Apple vs. Google : The Flawed Gaming Console Comparison

April 28th, 2011 § 0 comments

The 80’s Desktop Wars are not the only historical models people are using to predict how the iOS vs. Android battle will play out. In an attempt to show that market share can change dramatically despite an overwhelming lead people point to the gaming console wars of the past 3 decades. Atari started out with a dominating lead only to be usurped by Nintendo’s NES console in 1985. They held this lead, despite heavy competition from Sega, until 1995 when Sony released their first Playstation. More targeted at 18-25 market it quickly supplanted Nintendo as the major player in the console market. Sony held this lead with their Playstation 2 but lost out to the Wii and XBox 360 as Nintendo and Microsoft brought new innovations to user interface (WiiMote) and gaming communities (XBox Live). As the 5 year gaming console life cycle grows to a close it’s anybody’s guess who will come out on top in the next round1. I find this to be a more compelling comparison to the current battle between Apple and Google than the Apple vs. Microsoft one but I think it has some serious flaws.

There can be only one

If you look at the behavior of the consumers of gaming consoles as compared to the consumers of smartphones there are some key differences. A smartphone user will almost universally choose one product over another. With rare exception do people carry around multiple cell phones and I would guess that when they do one of them is a feature phone2. For people who buy consoles the decision is not as absolute but rather a preference for one platform over another. If you purchase an XBox today there is no reason that you couldn’t purchase a Wii later. Switching between the two is just an input button away.

Consoles are not “sticky”

As Horace Dediu posits in his How sticky is Android? article the stickiness of a platform really comes down to the software. As I pointed out yesterday it was this very issue that helped Windows maintain a huge lead over Mac OS in the 90’s. If you want to switch sticky platforms you have to give up all the money you invested in software. For gaming consoles, however, this does not hold true. When someone upgrades from one console generation to the next they are all but expecting to lose their software investment. Sure there are some consoles that are backwards compatible but that does little more than free up a display input on your TV. If you really want to play those old games you can leave your old console hooked up and it costs you nothing. Even these people are the outliers though because when someone does decide to make the leap into the next generation they are doing so because they want to play new and improved games. They aren’t just expecting to lose their investment, they want to.

This is simply not the case for platforms such as smartphones and desktop operating systems. People might get bored of games and be willing to lose that investment but it’s the productivity apps that are going to have a big influence over whether someone switches platforms. I would argue that this gives iOS the upper hand because of their superior apps and the fact that their customers have invested more heavily in them but that is besides the point. The Android Marketplace could improve and Android customers could start buying Apps.

Profitability

If there is one area of this historical model that HTC, Motorola and Google should  be paying attention to it’s that of profitability. Despite being unable to catch up to the Playstation 1 & 2 or the XBox Nintendo maintained their profitability throughout. Through tighter control and a more hands on approach to making games they have not only survived but thrived. Had they not so done I’m sure they would have ended up producing crumby games for their competitors consoles such was the fate of Atari & Sega. Instead they took that money and went back to the drawing board for the Wii. They abandoned the classic console battle of producing better graphics opting for a better user experience and an insanely low priced product instead. Proving once again that innovation and profitably trump market share any time.

  1. My guess is that Nintendo and Microsoft will continue to mop up market share as the hardware driven ethos of Sony fails to bring innovations that consumers really want. Ok, your graphics are better, that’s great, but I would rather play a fun game over a beautiful one []
  2. These are old school Nokia type phones that despite their name only have a few features like calling, texting and being hard to use. []

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