A winner emerged from this tussle far earlier than was expected. Mainly because the PS3 was used as a Trojan horse to get Blu-ray drives into homes. This cost Sony a lot in low initial sales of the PS3 and in financial costs ($3 billion). It was an expensive victory. So what does it mean?

• Firstly consumers can see a clear format victor which takes the confusion out of the market. This will lead to a faster acceptance of HDTV. So more TV sets will be sold sooner and more Blu-ray players. The manufacturers need this because so far the uptake of HD video players has been very low. Many people seem happy with upscaled DVD, the films cost a lot less.
• Microsoft will have to be very careful that the public don’t get the wrong idea and think that this is a victory of PS3 over 360. Some people are stupid enough for this to hit sales regardless. If Microsoft don’t dispell such misconceptions then sales could be badly hit.
• It could bring the tipping point of the HD consoles taking off sooner. So both Sony and Microsoft (with it’s imminent Blu-ray add on drive?) could suddenly be selling a lot more consoles (Amazon are reporting a 75% increase in sales of the 40Gbyte PS3). There are over 100 million customers waiting to trade up from the previous generation. This is not good news for Nintendo.
• Sony have an advantage over Microsoft because the PS3 has a built in Blu-ray drive. People will buy PS3s just to use as a Blu-ray player. So it’s average game attatch rate will be hit. Microsoft know all this so will price cut sooner.
• Microsoft now have an even bigger incentive to accelerate the end of the plastic and cardboard distribution model. Expect Xbox Live to get better, sooner. Expect bigger add on hard drives for the Xbox 360 to be offered. Sony know this so will put more into their Home offering.

It is very difficult to predict how all these elements will pan out, there are so many economic, commercial, technical and marketing factors involved. My hope is that the reduction in confusion helps everyone prosper.