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Tuesday, November 30, 2010

Xbox Birthday Signals Death of 5-Year Console Cycle

When the Xbox 360 turned 5 years old this week with no known successor on the horizon, and no new imminent PlayStation or Wii either, it may well have signaled the demise of one of the video game industry's most longstanding truisms.

Since at least the mid-1980s, major console makers have generally come out with new models every five years or so. For example, the Nintendo Entertainment System (NES) came out in 1985, followed by the Super NES in 1991, the Nintendo 64 in 1996, the GameCube in 2001, and the Wii in 2006. Sony put out the first PlayStation in 1995 and followed up with the PS2 in 2000 and the PS3 in 2006. And Microsoft introduced the original Xbox in 2001 and released the Xbox 360 in 2005.

But now, with the Xbox 360 having turned five, and the PS3 and Nintendo's Wii both having just hit their fourth birthdays, many industry observers see the ongoing success of each of the three major platforms as evidence that neither Microsoft, Sony, nor Nintendo have any intentions of following up in the next year or so. And why should they? Consumers are still buying the machines by the hundreds of thousands each month, and ramped-up online initiatives are breathing new life into the systems.

"I've been saying since 2002," said Wedbush Morgan Securities analyst Michael Pachter, "that the generation [started] in 2005 might be our last one."

But why would the major console makers pass up the opportunity to make big new splashes with, say, an Xbox 720, a PlayStation 4, or a Wii 2?

To observers like Pachter, a lot of it has to do with the fact that with the current generation of consoles (often called the "next-gen"), each company found a way to maximize either the technology behind the devices, or the utility to a wide range of new gamers.

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