- Competition becomes even more vital in an industry that is technology driven. It's quite amazing that Moore's law, which states that computing power doubles every 18 months, still holds true.
This rapid evolution is primarily driven by competition. People are constantly trying to outdo each other. Consoles typically have a shelf life of about five to six years. What would happen without competition?
Where did the Genesis go? What happened with the PlayStation 2? Having nightmares yet?
In other words, we would potentially skip a whole generation of hardware. So what would make this such a likely scenario? Because when no competition exists, then you have a situation where a company's bottom line is less aligned with consumer needs.
As an example, Nintendo was once clearly dominating the market with the NES. While the Sega Master system was on the market, it had less than 5% marketshare. Nintendo was so comfortable in their position they honestly felt like they could have extended the life of the NES by a good couple more years. From a business perspective it made sense.
If they had a massive install base, then they can easily earn revenue with the fees they charge publishers for every game unit sold, a standard practice for all console makers. If they created a...