In 1971, Magnavox and Atari introduced
the first very simple video game consoles that could be connected to the TV. In
1976, Fairchild released the VES, the first cartridge-based console, and RCA
and Atari followed shortly after. Nevertheless, in 1977 Fairchild and RCA
abandoned their game consoles, leaving only Atari and Magnavox in the market.
Many other companies launched their own consoles, but Atari dominated the
market until the early 1980s, until the video game market crash in 1983.
It was until 1985 when Nintendo revived
the video console market by introducing its NES console, with a great hit with
the Super Mario Bros game. This was followed by the release of several consoles,
such as the Sega Genesis in 1989, which had great success with the Sonic the
Hedge Hog game, and the Super Nintendo Entertainment System. Other better consoles
tried to enter the market, such as the 3DO, the Atari Jaguar, and Apple
Macintosh’s Apple Bandai Pippin, but they did poorly either because they were
too expensive, it was complicated to program for, or they were not accepted by
the customers.
Consoles became more powerful,
and the strong competition required companies to update them every few years. In
1995, Sega released the Sega Saturn and Sony the first PlayStation, while Nintendo
followed with the Nintendo 64 in 1996. In 1998, Sega introduced the Dreamcast
and in 2000 came the PlayStation 2, which was again very successful. In 2001
Nintendo came up with the Nintendo GameCube and Microsoft joined the
competition with the Xbox, which was the first console to have a hard drive to
save games and Ethernet for high speed online gaming through Xbox Live.
Next came the Xbox 360 in 2005
and in 2006, only one year later, came the PlayStation 3, with its PlayStation
Network for online gaming, and the Nintendo Wii. The first two had DVD readers,
hard drives and high definition graphics, while the later one did not.
Nevertheless, it included motion tracking, which was shortly added to the Xbox
360 through the Kinect and to the PlayStation 3 through the PlayStation Move.
This history shows us the
importance to the gathering and identification of customer insights, the design
of valuable customer experiences, and the design thinking process. We know that
companies can differentiate their consoles with price and technology, such as power,
speed, graphics, motion, memory, compatibility and connectivity, but it is important
to understand what really makes the difference to the customer when deciding between
the different options.
The rivalry is stronger than
ever, and as these companies fight to introduce their next products, they have
to be careful from hackers and security breaches. Not only do they have to win
their customers with their products, but they also have to maintain their
confidence and trust. These companies have millions of players connected to a
network and all their information, so a security breach can cause a lot of
damage to their future performance. For
example, Microsoft recently was attacked by a hacker and Sony suffered a hack
in 2011, releasing personal information of its customers, costing the company $170
million dollars and hurting their reputation. (Article 1)
After the fast evolution in gaming
technology, six years have passed since the last consoles were introduced to
the market. Gamers are very excited about the next technology and everybody
wants to know who will win the next battle between the big three. The Playstation 4 was announced
on February 20, 2012 and is expected to be released around Christmas. (Article
2) There are also rumors that Microsoft will introduce the Xbox 720 in time for
Christmas, but the question is, which one will come out first and which one
will wait. (Article 3) It is said that Sony usually waits to be second, since
it fears competitors might copy their specs and release a better console. This
might be possible, but I believe there is more to it than just the technology.
I believe it is important for
companies to understand their different customers, how they live, how they play
and what they value. Obviously, customers are segmented by different
demographics, but in particular, who a person plays with strongly influences the
next console they will purchase. Social gaming increases switching costs for
customers and creates loyalty within groups, since friends will have the same
type of console and will persuade others to buy it. When introducing a new
generation of consoles, retaining their current users is a challenge, but understanding
how to get complete groups of friends to switch, from the competitors’ to
theirs, is a greater one.
Article 1: http://www.forbes.com/sites/karstenstrauss/2013/02/21/microsoft-nabs-alleged-xbox-720-hacker/
