Each month we will bring you news, analysis, and insight into the  paradigm shift in personal computing, occurring as we speak! 

The World Changed This Year!
Did You Feel It?

At this very moment, we are witnessing the emergence of new computer platforms - not simply variations of what was a short while ago, but in fact a revolution - a return to what was, almost 25 years ago!  Our market has come full circle.

In these last 25 years since the "Personal" computer emerged from such companies as Atari, we have seen the computer become a fixture in the home, the office, and carried with us in the form of PDAs.  However, what started as a living room entertainment centric device at the beginning of the 80's, soon faded into the stuffy spreadsheet and word processing driven business tool of the 90's.

In truth, we did see a steady progression of dedicated game consoles, from the original Atari black-box 2600 to the modern PlayStation 2 and the Microsoft XBOX.  However, these were not true computing platforms, in that they were dedicated to their task as game machines - not because of lack of capability, but rather the simple lack of imagination in the marketplace.

But this year something changed.  The earth moved!  The sky fell!  The gods awoke!  This year, a change occurred to shake the very foundations of personal computing as we have known it for more than a decade and a half!

This year we saw the emergence of the XBOX 360 and the PlayStation Portable (PSP).  Both represent profound changes for the personal computer consumer.  In the one case, we see the personal computer return to the living room.  In the other, we see, for the first time, a portable device worth having!

In the first case, we are talking about the amazing Microsoft XBOX 360 - the most robust personal computer available under $2,000!  And it will sell for less than $300!  It's specifications are staggering, not only compared to the original XBOX, but also compared to almost any PC currently available, including MACs.  Best of all, it represents a clean break with the past and an opportunity to take what have been learned in the last 25 years, and apply it clean - if only Microsoft will take that chance!

A Brief Lesson In History...

25 years ago, consumers told the industry what they wanted: simplicity and fun!  As one of those who helped bring it about, I was a Senior Research Engineer at Atari. We delivered what the market wanted. Yet, through the stupidity of industry management in those days, the market collapsed, taking with it that first generation of original innovative manufacturers.  What we were left with for so many years was IBM - spelled BORING!  In all fairness, Apple did fight the good fight, but in their elitist mentality, they also failed to help the masses.  The market settles for what was available.

Ironically, Microsoft, kept trying.  Not only did they have a stake in making the first generation successful - such as with Microsoft Basic for the Atari in 1982, but also tried to launch a new consumer platform as the first group was failing.  Unfortunately, that new platform - MSX - was dependent upon the totality of the Japanese computer manufacturers, who in 1983-1984 were a timid group indeed.  This resulted in MSX being a still-born product offering.  (The irony in this is that Sony had even then, the best of the MSX products, and was Microsoft's ally).  When MSX failed, Microsoft focused on their bread and butter: the PC market, with MS-DOS, and soon after with MS Windows, as well as their incredibly successful business application suit MSOffice.

Early on, we saw other interesting products emerge, such as the new Atari ST products, the Amiga, and others.  But each failed to compete with the PC in the PC's market.  Partly, this was due to applications, standardization, and portability of data; but it mostly due to lack of imagination by the hardware's makers.  The new Atari especially, should have easily out marketed IBM, yet its management failed to take advantage of their strengths and opportunities.

We also saw Nintendo emerge, as the dominant game console, with Sega making a futile effort for the same market.  How ironic that the old Atari had the ability at one point to own Nintendo, and launch it under their name in the U.S. and preserve its future as a result.  Nintendo understood the home consumer, child and adult alike, and continued to evolve product after product in the game market to meet the demand.  Including in the hand held market with their GameBoy; which until the release of the SONY PSP was the cream of handhelds.

Unfortunately for Nintendo, they did not continue their tradition of leading edge innovation, and created opportunities for first SONY, and then Microsoft (of all companies) to eat their lunch in the market they owned not so long ago!  The most recent release from Nintendo, the GameCube, is easily forgotten - unless you have a Pokemon addicted child.  The real action is on SONY Boulevard and Microsoft Street!

Microsoft Amazes The World!

With the release of the XBOX 360, Microsoft takes us fully back to where we started: the computer as a Home Computer - in the Living Room again.  It becomes the fusion of the TV, Gaming, Communications, and Computing.  While we don't yet know all the details, it is likely that we will see a surge of new ventures to help consumers exploit the huge power of this new platform.  Within a year of its release, we should see whole new categories of software never to have appeared on a TV screen (or at least not in 20+ years!).

In our future editions, we will discuss the implications of the XBOX 360 as a platform in great detail.  We will explore emerging applications, opportunities, and the players (so to speak) in the market marking them happen.

The Revolutionary PSP

We also have another profoundly revolutionary product before us: namely the Sony PlayStation Portable.  You will note that I have completely ignored the PS2, and correctly so.  The PS2, like the original XBOX, and everything Nintendo, is so yesterday.  Yes they were a platform - but just a dedicated game platform.  The XBOX 360 and the PSP are Computing Platforms of robust capability, with amazing connectivity, and seemingly limitless application.  I am also ignoring (for the moment) the Sony PlayStation 3 - since it is unclear if it can ever be more than just another game system.

The PSP is especially interesting and significantly important, because by and large, portable hand-held computers have been a consumer failure.  Yes the Palm Pilot and various Windows based portables abound, but these are mostly for the more a-retentive business types out there.  They are making inroads in the higher end cell phones for the same class of consumers, but essentially are still an organizer, as opposed to a true versatile computing platform.  It is true, that there have been entertainment titles released for these, but they are a far cry from the amazing worlds so common in the dedicated game machines.

With the release of the Sony PSP, we see something almost entirely new!  We see a very capable hand held computer, that truly is fun!  It plays real games, but can do so much more.  And because of the amazingly new optical media and drive built into the PSP, can even play movies!  Thus the PSP becomes a true personal entertainment system you can fit in your pocket, with huge potential for other applications.  It is so much more than just a game device, its specs are first rate, and it takes no imagination to envision vast numbers of synergistic applications being developed for it, from hardware to software.

Several vendors are looking at helping this platform fulfill this opportunity.  A web browser has already been shown, and looks like it will be first tested in the Korean market.  A flip down keyboard is on the drawing board.  There is talk of business and other unique personal applications as well.  With SONY owning Erickson (the telecommunications giant), can a cell phone plug-in, turning the PSP into a phone also be far away?

Both Microsoft and Sony are consummate experts in consumer mentality.  While each has had their failures, they both understand how to exploit their products for their consumer's benefit.  Frankly, we expect both products to open a whole new era in personal computing, and to create incredible new opportunities for innovators and investors alike!

As before, it will be the aftermarket that really makes these platforms the success they deserve to be.  We have seen these waves come with each new platform, though this one seems different, in that so few recognize the paradigm shift that has just occurred.  Regardless, the world will soon discover the power of these new platforms, and the promise they bring.

As a pioneer in the personal computer industry, I welcome these new products with open arms - after all Halo2 rocks!  I couldn't be happier for Bill Gates and the Sony management, I've always had respect for both companies, and look forward to playing my small part in their success. 

My suggestion: buy Sony and Microsoft stock!

Tim McGuinness, Ph.D.
The McGuinness Report:
July 15th, 2005

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