Why Sony And Microsoft Teaming Up On Their Next Console Makes A Lot Of Sense

Microsoft has trouble making hardware. Sony has trouble running online services. What if the next Xbox and the next PlayStation are one and the same?

A few months ago, while reporting about the then unannounced Wii U console for Nintendo, we stumbled on an interesting ancillary rumour: Microsoft and Sony were in active discussions regarding their next consoles.

For two giants in the home video game console market to be talk from time to time isn't wholly surprising. Sony and Microsoft are clearly competitors in the console market, but they're also unlikely allies in a gaming landscape undergoing upheaval brought on by the likes of Zynga and Apple. Triple-A console games like Halo and Uncharted are still going strong, but the expansive growth in the industry at larger has been in the casual and mobile space—an area in which Microsoft and Sony only dabble, especially if you count Sony's PlayStation Vita as more of a "portable home console". (Don't get me wrong. The Vita looks fantastic. But it doesn't really compete with, say, the iPhone.)

Launching a new home console is an expensive and risky endeavour. Microsoft took a multi-billion dollar loss when the Xbox 360 had its infamous "red ring" crashes; Sony lost a few billion getting the PlayStation 3 off the ground. The real money is in games — and increasingly, in online services, like downloadable games and other media offerings.

It has come to light that someone — probably Microsoft — has registered the domain Microsoft-Sony.com. On its own, that means little — domain names are cheap to buy and easy to spoof — but it does prompt a moment of reflection: Microsoft and Sony working on their next console together makes a tremendous amount of sense.

Sony still has the hardware knack. A few aesthetic clunkers aside, Sony still makes lovely, sturdy hardware. The PlayStation 3 still looks perfectly fine. And my launch version has held up well enough over the lengthening years.

Plus, Sony has access to tremendous production facilities of their own, unlike Microsoft who largely contracts out to third-party builders for not just assembly, but components. (Crack open your phone someday. There's a good chance it has some Sony hardware in there somewhere.)

Microsoft makes the best development tools in the industry. "Best" is subjective, but most of the developers I know greatly prefer programming using Microsoft's excellent tools over those of their competitors. That's certainly been part of the reason so many cross-platform games begin their life on Xbox and are ported to the PlayStation later. (Although certainly as multi-platform development has matured, it's increasingly a port-as-you-go situation.)

A Sony-built hardware platform that ships with Microsoft development tools on Day 1 would give game developers a tremendous leg up in unlocking the power of the hardware.

Xbox Live is the best online gaming platform in existence. While PC-based Steam is a close second overall, there's no better platform for getting games, media and networking with friends than Xbox Live. And a unified Xbox Live and PlayStation Network would be instantly a huge community, which would be attractive to publishers and advertisers.

Plus, well, the hack. Sony got a black eye over the hack against the PlayStation Network over the last few months. While the problem has largely abated, online has never been one of Sony's strengths. (Evinced by their numerous aborted music download services and hesitance in putting the PS2 online, for instance.) Sony doesn't have the technical acumen to run end-to-end networking platforms, while Microsoft is perhaps the best in the business at doing so.

Sony gets to retreat into hardware and content, its greatest strengths. Remember, Sony was the Apple of the ‘80s and ‘90s: a hardware company that happened to sell and produce a lot of media designed to be played on the hardware it sold.

Every time Sony has strayed from their core competencies, they've been half-hearted at best — catastrophic at worst. But they remain tremendously profitable in the areas where they just build good hardware — their HDTVs, for instance—and leave the fancy network and software business to someone else.

It might get Microsoft a toehold into Sony Ericsson. Sony Ericsson has been on shaky ground since before the iPhone, but even its modern Android phones — including the gaming-oriented Xperia Play — aren't anything special.

Microsoft's Windows Phone 7 is pretty great. It just needs apps — like games. A combined Sony and Microsoft attack on the mobile gaming space would be pretty powerful. (Although wholly unnecessary in making a Microsoft+Sony home console a success; it would just be nice.)

We'll probably know sooner than later if Microsoft and Sony intend to team up on a new console. And there are plenty of reasons why they might not want to go in together — loss of their own exclusive platform being the most compelling one — but there sure are a lot of upsides to a team-up, aren't there?

And if you think about it, that Microsoft is making hardware and Sony is making software to compete against each other is actually the exception of their relationship, not the rule: Sony laptops have been running Microsoft Windows for years. You could even look at that as another reason why Microsoft would be willing to cede the Xbox hardware business: Sony's latest hardware experiments, like their tablets, run Google's Android. It might be worth a few billion here and there to Microsoft to bring Sony more fully back into the fold. (See also: Nokia.)

Do I think this is going to happen? Probably not. I'd give it a 20 per cent chance using my Statistical Confabulator with a +/- 10 per cent for the heat added to our economy by Nascent Fanboy Psycho-Kinectic Pedantry. But it sure doesn't sound totally crazy either, does it?


Comments

    I've been thinking recently that I'd probably only want to get one console out of the next Sony or Microsoft ones, so them teaming up would be really handy for the decision making process.

    cross console online gaming anyone?

      In response to your statement Browny, Watch this video, http://www.gametrailers.com/video/episode-209-pach-attack/712415
      Pachter explains why we will never have cross plat-form online gaming......

    Microsoft really don't have trouble making hardware, they just had trouble not being cheapskates and making sure that their hardware was constructed to a decent standard so it survived the rigours of average use. Thats a billion dollar mistake I doubt they'll make again.

    That said, the MicroSony XStation would be a potential dream machine and if it had backwards compatibility with both xbox 360 & ps3 games it'd be a wet dream machine

    There appears to be something wrong with the way this article has been uploaded. There's just a headline, a pic, and two fairly useless paragraphs.

    Where's the rest of the article?

    I don't think it would work based on some small issues they've had being the exact thing the other one is good at.

    I hope it doesn't happen, too.

    Anyone know why there hasn't been a push for a universal type machine that various company's could then make, like dvd or blu-ray players?

      it already exists and has for a long time. It's called a PC.

        touche

    Sounds absurd. Yet albeit very interesting if there is any truth to this. Microsofts main issue is breaking it big into the Japanese market where Sony rules. However Microsoft kills ps3 in the US market.. maybe this could be the reasoning behind their talks?

    Nevers!

    this is really jumping to conclusions

    Microsoft have also just registered the domains:
    www.sony-microsoft.com
    www.microsoft-sony.com

    http://www.wpcentral.com/microsoft-registers-domains-using-sony-brand

    But but what are all the petty people going to argue over now.

    Microsoft is better than sony, Sony is better than microsoft.

    There one in the same...Dun dun duh...

      ... they could still argue about pc gaming vs supermegaawesome box 5

    As for Sony and MS having discussions. . .
    Could just be a discussion between the two regarding console specs and features.
    If the two consoles were very different then it would be a nightmare for developers to make games cross platform.
    Look at the PS3 and 360 now. Pretty much the same games which pretty much run the same. Then you have the Wii and its games. . .

      Only reason they would care is if the other consoles hardware was more powerful by alot.

      making it difficult to port isn't really an issue.

      so long as your the platform they start on. Your more likely to get free exclusives out of it if it's too much hassle to make it for both and your seen as the prefered option

    OK -- sarcasm is best left to the dim, but this "article" is so shallow that anything else seems inappropriate.

    Yes. Excellent. Why would we ever want competition in a market segment in which we are all active consumers?

    It's not as if competition drives innovation and low pricing. I am sure that if there had only been one generation 7 console that prices would have dropped from the original absurd pricepoint just as quickly. I am sure that we would have seen just as much R&D money spent.

    This is just an absolute non-issue. This article is the journalistic equivalent of posting a headline questioning "what if Zelda was a girl?"

    Empty. Baseless. Terrible. Come on Johnson -- this is Kotaku. Put your game face on.

      Competition IS very important. That is true.

      However, video game consoles have several factors that make collaborations between providers a good thing.

      1) CONSOLIDATION; the same device doing the work of multiple devices. This is fantastic for space efficiency. Some people, including me, own both a PS3 and a 360; having one box do the work of both would be very useful.

      2) NETWORK EXTERNALITIES; the value of a network grows as more people are added into the network. For instance, you'd rather join a network with a million people in it than a thousand people in it (ceteris paribus). This value increases exponentially. Thus, a combined PSN/XBL would have more value than the separate PSN + the separate XBL.

      3) ECONOMIES OF SCALE; since the hardware is all the same and produced on a very wide scale, marginal costs would fall quite quickly.

      Also, in the context of the market itself, both companies do certain things better than the other company (as the article attested). If Microsoft did the OS/Software/Networking/Devkits, and Sony did the rest, you'd have a pretty damn solid system going by the track records of both companies.

      That said, it WOULD be hard to do this kind of thing on a hardware level and retain full backwards compatibility. I guess you could design a hybrid CPU relatively easily (Cell + 2 extra PPE's + extra L2 Cache = Cell/Xenon Hybrid). However, both systems use relatively different GPU's. nVidia code will have to be recompiled into AMD/ATI code, or vice-versa. I don't think this would be easy (who knows, I might be wrong).

      Also, finally, there IS competition in the market. The competition is coming from casual/social game sectors. Whilst these are EXTREMELY imperfect substitutes for the 'core' gaming market segment, it still is a degree of competition. There's also core gaming avaliable on the PC, and the Wii U looks capable of it too.

      That said, I don't think its settled that Sony and Microsoft will be teaming up for next gen. They might, and it has several potential pros and several potential disasters. I look forward to seeing what happens, but I won't be counting any pre-hatched chickens.

        That may be so, but name one time that a monopoly on a market has resulted in something beneficial for the consumer.

          I can't. But Microsoft + Sony teaming up to make their next gaming console collaboratively would not be a monopoly. There are substitute goods avaliable. The Wii U, the PC, various other devices etc could all approximate the functionality of an X-Station (so to speak).

          Yes, they'd be imperfect substitutes, but the PS3 and Xbox 360 aren't perfect substitutes for each other. Nor is Pepsi a perfect substitute for Coke.

            X-Station - they should actually just go ahead and call it PS-X!

            It does make me wonder about this report that the PS4 will use a Kinect-like sensor...

          I should also add that one unified Sony/Microsoft platform WOULD lower development costs, ceteris paribus.

          Are you serious? The exclusive possession or control of the supply or trade in a commodity or service by one party is called a monopoly. This is way far from monopoly. TWO different companies, Sony and Microsoft are joining forces in this hypothetical scenario. Besides there's Nintendo and PC and since we are already adding Phones and Tablets in the competition i might as well add it. See no freaking monopoly. In fact, the Pros of this hypothetical scenario greatly outweighs the Cons.
          1. Task will be divided by each company making the creation process more efficient and faster, making for a better hardware.
          2. Each company will cover some cost and that will indeed translate to a lower pricing with a higher profit margin for each company.
          3. They will both bring their great exclusive franchises giving us the Gamers more games to play.
          4. Developers will focus all there resources to creating for one system and the end result will be a robust game instead of figuring out ways to create for 3 or 2 different systems.
          I can keep going on and on but i'll leave it at those 4

            Either you're the most optimistic person on the planet or rather dim and naive. I can't really tell.

            Yea it's called a TRUST and there illegal. I just learned that in my history class :3

    I doubt this will happen. Xbox is good here in the west, and has a slight edge over PS3, but Sony is doing heaps better in their home territory of Japan, in both home consoles and the portable market. As in, they're beating Nintendo with their PSP and the PS3 sells 10-20x more consoles than the Xbox.

    I can't see how it would benefit them at all. They're fairly even here in the west, but Xbox is losing by an insane margin in overseas markets. It wouldn't benefit Sony at all.

    And Sony doesn't have trouble running online services! The PSN Store is really good, I like it much more than the Wiishop/Eshop.

    Doesn't seem plausable, but stranger things have happened and it could be very good for destroying flame wars at least.

    No, if the future consoles were merged and we get the one product (next-gen) consoles then where would the consumer be? As it is these two have a grand old time bashing their consumer base into submission (No home brew, Live gold priveleges, etc)

    Competition and consumer choice, not monopoly. It should be the driving force behind any market.

    Competition is what drives the industry forward. This would be a terrible idea.

      you mean the industry that is running on 6-7year old tech and currently looks to plan to do so for another 2-3 years.

      the console market is the anti competition.

      Theres only upgrades when they want to upgrade.

      it's not like Tv's where every 6 months theirs a new tweak or perk. with companies leapfrogging to be the TV of choice.

      while in the console market you release and then sit around for a while.

      want home brew buy a PC

        You're completely wrong.

        Nintendo release a console with a new way to interact, and Sony/MS upgrade their machines to add even more interactive functionality. You think we would have Kinect and PS Move if the Wii didn't exist?

        MS releases a console with excellent online functions delivering games and a fantastic medium for indie devs, and what does Sony and Nintendo do? They make online services a priority and upgrade their consoles features to match MS (as best as they could anyway).

        Sony added tv channels to their online services, so what did MS do? They went and signed up foxtel so that we can stream it over our Xbox's.

        Competition drives the industry forward, you can't possible argue otherwise.

          The playstation 2 had a camera that the player used. So it was Sony first not nintendo. Get it right.

        Buy a PC? You mean a biege monstrosity running bloatware that contains parts that work together about as good as a priest working with little kids? That you have to upgrade every six months because a Cliff Blezsinski type thinks that it is OK to NOT optimise a game so you need more memory than God and 4 graphics cards to view tight muscled buns in an MMORPG at some ridiculous resolution and at 100fps? Sign me up and spank me!

        My speculative 2 cents is that Microsoft want to work with Sony to bring cloud based gaming devices to the home. Think Microsoft Azure (their cloud offering) hosting scalable virtual gaming machines with Microsoft and Sony both manufacturing end user devices that integrate with the service. Would be sweet as. They should hire me, I'm an ideas man.

    Well as a matter of fact first generation PS3 consoles had exactly the same overheating problems as first generation X360's but because Sony did not offer extended warranty like Microsoft they charged $350 to have the console repaired.

    Most people like my friends took it to a place and had it repaired for $150, because they werent repaired by Sony they are not counted.

    Believe me we saw tables full of PS3 consoles all waiting to be repaired.

    As for the news I at this stage I will put it down to rumor, but it would be good and bad. Good because they only develop, promote, manufacture one console.

    The bad is for us, after a while we have less competition and the same games re-skinned, where else are we to go?

      While I'll probably get ripped on as a hater

      Haven't we already been getting reskinned games in cod since we will be seeing the 4th such release later this year

    A peace deal to end the console wars?!

    After decades of conflict?!

    This is interesting, but a bit premature. It'd be gigantic news if true.

    Looks like it's "Sony and Microsoft" vs "Nintendo" now.

    Well it also makes sense for them to join and compete against the Wii U juggernaut. But I think the competition between Sony and Microsoft in regards to the consoles is one of the biggest benefits to consumers.

    If the only choice was to settle for one console (Wii U excluded) then consumers would have to take what they're given; and MS/Sony would never need to adapt/improve what they have, it's one of the downsides of monopolization.

      Beaten to it :P

      wii u juggernaut really.

      wiiu has a long way to go before it's gonna juggernaut anywhere especially if Nin of America don't lift their game.

      And unless it has some truely killer launch apps it's going to have issues. 3DS has left people stung after their not being any awesome games and nothing on the horizon

        Hardware sales of consoles.
        Wii: 87.8M
        360: 54.7M
        PS3: 51.4M
        They've got the Wii brand in their favour, which carries weight with the casual consumers. Not to mention it will have a considerable headstart on the PS4/Nextbox.

        Regardless it is a threat, hence me mentioning it my original comment.

          oh no doubt its a threat, though it does cater to a different market.

          i just think that it's going to be hard to translate a lot of the casual gamers to the Wii U for the first 1-2 years.

          Half the wii u's success is going to depend on the price point

    Maybe it's a Microsoft VS Sony fighting game

    Kaz Hirai VERSUS Don Mattrick

    FIGHT!

    If this actually got made, it would have to be 100% BC with PS3 and 360 games, and ideally have BC for the currently BC Xbox games. I'd also like to see it BC with PS2 games... an Emotion Engine chip wouldn't be too expensive these days.

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