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In Gaming Console Battle, Microsoft and Sony Are Going Toe to Toe

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Nintendo is beginning to fade and the top two gaming companies are duking it out in the midst of looming questions for the console industry.

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With Microsoft (NASDAQ:MSFT) and Sony (NYSE:SNE) set to release new consoles for the first time in eight years, the battle for supremacy has just begun, but Nintendo (OTCMKTS:NTDOY) is nowhere to be found.

The average gamer is usually a stubborn consumer who doesn't just believe, but knows that his or her console of choice is the superior product.

Rarely will an Xbox fan make the switch to PlayStation, and vice versa, barring problems like intolerable console malfunctions and poor service. A sleek ad or a cool new console-exclusive release often just isn't enough to break someone's brand loyalty. As such, a console is not unlike a fixed cost for the gamer. Some distaste with the console's offerings may lead to a decrease in additional purchases by a mildly unhappy customer, but to substitute one console for another is often hard to justify given the cost of the hardware.

The introduction of a new generation of consoles, however, tends to bring to light one bright crack in the armor. For the die-hard loyalists, a new console could potentially revolutionize the way they think about gaming. For a true gamer, if any one console could define itself as vastly superior, brand loyalty can potentially be thrown out the window.

Additionally, with the advent of the online multiplayer format, there is an important social aspect to gaming that didn't always exist. Some people are satisfied playing with strangers online; however, the ability to play and talk with friends from the comfort of your own home has definitely become a key component of video games today. Keeping the gang together potentially creates a group mentality when it comes to console purchases, and thus can be critical to gaining market share; convincing one gamer to buy a new product could, in turn, convince five of his or her friends to follow suit.

When it comes to winning over gamers, it is one thing to pique their interest and another to deliver a product so mind-blowing they can't help but make the switch. Nintendo's Wii, with its heavy reliance on motion sensors at a time when handheld controllers were dominant, did the former. It turned heads, but it couldn't turn the hearts of the most hardcore of the gaming community.

Despite the Wii U being the first out of the gate, dwindling sales seem to suggest that Nintendo is no longer a participant in the same race as Microsoft and Sony. Its decision against holding a press conference at this year's Electronic Entertainment Expo, or E3, further cements the notion that the console business is becoming a two-company show.

With E3 set to kick off on June 10, the time has come for Microsoft and Sony to grapple for position.

Sony announced its PS4 on February 20, but it chose not to show the actual console, revealing only a controller. Microsoft, on the other hand, could very likely provide a physical product for the world to see at its Xbox-centric press conference today at 1 p.m. Eastern Standard Time. In anticipation of this, Sony released a blurry teaser video of its actual console early yesterday.

These may seem like petty and pointless battles, but each victory is significant. The Xbox 360 has been on top of the console game, based on sales, for the last 28 months, but for Sony, landing one strong punch -- be it a better price or better launch titles -- could be the difference between the company clawing its way to the top or remaining second best. In an industry where nearly every supporter you sway comes directly from your primary competitor, the potential for gains is unparalleled.

The response to Microsoft's and Sony's announcements in the next few weeks will come hard and fast. Keeping a close eye on trends in consumer reaction could provide insight as to who will be top dog in a console industry worth $27 billion worldwide, according to Microsoft, in the year to come.

While it never hurts to be on top, it appears that the console industry may be passing the torch. With ever decreasing attention spans and the reality that $0.99 spent on an iPhone (NASDAQ:AAPL) app can now keep you occupied for just as long, if not longer, than $60 spent on a console game, mobile gaming looks to be the future.

For now, however, Microsoft and Sony continue to size each other up as we wait for E3 to signal the start of a new round.
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