Is Microsoft Trying to Shut Down the PC Gaming Market?

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Last week NDP Group released the sales figures for 2006, with console game sales bringing in $12.5 Billion – yes, you are reading correctly – 12.5 BILLION DOLLARS and this is only US sales. But this is not so surprising; what is surprising is the next figure:

PC games sales totaled up to “only” $970 million, which brings the total sales to $13.5 billion.
Also, some Vista gaming benchmarks ware released today showing how poorly the new OS handles games while forcing you to buy new hardware in order to use the new OS.

Bill Gates was quoted saying that the Xbox 360 can do what ever your PC can and this has got me thinking:

Does Microsoft want to take over everything?

When I think about it, Xbox 360 is everything we need: it’s a gaming platform, it can function as a PC if Microsoft wants it to, with IPTV service it’s going to act as your media center. So where does this leave the PC?
Obsolete is my answer, at least as a gaming platform which is what many of us use it for.
If Microsoft can make the gaming aspect of the PC seem unattractive for the casual gamer, then for the price of a decent PC with mediocre gaming capabilities, Joe Sixpack would be able to get himself a “dream system” in a form of the Xbox 360.

Let us look at the big picture as it seems now:

  1. PC game sales are marginal to the total game sales market;
  2. The new OS from Microsoft is actually “heavier” and requires more raw power in order to function while degrading gaming performance and thus actually negating the system upgrade;

  3. Microsoft “happens” to have a magic solution: a box (in a shape of an Xbox 360) that is capable of gaming, PVR and I trust Microsoft to add a built in browser and Email/Word processing capabilities in the future.

Where is all leading us to? I think that the wheels ware set in motion for something big:

The Death of the PC as we know it.

How do I see us progressing in the near future? Well for one I think we will see a sharp decline in gaming related hardware sales, such as high end graphics card and fast memory, bringing the actual gaming capabilities of the PC down, which in turn will shift even more game developers over to the console market and so making the games better, prettier and more abundant.
In the PC market, as we see more people shifting over to laptops and computer footprints shrinking, you are not going to need more than a motherboard, CPU, memory and non-volatile storage, so no large profile cards thus no large PC cases.

I am not a big believer in so called “conspiracy theories”, but in this case the facts are hard to ignore – I strongly believe that Microsoft has set the game board years ago and we were playing a loosing game all along, but I also believe that this was a brilliant marketing move.

In conclusion, it is my belief that in the next two, three years we will see the console sales figures reach an all time high while biting into the gamer PC market share. At the same time, Microsoft will continue selling their new OS to home users and mainly other businesses and corporations and so they will keep a steady cash flow in the slow transition. The biggest losers here are actually going to be companies like ATI and Nvidia, which will loose a large market share bringing them down to their knees.

It is going to be interesting to see if they will try to fight back with moves like sponsoring game developers and more mergers like ATI and AMD, thus lowering their costs and offering cheaper hardware.

Daniel “Flip-Mode” Malesevic

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