rushing the console to market, so far it has turned out to be a very good move for the company. No matter what happens this holiday season, Microsoft will still have millions of consoles in living rooms across the world, while Sony and Nintendo will be starting over at zero.

While Microsoft has a one year lead on the competition, Sony has the power of the PlayStation name. Many consumers held off on buying the Xbox 360 last year because they were waiting for the PlayStation 3. They didn't really know what games to expect or whether or not the games they were hoping for would hit the Xbox 360 or Nintendo Wii, but they knew they wanted a PlayStation. So while MS was first to market, a good portion of the market still waited for word from Sony.

Nintendo hasn't had the best of luck when it comes to the console market. The Nintendo 64 and GameCube were both lackluster successes when compared to any of Nintendo's previous consoles or Microsoft and Sony's efforts. Most people, who either picked up an Xbox 360 or are waiting for a PlayStation 3, aren't thinking about the Nintendo Wii. Only now, after a strong showing at E3 2006, has Nintendo moved the spotlight away from Sony to gather some attention of its own.

Console Pricing

When Microsoft announced that the Xbox 360 would be retailing for $400, the gaming community went into an uproar. This marked the first time that a major player in the industry was to be releasing a console higher than $300 since the Sega Saturn. The few lesser known consoles that have released at prices above the $300 mark have all failed. But Microsoft proved the company had done its homework, with the $400 Xbox 360 selling out over the last holiday season and still being the most popular choice between the two hardware packages available.

So while Microsoft did just fine pricing the Xbox 360 at $400, the company struck gold when Sony announced that the PlayStation 3 would be retailing for $500 and $600 for its two hardware packages. No matter what, Microsoft will have at least a $100 advantage over anything Sony will be offering with the PS3. The ball is now in Sony's court to convince gamers and electronic enthusiasts that the PS3 is worth the price of admission. For the time being, many consumers who were waiting for the PS3 before picking up a next generation console seem torn between the PS3 and the lower priced Xbox 360. Given the early mover advantage of the Xbox 360, this could weigh heavily on the success of the PlayStation 3.

Nintendo is definitely in prime form when it comes to console pricing. The company has already confirmed that the Wii will not sell for any higher than $250, and some industry analysts indicate that the Wii could retail for as low as $150. Splitting the difference, a $200 Wii would be hard to pass up compared to a $300-400 Xbox 360 and a $500-600 PlayStation 3. Even if the Wii comes in at its highest presumed price of $250, it would still be significantly cheaper than any other next generation console. We won't even mention what could happen if it's possible to purchase a Wii and Xbox 360 for the same price as one PlayStation 3. Sony has a huge hurdle to overcome, and with competition from Nintendo and Microsoft, the pricing war will not be easily won.

Continue...