Everyone remembers when the Xbox 360 first launched. Tons of them broke down, and the buyers had to send them back. Dean Takahashi, a writer for VentureBeat, explains how all of those problems diminished almost all of the advantage that the 360 had by going first.

He points out that Microsoft knew that their next-gen system had flaws, and they thought they would go away, so they decided not to delay the launch of the system. In addition to that, Mircosoft didn't have their workers standing by ready to fix any problems they knew the would may have.

"They got enamored with the idea of the Microsoft army rolling everything out at the same time," said an anonymous source close with Microsoft.

The quality problem negated much of the advantage of going first, and it has delayed the company’s plan to aggressively market the console and slash its prices. (Microsoft disputes this point; it cut the price of all three versions of its Xbox consoles by $50 to $79 on Wednesday. And the company believes it will sell more boxes than Sony will. But prices ought to be lower still during this stage of the console life cycle). That has stopped the company from reaching the broader market of consumers that Nintendo has won over. It has lowered its ambitions, hoping instead just to get a clear edge on third-placed Sony. The future profits that the company once hoped for are now likely to wind up in Nintendo’s pockets.

Microsoft’s top game executive, Robbie Bach, president of the Entertainment & Devices group, said at a dinner in July that Microsoft’s own research shows that gamers have largely forgiven the company for defective Xbox 360s. Microsoft has still sold more Xbox 360 consoles than Sony to date. But there is no doubt that the company has lost considerable good will among gamers. Before Microsoft offered free replacements, connsumers grumbled that they had to turn to forums, such as those on Ars Technica, to vent and to find solutions to problems that the company didn’t openly discuss. And for a couple of months now, Sony’s PlayStation 3 has been outselling the Xbox 360 in the U.S. for the first time.

tyranitar24 via venturebeat.com »