I think Bill Gates has said that the PC always can rise to any challenge and can move into nearly any market because it's built around commodity hardware.
Once upon a time, supercomputers were very custom machines. The Cray-2 was cooled with Fluor-Inert. The Connection Machine 2 had 32,000 1 bit processors. Crazy design things like that. Now supercomputers are clusters of machines that use AMD Opterons or Intel Xeon processors.
Ten years ago, PCs running Windows weren't taken as serious graphics workstations like SGI or Evans and Sutherland boxes. Now they put those guys out of business. Now if your 3D software didn't run on Windows or Linux about 5 years ago, you're now out of business.
For years, PCs weren't taken seriously as servers. Now they are -- and where has Sun gone, or HP-PA, or RS/6000 or any of those? Blips on the radar compared to x64 servers these days.
PCs weren't taken seriously as under-the-TV appliances. Now, with Media Center, they are.
(Do I even need to mention that Apple finally abandoned their custom platform and went to commodity PC hardware? Didn't think so.)
And finally, PCs are not taken seriously for console-type entertainment. Which brings us to where we are today.
The PS3 and Wii that are being launched this weekend mark the death nell of the console as we know it. Next stop is no surprise... it's a PC that acts a lot like a console.
Take one look at it and you can see the PS3 is the creation of a consumer electronics company. It's being billed as an all-in-one entertainment console for your HD-TV. Sony has gone as far as to claim it's "a computer." One of the selling points is that you can browse the web for it. Another selling point is that you can download movies and games. It has a proprietary media format in Blu-Ray.
And it costs $600.
Whereas the $300 that the PS2 sold for might have been equivalent to a $1200 gaming PC at the time, today we could build a pretty reasonable gaming PC for the $600 price tag of the PS3. And it has all of those selling points mentioned above. Where's that PC price point going to be if and when Sony tries to launch the PS4? Given the way prices have gone over the last few years, $600 will buy you a monster quad-core PC in the year 2011 or 2012.
And let's look at what Sony had to do to make this console. They had to invent and fab a completely new processor architecture. They had to build all new dev tools since the PS2 and PS3 are very different to code for. And on and on. The ROI is dropping fast for consumer electronics makers that want to enter and stay in this market by building custom hardware like Sony has done here.
Nintendo had a good idea with the Wii: make a Gamecube version 1.1 with a new controller and "novel" gameplay. My bet: next time Nintendo won't even release a console. They'll build their games around a PC and build custom controllers (if the Wii controller concept takes off). Why on earth would Nintendo keep manufacturing these consoles if the Wii is successful and they prove they don't need to?
The original Xbox fits the bill of a commodity console more than the Xbox 360. It's pretty clear that's what Microsoft was thinking when they released the original Xbox. I think we'll see that again. The Xbox 3... errr 720... errr.... 4... will probably look a lot like a PC again. You might even play PC games directly on it. Maybe it's just a special configuration of DirectX 11 or 12 hardware that lives up to some standard.
After hearing all day about people paying $3K for a PS3, or waiting in line for hours and hours, I couldn't help but realize that this probably marks the end of the console run. The ROI isn't there if we don't see game consoles die off to commodity PC hardware. It's the way everything else has ever gone with the PC, because it's the cheapest and most effective method for growing a market around technology that's continually plowing ahead.