Why Sony and Microsoft won’t be dropping out of the console race

Recent rumors spawning from cloud gaming company Gaikai's chief product officer, Nanea Reeves, are pointing to either Microsoft or Sony not joining the next generation of hardware. "Not all of the current console makers will have one more generation. That will be the big news at E3." Reeves said during an interview with IndustryGamers. Quite the bold statement if you ask them though I think this has been made without anything to back it up. 

Gaikai recently announced a deal LG to bring their cloud based gaming service to the LG television line. In fact Gaikai is pretty much in the anti hardware business, much like OnLive, they opt to keep the hardware out of your room instead streaming the game from their servers to your PC or device that supports their service. Having Gaikai announce that either Sony or Microsoft won't be returning with a new console comes off as wishful thinking more so than anything based in fact. They are competing against these companies, still haven't managed much market penetration, and there's nothing out there to back this mindset.

Despite Sony recently shot down rumors that the PS4 would be at E3 2012 this is by no means any sort of confirmation that there won't be a PS4 released. First of all Sony is just getting the Vita out the door which we all know has been struggling in Japan, a territory that the PSP thrived in. It isn't hard to see that this will be a huge focus for Sony during E3, the idea of pulling spotlight away from their newly launched handheld probably didn't sit well with the heads over at Sony. Secondly rumors have been swirling for some time now that a first party developer has begun developing exclusively for the PS4 along with assisting efforts on graphics development for the new console.

To add further fuel to that fire Naughty has recently announced they've split off into two teams, one having just wrapped up development on Uncharted 3 while the other has been hard at work on Last of Us due out later this year. Given the fact that Naughty Dog has worked wonders getting amazing graphical performances out of the PS3 with their Uncharted series is it that much of stretch to think Sony would want them helping with graphics development on their next console? Sony also has 14 other studios which could fill this position. Let's not forget how many new IPs Sony introduced this generation and studio development they've done. The idea of them suddenly restructuring away from hardware sounds insane to say the least.

In fact a recent job listing over at Naughty Dog says they are working on next generation technology with a system capable of rendering characters with a million polygon count. Definitely sounds like Sony is gearing up for a new console in the next few years and Naughty Dog will once again be a key player in showcasing their new hardware.

Microsoft also has plenty going on with reports of Ubisoft Montreal already working with target hardware for their next Xbox. EA studios is also rumored to be working with these target boxes containing off the shelf PC parts from Microsoft for development on the 360 follow up. Clearly something is in the pipelines for a new Xbox and Microsoft is pretty far along in development for new hardware.

Not only that but Microsoft has shown off Xbox Live running on Windows 8, which is being developed as a universal OS for all their platforms. This includes PC, phones, tablets, and consoles. Clearly Microsoft has the Xbox brand in mind going forward and they've been actively including elements in their new version of Windows. Also Microsoft hasn't denied that their next console will be shown off at E3 2012, which we've all seen rumors for that floating around by now.

Kinect has given the aging 360 new life and there have been plenty of rumors about Kinect 2 being shipped alongside the 360 successor. If sources are to be believed Kinect 2 is so accurate it can read lips. It isn't hard to see with all the evidence out there that Microsoft is also gearing up for the next generation.

Recent reports also suggest Microsoft has begun production on the new chips that will power their next generation console. Just like Sony it seems like Microsoft has plenty going on behind the scenes and it is only a matter of time until we see a new console from them.

So where does this leave us? Basically a rumor full of hot air from Gaikai that is going to amount to nothing. Neither company is showing signs of pulling out of the hardware industry, both companies saw success with their latest home consoles, and both companies have made numerous acquisitions over the past years to further cement their positions in the hardware industry. Thinking that either of these companies would suddenly turn tail and run is foolish at best. Sony may have lost market share with the PS3 but they've bounced back stronger than ever while Microsoft has continued to take strides forward gobbling up market share from Sony. This is made even more impressive with the 360 not performing well at all in Japan while Sony has continued to thrive in all three major territories.

Personally I'm looking forward to seeing what each company brings to the table. Only time will tell if these rumors and reports hold any water or if Gaikai was right all along. If I were a betting man though, I'd be putting my money on Sony and Microsoft continuing forward in the hardware industry.