Would a cartridge based console take away the need for a harddrive?

That's generally the case here, but employee theft is a concern as well (and generally the bigger problem in retail). You start selling tiny games in tiny boxes and it's really easy for someone to walk out at the end of the night with a thousand dollars worth of software in each pocket...

I dont think we will see online only distribution anytime soon. Besides the problem of everyone must have a fast unlimited internetconnection, which would already be a problem for most people in Belgium for example you also cant deny the power of a store. The more vivid gamer probably doesnt mind going online to buy his game but the kind of people who buy things like wii fit or braintraining see something on tv and they just want to walk into to store and but the thing they saw.

Consider this. Name a store that sells physical copies of iPhone games. Yeah, there aren't any. So it's a strategy that's already here. We're talking about portable devices that can go online at any wifi hotspot. You don't need broadband at home. You can buy games online from any office, school, coffee shop or even videogame store with free wifi.

It's true retailers probably won't like it. They may have to arrange for commissions on in store downloads, game redemption cards and accessory sales. The hardware companies may also have to make concessions and offer a larger margin on the hardware itself if they want stores to stock systems.
 
The iPhone is a totally different story. The iPhone is sold as a phone, not a gaming device. Its sold a stores that generally dont have anything to do with selling games or software so for them its not interresting if you can get all your games online because its not a loss for them. For Nintendo, sony and MS its totally different. Their consoles are (almost) only sold at stores that deal with selling games, toys and that kind of stuff. Take away the games and they dont have a reason to sell the hardware anymore.
 
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