Remember when the XBox and PlayStation 2 were fairly new, and a lot of pundits speculated that due to the power of the new consoles, PC gaming was on its way out? And remember how just a couple of years later, the PC was home to marquee titles including Rome: Total War, Half-Life 2, and Doom 3?
The State of Consoles
The new generation of consoles is off to a slow start. Well, except for Nintendo, who is storming out of the gates with the only console that isn't targeting those with the budgets for high-end gadgetry. But the PlayStation 3 is really struggling, and given the current state of things it's not unreasonable to suggest that it may end up being a total flop. I don't think that will happen, but I think Sony is going to lose enough money on this thing to seriously reconsider their strategy the next time around.
Think about it. Sony loses $300 or so on every console sold. Without a compelling selection of games, Sony has no way to make that money back. Sony's been a bit over-ambitious with their console, and it may come back to hurt them. Chalk it up to an overly complex processor, a needless Blu-Ray drive, and an oversized hard drive. There's no denying that most companies would not be able to stay in business with the kind of losses Sony is taking.
Microsoft is having a bit of a tough time as well. While the 360 leads the next-generation pack due to its one-year monopoly on the market, sales have been sluggish lately. Perhaps it's due primarily due to the dearth of AAA software a la Gears of War, or perhaps it's because the thing still costs $400, which may just be a bit too expensive to penetrate a large market share. But Microsoft doesn't seem to be too worried, keeping mum on recent sales figures amidst rumors of a smaller fabrication process and the hotly anticipated release of Halo 3. However, Microsoft has also shifted focus somewhat, broadening their horizens to include DVDs, downloadable content, mp3s, and other technology convergence. Even Microsoft seems to be aware that you can't charge $400 for "just" a videogame console.
And then there's Nintendo. Nintendo's Wii is selling fast (good luck finding one), but if you're into graphical splendor and boundary-busting games, the Wii, with its family-friendly, simplified approach to gaming, is not the place to look.
The State of Gaming PCs
Gaming PCs are a unique niche market, not to be lumped in with PCs in general. A gaming PC is often significantly more expensive than your basic office-type PC. But unlike the money-losing hardware business that Sony's plunged into, gaming PCs are immensely profitable. So much so, in fact, that two major mergers have happened in the last year – Dell acquired the second-teir boutique Alienware, and HP acquired top-teir boutique VoodooPC. More recently, another rapidly expanding second-teir boutique, Velocity Micro, acquired top-teir boutique OverdrivePC. All of these mergers are focused not only on expanding the mostly niche boutique market, but also bringing more gaming PCs to retail outlets. Velocity Micro and Alienware PCs can already be purchased from retail outlets such as Best Buy, and Voodoo has announced plans to move into retail as well.
Not content with acquiring the top gaming PC manufacturer, Dell is also stepping up its foray into gaming with their top-end XPS systems. These performance systems cost as much as $6,000, and Dell will likely sell every single one. Last time Dell release a limited run of quad-CPU desktops under the XPS line, they rapidly sold out. Not to be left out, even Gateway is expanding their line of FX series gaming PCs. Make no mistake about it, PC companies are venturing into gaming because the market is growing, and selling these machines is very profitable.
Think about it: most major console games are also on the PC. The PC also has a game library stretching back 25 years or more. Most people need a PC anyway, and often the cost of upgrading to a nicer gaming setup isn't any more expensive than buying a next-generation console. Since gaming PCs can be configured for nearly any budget, they can hit an extremely broad audience. And believe it or not, it's relatively inexpensive to get a gaming PC that can match or exceed the graphical fidelity of the PS3 and XBox 360.
Software-wise, PC gaming is looking great. The list of AAA titles coming out in 2007 covers virtually every genre imaginable. And with Microsoft pushing gaming hard with their "Games for Windows" branding and with Windows Vista, it's clear that the big players in the industry are not oblivious to the massive audience they can reach through PC gaming.
I think that in the very near future, the pundits who once again predicted the death of PC gaming with the release of the 360 and PS3 will once again be found foot-in-mouth as a slew of marquee titles are released for the PC, and top systems integrators continue to expand their lineups of gaming PCs.
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