Rating the New Generation of Gaming Hardware

We have come a long way from Atari, Nintendo's Super Mario Brothers, and the origins of Madden Football, where runaway ambulances violently bowled over crude, pixelated football players to the muffled "pow - what a hit," commentary of John Madden. This is the Next Generation of gaming hardware.

The latest version of video game console warfare features the Nintendo (NTDOY.PK) Wii, the Microsoft (MSFT) XBox 360, and Sony's (SNE) Playstation 3. We are set to present and analyze the strengths and weaknesses of a rock-paper-scissors exercise that is defined by hardcore gaming capacity, peripherals, and overall excitement.

Nintendo Wii $249.99

Strengths: Fun and ease of use. Low cost. Durability.

Weaknesses: Elementary graphics. Limited options for hardcore gamers. No DVD player.

Ideal for: Young children, older adults, women, and socialites.

Best Games: Wii Sports (included), Guitar Hero, and Mario Cart (exclusive to Nintendo).

In 2006, Nintendo sidestepped the war for technological supremacy with the Wii. This console features a magic wand-like controller that is built for fun. All players, regardless of gaming experience, easily command the system. The Nintendo Wii inspires physical activity and has quickly become a conversation piece.

Appropriately pronounced as 'we,' Nintendo's gaming system promotes the all-inclusive ideal for entertaining gamers at every level. The Wii remote controller is motion sensitive and allows participants to use everyday movements to simulate on-screen character movement. Indeed, the play can become quite physical as Wii gamers bowl, hold serve, and play virtual baseball by swinging for the fences.

The Wii is a product designed to be enjoyed by the masses. The console is leading the current video game war with estimated sales figures of 35 million units that compare favorably to the 22 million Xbox 360 and 17 million Playstation 3 units sold.

Still, the Nintendo Wii is not the system of choice for experienced gamers seeking performance, crystal clear graphics, and higher levels of difficulty. Hardcore video game players will become quickly frustrated by the limited Wii Remote that does not allow for precise control, unrealistic bobble head-like cartoon graphics, and an exclusive game catalogue that appears to be more so geared towards toddlers.

Microsoft Xbox 360 ($199 for 256MB - $299 for 60GB - $399 for 120GB)

Strengths: Graphics. Excellent Online Gaming Community. Top Shelf game selection.

Weaknesses: Unreliable. DVD is not Blue Ray. High Price Tag. Bulky Controller.

Ideal For: Computer Geeks.

Best Games: Halo 3 (exclusive), Gears of War 2 (exclusive), Grand Theft Auto 4, Madden 09, Guitar Hero.

The 205 Xbox 360 release represents Microsoft's latest foray into the video game war. The console is available at the minimal $199 arcade level, $299 for the Pro, and $399 for the Xbox 360 Elite. The $520 deal is comprised of the Xbox 360, pre packaged with Tiger Woods and Madden 09 Electronic Arts (ERTS) titles. The varying grades of the 360 offer increasing levels of storage space capable of downloading and saving content.

Bill Gates and Co. introduced the world to the next generation of gaming with this powerful Xbox machine. The hardware's strikingly realistic graphics are perfectly suited for prominent 720p or 1080i high-definition flat panel television projection.

Microsoft has leveraged its sheer dominance of the personal computer and Internet knowhow to create an online gaming experience that is unmatched within this industry. Xbox Live permits gamers to battle each other for supremacy within the connectivity of the World Wide Web, download material, and create virtual identities. The Xbox Live 3-Month Starter Gold Pack may be purchased for $29.99 at Best Buy (BBY).

The Xbox gaming catalogue is bolstered by the legendary Halo 3 and Gears of War franchises that are exclusive to Microsoft. Both top-selling titles are shoot-em-up genre and action packed games of skill and controlled mayhem.

The very same issues that seem to haunt Microsoft Corporation at-large victimize the Xbox 360. The machine is privy to ill-timed glitches and maddening customer service. The Xbox red ring of death has emerged as top nemesis angering consumers of this product.

The noisy 360 machine is prone to overheating and will signal its impending meltdown by flashing three red lights. Gamers must then return the item to the retailer or Microsoft and will be compensated with a refurbished system or a gift card, that is - if the Microsoft Xbox 360 is actually still under warranty at the time.

Sony Playstation 3 ($399 for 80GB - $499 for 160GB)

Strengths: BlueRay Player. Impressive specifications. Sleek appearance.

Weaknesses: Game play is not as smooth as Xbox 360. Weak online presence. Not compatible with PS2 Games.

Ideal For: Movie buffs, Sony loyalists, and marginal gamers unconcerned with online play.

Best Games: Grand Theft Auto 4, Madden 09, Guitar Hero, Metal Gear Solid 4 (Exclusive to Sony).

The Sony brain trust allowed Microsoft to strike the first blow in this epic video game battle. The Sony Playstation 3 was then ultimately strategically released one year after the Microsoft 360 in order to leap frog Redmond with this technical marvel of IBM, Toshiba (TOSBF.PK), and Sony engineering.

The Playstation 3 boasts a built-in Wi-Fi, HDMI output for 1080p resolution, Bluetooth, free online Playstation Network membership, and the Blu-ray next-generation media format. A Cell Broadband Engine powers the PS3. This cutting edge microprocessor facilitates unmatched levels of storage capacity.

The powerful technology is a gift and a curse of this Sony brand. Game developers are still getting accustomed to the hardware and performance may be somewhat choppy; and to the dismay of Sony loyalists - the Playstation 3 is not compatible with older Playstation and PS2 games.

In spite of the impressive specifications, sales figures related to Sony's Playstation 3 investment have been dismal. The 17 million units sold is a far cry from the unquestioned dominance of the original Playstation and Playstation 2. The Playstation 2 is the top-selling video game system of all time at 140 million units. The PS2 ranks just ahead of the original Playstation that recorded 100 million sales in its own right.

The results have been devastating to a Sony Corporation that is largely dependent upon the video game sales that have accounted for approximately 10-15% of Sony sales over the past decade.

Wall Street is not buying. SNE shares were unresponsive upon the ultimate 2006 release of the Playstation 3 and have cratered from $60 to $20 in-step with this flop.

Conclusions

1. No system is actually 'better' than the other.
2. The selection must be made according to the needs of the particular consumer.
3. Sometimes there can be too much of a good thing.
4. Hold or liquidate sector specific video game investment positions. The current cycle cannot match the late nineties - early 2000's heyday.

Disclosure: no stock positions.