Can a new player come into the console business and succeed?

Posted by Lord Publius |

I have been wondering if there was a company that could break into the current market for game consoles and give Sony, Nintendo and Microsoft a real challenge. I'm sure that many consumers and gamers would think that's unlikely because of the costs and other barriers to entry.

Naturally, I don't agree with that sentiment.

It would be costly but, now would actually be a good time to enter. Nintendo is struggling with their console business but, doing well with portables. That puts them in a weakened, but stable position. Sony is selling PS4's at an alarming rate but, EVERYTHING else the company does has been a net-loss for them for years. If not for PlayStation, Sony would probably go bankrupt. Microsoft has never once made any money from the XBOX division at all. However, they probably don't care. XBOX was just their way to get Microsoft products into more households as they expanded into entertainment. (As if they weren't able to do that with good quality PC games for Windows...)

The point here is that there's an opportunity for a suitably large enough (and committed) company to come into the market and dominate. Sony can't afford any more losses. Nintendo has such a huge cash reserve that they could probably go without a new console for a decade and still be profitable. However, like any company that has to answer to shareholders, they wouldn't. The only one of the current players that has the will (and a significant amount of cash) to defend their market position for long would be Microsoft. Even they may not want to if the competition gets too aggressive. One investor in the company wanted to shut down the XBOX division since it has never made a profit. That person was ignored by the corporate board since XBOX is more about getting market-share than profit.

All that being said, what company can possibly take on Microsoft, Sony & Nintendo? Who would want to go up against such beloved gaming titans?

PippinA lot of pundits would probably say Apple but, I vehemently disagree with that idea. Knowing Apple, they'd turn the console into a Set-top box like Apple TV that also plays iOS games. Or, maybe just a cradle that allows you to plug your iPad/iPod Touch into the TV. Considering just how crappy most iOS games are, I can say that I definitely do NOT want Apple to become a major player in the business. Besides, they already tried to enter the console business with the Pippin and it was a miserable failure.

So, if not Apple, then who?

I know of a company that can do it and have some considerable success, IF they market things right. It also has some prior experience with game consoles since they designed much of the technology for consoles like Atari Jaguar, Sony PlayStation 2 and 3, Nintendo GameCube & Nintendo Wii, just to name a few. They also have a beef with Microsoft that goes back several decades.

What company could this be? None other than 'Big Blue', International Business Machines.

Just imagine that, if you will. The company that invented or made possible virtually every single aspect of the IT and modern electronics industries gets into the console business. A company with an unbelievable R&D department that gets tens of thousands of patents per year... The company that has almost single-handedly brought Artificial Intelligence from Science Fiction to Science Fact, beating chess champions and competing on Jeopardy!... If ANYONE can shake up the console business and innovate in that segment, it ought to be Big Blue.

It wouldn't be the first time IBM entered a market outside of their core business computing market, either. The magnetic stripe on your credit cards, the software used in ATM machines, subway ticket dispensers, UPC labels and the laser-scanners that read them at grocery stores were all created by IBM. If there is a form of information technology somewhere in the world, chances are good that IBM had a hand in its creation or inspiration.

For now at least, They're probably content to just be a chip designer/provider for Sony and Nintendo. However, who knows what the future holds? This wouldn't be the first time a computer company entered into the business and shook things up. NEC did it with the Turbografx-16 (aka 'PC Engine' in Japan) and had considerable success... in Japan. TG-16 was virtually ignored here in America. Commodore and Atari both had a strong gaming presence on their computers in both North America and Europe. However, I'm sure IBM could have much better luck than all of them. Few companies, in or out of the technology sector, have the kind of cash to throw around that IBM does. Big Blue could rule them all. I'm sure they'd also love a chance to get back at Microsoft for essentially forcing them out of the PC market in the 1990's. It could be their revenge for the failure of OS/2, even though that operating system was never going to succeed, anyway.

As for whether or not IBM making their own consoles is a good thing, I leave that up to you, dear readers, to decide for yourself. It could be interesting, that's for sure. A stuffy and overly bureaucratic operation like Big Blue having to deal with the 'creative types' that normally inhabit game design studios would make for a lot of 'odd couple'-style hilarity. However, if an equally bureaucratic company like Microsoft can do it, I'm sure IBM can too.