The HDD was a great feature for games on the Xbox1, but it was a mistake for MS.
We don't even know that for sure. They *felt* it was a mistake, because it prevented them from pricing the Xbox more agressively against the PS2, as the HDD's price became stuck at $50 and couldn't be scaled down. They have concluded that the Xbox would have been more successful if they could have scaled their pricing levels better. But the truth is, I think they only reason why the Xbox was as successful as it was, is because it had the built in HDD. Case in point is that Halo 2 is its biggest and most defining success. It used the HDD extensively. Live was a great success. They couldn't have pulled it off nearly as well without the HDD - where to store the new car-packs for PGR2, for instance? Or the E3 videos? People loved being able to have custom soundtracks, put their own mp3s on the HDD and hear them in the game. Could they have done it without a HDD? Would any game have supported it if the HDD was optional?
The HDD was an important part of how the Xbox differentiated itself from the PS2 enough to see some PS2 owners buy an Xbox once they got bored with the PS2. The Xbox biggest problem was having to fight against the Playsation 1, and coming late to the party.
While having carefully analysed the success of the Playstation 1 and the problems they faced while fighting the Playstation one, they decided that first of all, to stand a fighting chance, they had to release before the Playstation 3. This way, they felt they could make up some of the distance to the PS2 they faced in the previous generation, and if they managed to bring out sufficient consoles, it would be more attractive for publishers to bring their games to the 360 to expand the limited install base that exists on next-gen platforms in the early years. Though that's partly compensated by a game competing with less titles, and having a longer shelf time, it also allows developers to spread the risk - probably one of the two platforms is going to be successful, at least.
Coming first to market however wouldn't have helped them without the original Xbox, which because it did well enough in the U.S., Live was a critical success, and Microsoft proved its commitment with a very expensive investment.
However, this scenario also posed them two big problems: they can't know what Sony is going to do, and the HD DVD player wasn't ready in time. The latter they have found a so far fairly successful strategy for, and it may not hurt them if: a) multiplatform titles aren't going to make much use of BluRay's capacity; b) if exlusives on the PS3 aren't going to be able to show convincingly that BluRay really improves a game; c) if it helps them significantly in undercutting the PS3's price point.
If they had known that the PS3 would get the HDD default (revealed very late for a reason), they probably wouldn't have bothered with the Core unit at all. It's a risk, and it costs money, but it was completely necessary if you come to market first and need that flexibility. This they learnt partly from the PS2 - although it wasn't ideal, if HDD and network gaming had *really* hit it off on the Xbox or another platform, it could have been fatal not to have this option. Similarly, if the Wii turns out to be the 360's biggest competitor or of by a sudden surprise the PS3 had gone the cheapest console route and made everything option, that could have killed the 360. So no matter how much I think the HDD is going to be essential for the next-generation of console games, and even though it may turn out to be inconsequential after all, they made the right decision here. They were first to market, and they needed to be flexible.
I am not saying a HDD standard was a mistake, only that it can be seen as such from a business perspective. And there is living proof that a standard HDD can cost Sony a ton by subplanted revenue and additional hardware costs all gen.
Yes. And while I understand Microsoft's decision, as outlined above, I get somewhat agitated whenever I see someone assume that in something as fast developing as the console space, you think that realities of the past have any bearing on the future. The difference between each console generation is about 5 years, which is an enormous space of time in this sector. Even basic things like currency and inflation issues are often just simply glossed over, although the prices of handhelds and iPods are clear proof that inflation matters. The market for consoles has expanded enormously over the last 5 (and 10) years, online infrastructure is vastly different both in terms of penetration and speed (can you imagine people downloading 1gb+ game
demos 5 years ago? Back then, we were still arguing whether DVDs weren't ridiculous overkill for console games, and now a
downloadable demo doesn't even fit on a CD!)
There are more subtle differences as well, incidentally. The PS3's HDD can be plugged in and out. The PS3 has support for USB media (including HDDs), several types of memory cards (which are going to hit 32Gb relatively soon, and may eventually be cheaper), and so on. If it turns out they need to go cheaper, they can always with relative ease release a PS-Three that doesn't need some of these components and adds others. But they definitely made the right choice by, at launch, bringing the full system out there so that developers and content providers (which for a very important they themselves are) can make use of it.
The key, however, is going to be at which point consumers are going to be ready 'en masse' for the next generation. The early adopters generally want the latest and preferably most potent stuff. The mass will generally just want the next playstation, unless something else is significantly different and better.
Significantly different and better here means iPod vs walkman. It has to be both appealing, and offer something distincly new at the right time. I won't say the 360 can't do it. But right now, I'm not seeing it happen.
At the same time, I cannot tell the role price is going to play. I can't make a conclusive argument, but I do think that value is going to be important, and having performance and features built in from day one tends to help win the long term battle. The 360 is going to have to get it done before the PS3 gets to $300. Call it the 'Amiga' effect.
And of course none of the unique stuff that the PS3 (or Wii) have should hit that iPod effect.
But much of this is speculation on my part, of course. We'll have to wait and see what happens.
