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PlayStation 4 vs. Xbox One: Does the Launch Really Matter?

With Sony's (NYSE: SNE  ) PlayStation 4 launching on Nov. 15 in most major markets and Microsoft's (NASDAQ: MSFT  ) Xbox One launching soon after on Nov. 22, the question on the minds of consumers and analysts alike is which system will take the early lead. With so much emphasis being placed on the first few days and weeks after release, it is interesting to see just how crucial a successful launch is for a new gaming system. Can the ramifications of a good or bad launch event extend into the console's entire life cycle?

Hardware glitches
A major worry on most consumers' minds when they first plug in their new gaming systems is if the system will actually work correctly. For early adopters of Sony's PlayStation 4, it seems that this is a very real concern. Numerous consumers and media outlets have already reported that the PlayStation 4 has serious problems.  There are instances where systems will simply not turn on and users are met with only a pulsing blue light as the system fails to output a signal to any connected television.

This particular problem is very reminiscent of the Xbox 360's infamous "red ring of death" error, a problem that plagued Microsoft's system in its early days. However, it is important to note that despite the major and widespread problems of the Xbox 360 in its infancy, the system still went on to be the most successful gaming console for over two years and reigned atop the U.S. console market for 30 straight months. 

This of course hints that technical problems are not as detrimental to a video game system's long-term success as one might think, despite the uproar the errors cause in the short-term. It seems that consumers are largely willing to forgive early technical glitches and accept them as an unfortunate and unavoidable step in the process of upgrading hardware.

Early adoption
A major source of concern for the console manufacturers is being the first to market, as it is possible that consumers who are eager to usher in the next generation of gaming will rush to buy whichever system launches first. There is some evidence to suggest that this has merit. In the last generation, Microsoft launched its system a full year ahead of Sony, and this led to the Xbox 360 taking a strong lead over the PlayStation 3 in sales. 

Over time, however, Sony was able to bridge the gap and pull ahead of Microsoft. It was reported  in May of this year that the PlayStation 3's lifetime sales passed Xbox 360's lifetime sales. Although it is hard to call one a victor over the other as both systems managed to sell over 77 million consoles since launch, it is evident that early adoption equates to only an early lead and is not crucial to long-term success. In any event, Sony and Microsoft's next generation consoles are launching within a week of each other, and the time difference is likely so minuscule as to not even be relevant.

Tech prowess
Another major point of contention, this time for consumers and manufacturers alike, is the power differential. The question on most gamers' minds now is which system is the most advanced? All early indications, as judged from technical specifications and the reviews of several multi-platform launch games, suggest that the PlayStation 4 is the more powerful system.

Before reading too much into that, though, what was the best selling console of the last generation? Surprisingly, it was the weakest of the bunch, Nintendo's intuitive Wii gaming system. The Wii, which was significantly underpowered on many levels compared to competitors, still managed to outsell the PlayStation 3 and Xbox 360 by more than 20 million units.What this means is that while manufacturers and fans of the more powerful console can enjoy bragging rights, the extra power does not necessarily translate into higher sales.

The takeaway
In all of my research, there is not one particular aspect that I have found which directly correlates to a successful gaming lifecycle. The only discernible difference is the available game library, and in this regard it is difficult to give one manufacturer the edge because both are so intent on offering powerful exclusives. Additionally, third-party video game publishers are not keen to pick one side or the other, as doing so would limit their available audiences significantly. Because of this, the majority of blockbuster games will remain available on both consoles.

What is evident is that the early success of a console simply leads to continued early success. A strong start in no way means that a victor can be crowned anytime soon. The console war is likely to rage on for a while, and consumers stand to benefit from the fireworks. At this point it is still too early to tell which investors will benefit the most, Sony's or Microsoft's.

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