I like to play video games. I’m from the first generation that every grew up with them, and so I like to follow some of the games industry news. I recently read this great Wired article about the history and current status of the battle between Sony and Microsoft for the third generation games console.

The issue at first seems to be about a format war being fought between the two companies (and their allies) over the next generation format for DVDs (Blu-Ray versus HD). But it’s really about a lot more than that. The article gives you the history and the company insight that allows you to see the huge fundamental changes in the environment that allowed a software company to quickly become the number two games console makes. Equally as interesting is the analysis of the organizational limitations of Sony, which flourished as a hardware manufacturer but is now very nearly on the brink of going out of business.

The stakes are high. If the PS3 isn’t a megahit, then Sony could be forced into irrelevancy or breakup into specialty niche hardware manufacturers. So the current drama is extremely interesting. I myslef predict that the PS3 will not be very successful outside of Japan, and that the billions lost in subsidizing its high manufacturing costs will start a cascade of financial reprecussions that will be the beginning of the end for the company formerly known as the best electronics manufacturer in the world.

But, I could be wrong.

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