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'I think Apple rolls the console guys really easily.' - Gabe Newell
'I think Apple rolls the console guys really easily.' - Gabe Newell
January 30, 2013 | By Frank Cifaldi

January 30, 2013 | By Frank Cifaldi
Comments
    45 comments
More: Console/PC, Business/Marketing



"The biggest challenge, I don't think is from the consoles. I think the biggest challenge is that Apple moves on the living room before the PC industry sort of gets its act together."
- Valve co-founder Gabe Newell is fighting hard to get a Linux-based "Steam Box" into living rooms, and he doesn't see the traditional console makers of the world standing in the way of that. He sees Apple.

"The threat right now is that Apple has gained a huge amount of market share, and has a relatively obvious pathway towards entering the living room with their platform," Newell told students at a recent University of Texas lecture.

"I think Apple rolls the console guys really easily."

More at Polygon.


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Comments


Merc Hoffner
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Challenger Approaching



Edit: Also, thinking about it, if we're talking about dark horses in the console space, then no one is better positioned then....

dun dun dun... Samsung.

They've got the TV's. They've got the tech. They've got the remotes. They've got the mobile platform cross pollination. They've got the OS. They've got the money. They've got the momentum. They've got the market. They've got the hype. They've got the backing of the most obsessed gamer nation on Earth. If anyone is a potential threat, it is the pride of Korea.

Mike Kasprzak
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Except Samsung isn't synonymous with gaming, at all.

Thing is, Samusung, LG, and co have had "Smart TV" capable TV's and boxes available for years now. Totally capable of playing games, but almost nobody has noticed. Even Roku is a bigger name in set top boxes, totally gaming capable, but again nobody has noticed.

Derek Poole
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@Mike: Sony wasn't synonymous with gaming either.

Jeremie Sinic
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"Except Samsung isn't synonymous with gaming, at all."

Well, except they've been the main World Cyber Games sponsor since the first edition.
They are no console makers, but it's not like they have nothing to do with gaming at all.

Andrew Chen
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"They've got the OS."

Well, they got a piece of it thats for sure. But so do many others :p

On the topic of Samsung's current momentum, sure they are making bank but what really separates their products from their competitors? They do have a stalwart production advantage over pretty much anyone, but that by itself is not going to hold onto consumer imagination.

Merc Hoffner
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@ Andrew

Who knows what it is, but they've got the zeitgeist right now, in the exact same way Sony did throughout the 90's. People just love Samsung stuff right now, and can't always put a finger on why, though it's often because they make quality gear at affordable prices. Perhaps it's something in the name.

Andrew Chen
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@Merc (swt name btw): "The Zeitgeist" is a good way to put it...I remember just a few years back already reading the mantra "Sony quality at Samsung prices" and now they just stole all the thunders (and most of the profits).
I imagine Samsung's $11-some billion marketing budget in 2012 probably helped a bit, too hahah.

Jay Anne
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That sounds unlikely, because as long as Apple does not provide the Apple TV with a controller or mouse or some form of sophisticated input, the audience overlap between Apple TV gamers and SteamBox gamers is like to be relatively small.

Michael Wenk
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Except when SB users won't spend the 50-60$ for a game when they can spend nothing or a fraction for a game. Of course there will still be some that will buy the more expensive option. However, what it will do is make a relatively small niche even smaller, perhaps too small to be viable from a business perspective.

Mike Griffin
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There's such a vast range of game types and game prices welcome on Steam now, I don't think intimidation by AAA prices becomes a major hurdle.

Jonathan Jennings
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As a console Enthusiast I have to disagree Mike , One of the biggest sources of envy when i was a bit younger was seeing how games that still were in the $35+ range in brick and mortar stores as well on XBL versus steams sells that would sell the game at half or even sometimes less of the cost. add in the fact that it takes FOREVER for most game prices to drop on XBL and PSN and I definitely feel that from a online marketplace stand point the steambox is going to really challenge console marketplaces to either adjust prices or essentially ignore the discounts and special offers that steam as a service provide. I think they would sooner just pretend it's not happening though

Mike Griffin
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Well, remember the traditional console licensing fees as well.
Until MS, Sony and Nintendo start significantly cutting their slice of the pie to appear on their hardware, that pricing disparity -- the same games on console vs. Steam -- will probably continue to exist.

Because, well, MS, Sony and Nintendo start every generation eating serious losses on hardware production, and they need those game sales and licensing fees to recoup it.

It'll be interesting to see Valve's approach to licensing on their hardware, how closed or open it will end up considering Linux, what sort of cut they'll take home, how it may affect game prices on SB versus Steam on PC, etc.

Jonathan Jennings
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I definitely agree with that I am most interested to see just how online marketplaces develop on the next round of consoles and platforms

Andrew Chen
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Jay: If the only thing that is keeping Apple from "rolling the console guys" (In Gabe's words) and pre-empting Steam-Box is lack of a controller, the Old Guard is in serious trouble.
To design, produce, market and distribute a controller product would cost Apple a relative pittance. Actually, I think marketing alone would practically handle itself!

Mike: The slice of the pie demanded by Sony, Nintendo or MS depends on the distribution format. If its retail, you are kind of hamstrung if you are the Big Three because the retailers need to receive their cut. If we are talking digital, everything I've read on Gamasutra points to their slice being roughly analogous to the other platforms including Steam and iTunes.

Jay Anne
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@Mike
For Apple to bundle a dual stick controller with the Apple TV, it'd mean they were trying to get into the console business. Tim Cook explicitly said they aren't interested in that.

Andrew Chen
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@Jay: That has been the old company line, but CEO's do after all sometimes say one thing and later do another. Personally, I like to think of "console=optimized game service", which in that case a company at some point could offer a product that runs the service without explicitly designing said product to specialize in it.

At any rate, even if Apple did not want to take the trouble of developing their own gaming controller (money on the table, even if its not the money they are used to making now) it feels like all they gotta do is declare the spec and let the third party accessory makers fight over the rest.

Jay Anne
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@Andrew Chen
While anything is possible, none of these are characteristic of the way Apple does things. And a third party controller is a non starter (much like those who thought the current AirPlay support would kill the consoles).

[User Banned]
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This user violated Gamasutra’s Comment Guidelines and has been banned.

Kujel Selsuru
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I just don't see apple TV nor the steam box really being a threat to any platforms.

Bob Johnson
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I just can't picture Apple making a gaming controller. Apple can barely make a remote for the ATV. ;) It hasn't been gaming first focused either. Gaming on iOS is more of a byproduct of the new interface, open digital store and good mobile graphics & hi-res display. Those things are all there for reasons other than gaming.

Apple won't package the controller with the ATV and casuals won't buy such a controller.

An iPhone won't work as an ATV controller. Try hitting a button on your touchscreen while looking at your tv and you'll see what I mean. Besides how many kids are going to have iphones?


And as long making AAA games is economically feasible I don't see the Madden, CoD, Halo, Fifa, etc audience settling for a $99 ATV gaming experience with a $50 controller add-on.

Michael Joseph
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besides games and media and tools for making games and media, what is pushing consumer hardware?

It always puzzled me that Apple neglected games for so long...

I'm glad Apple is finally going full steam (tee hee) ahead with games.

Alex Nichiporchik
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Gabe sees how Apple can easily expand into the living room. Their hardware is already there - in the form of a $99 Apple TV.

As soon as Apple figures out how to control games on a bigger set, and how to still be compatible with all of the huge iOS catalogue.

The $99 Apple TV already runs iOS which many probably don't know. I have it jailbroken with stuff like XBMC and PLEX installed -- it's the best thing ever. Plus AirPlay lets me stream any content from the iPad to any screen in the house.

Once you understand how tight it's already integrated, with you being able to stream anywhere, be it music or video, it becomes really scary on what Apple does. The market is ready for such a box, has been for a while. Ouya and other Android boxes confirm that. My only fear with those open boxes is fragmentation and lack of quality content.

It's going to be an interesting year

Bob Johnson
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OUYA etc do not confirm the market is ready for an ATV like console. Only sales will confirm that. And right now there are essentially zero sales even for these KS projects. There have been plenty of consoles and handhelds that crashed and burned after reaching store shelves.

And large swaths of iOS games will not transfer well at all from capacitive touchscreen to the big screen. This might be nice for marketing. But the reality will eventually get out.

David Schweighofer
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Not sure the living room presence is the key here, it is more the eco-system. Gaming is processor intensive, but in not so distance future, the game processing will not have to happen in the living room. A thin or zero client approach that connects to a game streaming service will platform agnostic gaming.

Apple's threat is iTunes and binding customers to a specific store (when you have hundred's or thousands of dollars of apps invested, unlikely to move). To that regard, Gabe's comment very relevant. So it is less the living room than the platform eco-system that represents a threat. Gaming is fragmented by platform and OS technical boundaries.

Gaming might become just another interactive channel on your TV, no local processing involved. Apple iTunes will be in a much better position at that time than EA Origin or any DLC/DRM platforms, based on the hypothesis that you have a fully-capable system downloading the content.

Technically, we can do it and have a virtualized game application in the cloud streamed to the end-point. Yet network availability and bandwidth (public/broadband bandwidth is low, latency might be high), travelling across borders (national telco contracts & costs) and connectivity while in motion (seamless handover), make the local processing a better experience.

It is not about 2013 or 2014, this is a long-term perspective. Valve seem to understand this and I would not be surprised to see Valve ready themselves not only to sell content, but also to be able to stream the games to any devices as a virtualized game app (which would help deliver on Linux box pretty much any content).

Toby Grierson
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@Schweighofer

"It is not about 2013 or 2014, this is a long-term perspective."

Long-term, latency and the requirement of physically near datacenters to provide the games remains true.

Conversely, the needs of games proportional to what consumer-grade hardware can provide locally continues to shrink.

The difference between a device like an iPad and Apple TV is that the latter is not battery constrained.

Long-term, I don't believe that a thin client will actually offer hardly any cost savings to the consumer and guarantees a dramatic new load on infrastructure and data centers.

We're talking a cost savings of as high as maybe $50 to $100, _but_ only in societies with low-latency, high-performance infrastructure _and_ local game servers, which _happen_ to be the societies where those cost savings have lowest value.

Meanwhile, everyone in rural areas and poorer countries would be SOL as games move to the service model.

Troy Walker
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I would love to see Apple branch out into the console market... their stock needs to drop considerably more, and that would certainly do it.

Andrew Chen
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Apple has lost about 25-30% of their peak market cap reached back in early fall. Their P/E now sits around 10. That metric by itself may not be so useful but it is kinda interesting when compared to some other choice companies: Google at 23-ish, Microsoft at 15, Amazon at 3 jillion (j/k, its actually 3200-sum).

In the video game industry Activision is sitting at 15-ish while EA is at 300-sum...now thats an interesting contrast! :)
Guess people have high hopes for Origin and EA Mobile. Anyways.

All the companies are of course not the same but I lean toward thinking that Apple is not quite overvalued either vs their tech peers, considering the pretty decent position they've dug for themselves in significant present and future markets.
That Scrooge-like money bin of cash they are hoarding admittedly lends them some gravitas as well @_@

Adam Bishop
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I think there's a major flaw with all of this focus on Apple beating the console manufacturers, and it's the idea that the app environment is essentially replacing the higher-priced, complete game market. I don't think that's true at all. People have been saying for years that iPhones/Pads/Touches were stealing the handheld market share that Nintendo used to have, but the Nintendo DS continues to sell like gangbusters. And it's not going to stop any time soon for a pretty simple reason - many people *like* paying one up-front cost for a complete, high-quality, fully featured game and those people are willing to pay higher prices (ie. the cost of DS game vs an app store game) to get the product they want.

I know it's boring to say "Lots of people like what they've got and they'll continue to do so" but it's the truth.

Andrew Chen
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Adam, as someone who Love-Love-Loves (thats three times) their DS and totally wants to get a 3DS for Fire Emblem and Castlevania it worries me that Nintendo just revised their sales forecasts.
We are not talking just Wii U here...that was already a tad worry-inducing if you are a shareholder of Nintendo. Even the 3DS, which saw some respectable sales of 12+ million hardware units fiscal year-to-date, was revised from 17 million to 15 million for fiscal 2012.
More worryingly, software projections were also kicked down from 60 million units to just 40 million units. For Nintendo to predict something like that first means they were WAY OFF their initial guidance and secondly 3DS owners seem to be buying less games-per-console than expected.
Who can say for sure why this is, maybe the mass market software or Nintendo's marketing message just haven't jelled yet? However it is worrying and definitely not quite gangbusters.

Unless you mean Japan, which yes, its all bout the Gangs-Bling-Bling-Busters over there. But they already got Animal Crossing!

Bob Johnson
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The DS and 3DS don't appear to be selling like gangbusters in the west. Nintendo just admitted western sales are lagging those of Japan. And there is a catch-22 with the lack of diversity of 3ds software here in the west.

But I agree with you otherwise.

Jarod Smiley
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I agree...and I also don't think Sony or MS aren't just throwing all of there eggs into a high-end box. Sony bought Gaikai, MS partnered with another Cloud-based company I believe, so everyone is looking into streaming content, and realize, when consumers are ready for it, it will be one of the easiest and convenient ways of delivering content.

In fact, I'm really interested in what Gaikai's acquisition means for Sony...

Bob Johnson
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Games aren't going to be streamed anytime soon. Just because Sony bought Gaikai doesn't mean they know what they are doing and that they didnt overpay. In fact I bet the next thing we hear about Sony and Gaikai is news of the acquisition being written off.

Adam Bishop
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There are plenty of smart things they could do with Gaikai, like streaming game demos rather than requiring users to make hefty downloads for 20 minutes of gameplay.

Bob Johnson
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If the demo thing is feasible then good point. But they paid hundreds of millions for Gaikai if I remember correctly.

And not sure the demo thing is feasible from a logistics/financial standpoint. Imagine how many full fledged gaming pcs they would have to have setup to stream the demos to a peak demand day 1 demo audience. And, in order to limit latency, these machines would have to be clustered in numerous geographical regions which won't help scalability. And even then there are still latency issues. Not sure that is worth the trade off.

A more practical solution is pre-downloading as is done with many Steam releases. Let customers set their machines up to download (like overnight) most of the demo before it is released. Then when it is ready you only have to download a tiny remaining portion.

I admit it would be neat to have all the demos streamed to your console like cable channels. I liked this about OnLive. You felt like something was going on. Things were happening! You got thumbnails of handfuls of games running on your screen at the same time. ......But then in-game latency reared its head. And it wasn't a good experience. Not sure a developer would want to show off a preview of their game with this type of latency.


Adam Bishop
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The problem isn't the timing, it's the bandwidth. I often don't download a demo that looks interesting because I'm worried about how much of my monthly bandwidth limit it'll use up. If I could stream demos and use less bandwidth I'd play more demos.

Bob Johnson
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Oh ok. But not sure streaming demos means less bandwidth than downloading one.

Kristian Roberts
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Disclaimer: I did not read every last comment, so this might have already been raised.

I think that the argument around whether an Apple TV will be a leading game console is kind of missing the point. MS and Sony (and to a lesser extent Nintendo) are competing not only to be your "optimized gaming service" as someone above eloquently put it, but to be THE entertainment hub of the living room. While such features exist in the current generation, they will, no doubt, be even more centrally featured in the next gen. As such, these consoles will compete with SmartTV, TiVos (kinda), media centre PCs and so forth for real estate. While the consoles may continue to be primarily gaming devices for much of the market, the growth appears to be elsewhere.

For this reason, I think that in determining the fate of the Apple TV against the consoles, we need to look how they compare as whole -- and not just as a gaming platform.

Bob Johnson
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Yes and no. Yes the growth of consoles is in living room features other than AAA gaming.

But a proper next-gen console is overkill for living room features.

Thus there is a dilemma. Hard to sell your console as a living room device when next-gen games demand a more expensive, larger and louder piece of hardware.

I heard some rumor about MS making 2 "consoles." One would be more like an ATV. One would be the 720. Living room features would overlap. And, roughly speaking, Live Arcade gaming would overlap too. Or maybe I made that up. Not sure. :)

and right now ATV is doing fine as it is with no games. And is now probably outselling consoles as a living room platform.

So...I don't think consoles have a chance as a defacto living room platform for the masses. But for those interested in console games they will get their eggs in one basket and the living room stuff will be a value add.


The question in my mind is will Apple enter the living room gaming market and with what? And would a low powered iOS living room device kill traditional consoles? Will folks settle and reboot their habits in the name of cheap games made by 3 people?

GameViewPoint Developer
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I totally agree with Gabe Newell, why do you think Android TV Devices are popping up everywhere? it's because everyone knows that's where these OS's are heading and they want to try to get there before Apple throws it's hat in the ring.

I suspect TV Manufacturers will stay TV manufacturers but might well align themselves with a particular platform, Android, iOS etc.

Andrew Chen
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I don't think there is any question of "alignment" with the TV makers...Apple will make their own TV or you can buy a $100 little box. What would they need TV makers for?
...If the Apple TV uber-initiative happens, that is!

GameViewPoint Developer
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No, not for Apple, they are good to go as they are, I meant with console hardware being built into TV's, then it just comes down to what OS they are going to run.

Ken Nakai
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I agree with Mr. Newell. He's not saying they WILL make a console, he's just saying if they decide to, they're in a great position to make it happen and take marketshare:

- They've got a ton of cash
- They've already got the consumer electronics experience to deliver a new device fairly quickly
- They've already got a gaming platform (iOS devices) that exists with thousands of games people already play.
- Everyone's talking about them making a controller. They don't need to. They have one: an iOS device. Sure it's not as tactile but there are already millions of them and chances are a lot of people already have one handy.
- And before you say who wants to use an iOS device as a controller, they already do with all the games in the AppStore and it represents a great opportunity to mimic the usability of the Wii U. Play on your iPad or flick it to the TV and play co-op with your iPhone-toting friend.
- Apple TV is already out there, plugging into TVs and home theaters for $100. It already delivers movies and music and internet video with great quality over wireless.

And, even if they decide to make a controller, you really think they can't? They single-handedly reinvented the mobile phone. They brought out a touch screen UX at a time when RIM was still relevant and most cell phones were still phones. Now, Nokia is tanking because no one wants a regular cell phone anymore. They want a pocket computer that does everything.

I'm not saying they're going to (as someone pointed out, Tim Cook said no way...though no doesn't always mean no at Apple, especially with Steve Jobs). But, if they wanted to, they could and they could take a huge chunk out of Microsoft, Sony and Nintendo's marketshares. It's gotta come from somewhere since they're probably not going to convert too many people who aren't gamers right away.

Bob Johnson
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Yes but the iOS controller is limited on your tv screen because you are looking at the tv not at the screen on the iOS controller. Thus you even further limit the type of control you can get out of a capacitive touchscreen. The gyroscopic control will work. Using the touchscreen as a trackpad will work. But using the touchscreen for menus will work. But that's about it. Most games will not transfer over to the tv screen and be playable because most games require you to touch what is on the touchscreen. Try doing that while looking at the tv screen. Not going to happen. There is also the question of how responsive an iOS device would be as a controller.

Yes ATVs are in millions of households now. And the platform could probably be turned into a gaming platform quickly. But you compare Apples and Oranges when comparing it to consoles. The ATV is by no means ready to play AAA console games. IT lacks the power for those games. IT lacks the storage space for those games. And again there is no method of control.

And no not sure they could make a gaming controller. Yes obviously they could in the sense that they could easily farm it out to some Chinese 3rd party that makes generic controllers. Or just copy what is out there.

But do these guys really understand gaming and the needs of a gaming controller? Your designer would be extremely talented in UI and have no clue what a gamer really needs for a controller. So it isn't so cut and dried. Especially if you want to move gaming control forward and not just copy what others have done.

And Apple isn't about just getting by copying others. IT is about doing things better.

Also working against a controller is Apple's tendency to design really nice products. Hard to picture them making a cheap plastic controller although they put a plastic shell over the ATV. But that could have been due to wireless issues and the fact it is hiding in most setups.

Andrew Chen
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"Also working against a controller is Apple's tendency to design really nice products. Hard to picture them making a cheap plastic controller..."

Looking forward to their machined aluminum game controller :)

@Ken: Over the last couple years Apple has been bringing on experienced execs from the game industry sorta on the down low. Former Nintendo, XBox Live and Activision PR heads are among the talent they have recruited, but my favorite is actually their hiring of former IGN editor Matt Casamassina. My point is only to show that the company takes gaming functions seriously as a non-trivial selling point for their hardware.

I don't think Tim Cook is lying when he says "we have no intention of offering a game console." I just think that he doesn't think they need to. As you pointed out with Apple TV they will sell devices that perform a number of services, one that will be playing games.

@Bob: The present hardware, even the top end of their AX processors probably can't handle games that will satisfy everyone, but it seems capable of good-enough performance for a bunch of casual and not-so-casual game players. And those dudes are iterating practically every year!

TC Weidner
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once and for all, Gaming has been and will remain big enough for many different gaming types and gaming niches and opportunities. All these people lose some respect from me when they act as if ONE platform is gonna suddenly roll over and kill every other platform and genre out there. There is no one size fits all and kills all in gaming.


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