Conclusion

On the console side, despite all the hype, it was actually a disappointing E3. Nintendo got the biggest line-up for the next Zelda game, while Microsoft and Sony were busy beating each other up.

The Xbox 360 came in force. It was playable, visible, it was in Microsoft's booth and every publisher we talked to had its next-generation PC games ready for Xbox 360 or at least being considered. No one complained, even privately, of difficult development. In fact, the presentation team for Elder Scrolls: Oblivion mentioned on three separate occasions that the Xbox 360 version of their game ran and looked better on the console than it did on the GeForce 6800 Ultra-powered PC they had. Considering that Oblivion is at least as visually impressive as Unreal Tournament 2007, that's high praise indeed.

And yet, Microsoft didn't deliver the killer blow. Xbox 360 caught most of the media and public's attention at the show, but there wasn't a booth or game or even non-interactive demo that had audiences crowding and lining up. For a console that will have games that look as good as anything the PC will produce until at least 2007, this is a major disappointment, because it should have had at least one game that blew away everything else at the show.

Sony came away undamaged, though no thanks to their own desperate efforts. Yes, their marketing team succeeded in pitching a few million dollars worth of CGI as a next-generation console, and the smoke and mirrors show was sufficient to fool the weak-minded. But Sony won not due to any particular competence on the part of Sony, but because Microsoft failed to blow us away.

This doesn't mean that Xbox 360 is a failure, just that it won't surpass the PS3. The Xbox, especially in the past year, has made impressive market share gains and established itself as a strong brand in Europe and America. This is a good platform for the Xbox 360 to work from and it will undoubtedly improve on the Xbox's market share, but Sony will remain the undisputed champion for at least another round.

HDTV: The Wildcard

HDTV adoption is improving but still lagging behind what everyone expected a few years ago. No doubt the advent of plasma and quality LCD screens has increased the pace, but the low numbers of HD programs available are keeping the pace of sales at less than the torrent it should be.

The Xbox 360 might be able to increase the tempo, but the simple fact remains that it needs a large installed base to sell itself. On regular TV screens, the differences between an Xbox and Xbox 360 will be evident but likely not dominant enough to justify a $300-400 expenditure. Those that don't have HDTV will have to consider the extra cost of the TV itself, and anyone who doesn't have HD yet is likely not in the income bracket to easily swallow that kind of expenditure.

Sony, meanwhile, will benefit from a larger installed base (partly due to the Xbox 360) by the time it launches its console sometime in 2006. In the short run, it isn't doing itself any favors by pitching the PS3 as being 1080p native, but with their brand name and marketing, they don't have to worry about the short run. 1080p will pay off for Sony in the long run. Meanwhile, games are expected to run just fine on regular HD resolutions, and probably even standard TV.

The coming year

Over the next year you can expect to see the Sony marketing machine building steam. Sony's marketing agents will be busy convincing news media that the Cell processor in the PS3 can replace the human brain be so powerful that its sales have to be banned not just to North Korea, but France and Germany as well. Their PR agents will be contacting all their friends in the written press and sending them white paper after white paper, detailing the PlayStation 3's maximum theoretical under-optimal-conditions if-hell-is-frozen-over capabilities. The press - print and online - will obligingly read these white papers, understand maybe 10% of what's written, re-word them and print them as a "hardware analysis" of the PS3, because the public is screaming for more information about it. Amazingly, it will turn out that PlayStation 3 is so powerful according to these articles that the latest supercomputers were a waste of billions, and research institutes should have saved the money and bought a PS3.

Microsoft, meanwhile, will be trying to build off this E3 as fast as possible. They want a good, strong base to work from before the PlayStation 3 launches. The launch titles are going to be competent, but Microsoft will have a couple of top-notch games in time for Christmas, but save the big guns for the PlayStation 3 launch. When the PlayStation 3 launches, the press will obligingly disparage the PS3's starting lineup and say how you should own both systems. Some will even print quotes from careless developers who say how difficult Cell is to work with.