War is Over

Towards the end of this year, the PlayStation 3 will celebrate its fifth birthday, with the Xbox 360 blowing out six candles on its cake about a week later. By this stage in the lifespans of their predecessors, these consoles would already be well on the road to replacement - five years after the launch of PlayStation 2, Sony was talking openly about the PS3, while five years after the launch of Xbox, Xbox 360 was already on shelves.

It's unsurprising, then, that speculation about the next generation of hardware is rife - especially given that Nintendo has fuelled the fires by deciding to unveil its next home console platform, codenamed Project Cafe, at E3 this year. In the past week, attention has also focused strongly on Microsoft, based on rumours that the company has sent very early development kits to close business partners. It's even been suggested that the company might decide to rock the boat with a surprise teaser for the new platform at E3.

This latter is something of a far-fetched idea, since right now it's Microsoft more than anyone else who stands to gain from prolonging the present console hardware generation. After taking huge losses on the original Xbox, it ended its lifespan prematurely in order to steal a march on its rivals in the current generation. Now the Xbox 360 is maintaining a (not terribly big) lead on Sony's PS3, consistently reporting very comfortable software tie ratios and even seeing very solid early figures for its much-hyped Kinect motion controller.

Microsoft is right now doing something it never had an opportunity to do with the first Xbox - it's enjoying the harvest

In other words, Microsoft is right now doing something it never had an opportunity to do with the first Xbox - it's enjoying the harvest. It must now strike a careful balance between keeping consumers interested in its present hardware offering in order to make this generation as profitable and successful as possible, and beginning to build excitement around what's coming next, to avoid being leapfrogged by a rival.

In this instance, however, Microsoft can sleep a little more soundly at night thanks to the knowledge that Sony is unlikely to have the stomach for much leapfrogging right now. PlayStation 3 took a kicking in its early years on the market, struggling to establish itself at a market-friendly price point and to build a solid catalogue of software - while Sony's business overall had the rug swept from under its feet by Nintendo, with the Wii poaching many of the consumers who could, in theory, have kept the PS2 profitable for even longer.

PS3 is now a business with a tidy operating profit, and despite being behind Microsoft overall, is presently the strongest-selling home console worldwide - Sony, a company faced with serious challenges in many of its other businesses, has little interest in jeopardising that by starting to talk about a new hardware generation so soon. These rivals are eyeing each other warily, but neither of them is actually prepared to draw just yet.

More than anything else, though, both Microsoft and Sony would probably like to get a good look at whatever Nintendo is planning before they commit themselves publicly to a specific direction for their future hardware. Everything we've seen so far about Project Cafe suggests that it's a system with graphical power not dissimilar to the present generation of HD consoles. Its games should look comfortably as good as PS3 or Xbox 360 titles, then, but the real selling point will be the control system, which reportedly builds a screen onto the controller itself.

Speculation about what exactly that means, and what functionality it will enable, is somewhat pointless - a lot of people already know what Nintendo is planning, but have been tightly wrapped up in non-disclosure agreements. What's more interesting is to think about the market reaction to a console which will launch six or seven years after the other HD systems, but only slightly out-match them in terms of graphical prowess.

We're all so used to the idea that new hardware is a straight-up fist-fight between sets of specifications that it's hard to imagine such a strategy doing well - but of course, it's a fairly direct repeat of exactly the strategy which has given Nintendo a Wii installed base of almost 90 million units. That isn't to say that it'll necessarily work again, but it's interesting to look at some of the advantages it confers.

For one thing, working with older, more well-understood and reliable chipsets gives a direct advantage in terms of manufacturing. It's cheaper to get up and running and you're far less likely to hit major production bottlenecks and shortages. Moreover, since you're not dealing with hugely expensive prototype silicon, you can seed tons of fairly advanced development kits to your partners early in the process, which should greatly benefit the early software line-up for your console.

The advantages to developers don't stop there, of course. Admittedly, by all accounts, direct ports to Nintendo's next-gen system will be just as pointless as they were on the Wii - the system's unique controller and interface should ensure that, although there's no doubt that plenty of publishers will defy such basic logic and demand shovelware ports aplenty, all the same. Developers wanting to do a good job on the console will need to think seriously about its advantages and disadvantages and tailor their software for the system.