Microsoft’s onslaught into video games would have been more of a stumble had it not been for Master Chief and his aline adventures. Halo not only made the Xbox a success, but it instantly became a cultural phenomenon, redefining the console shooter in terms of AI, graphics, gameplay, and story. With amazing multiplayer still played years after release to the sub-culture of Red Vs. Blue, Halo spread its web of influence to be an icon, revolutionary, and bad-ass all at the same time. Halo sequels have broken sales records, with Halo 3 holding the record for biggest day of sales in U.S. history, more than $170 million (only to be trounced 7 months later by the multi-platform cheater GTA IV). Still, it’s impossible to play a first-person shooter these days without feeling the armored hand of Halo siphoning your gaming skillz as you ponder why you’re settling for anything but the best (selling).

Microsoft ruled desktop computers but now can barely get people to visit its website without paying them. Tim O’Reilly effectively sums up Microsoft’s problem:

Microsoft was once motivated by its own Big Hairy Audacious Goal: “a computer on every desk and in every home.” They achieved that goal, and ever since, they’ve drifted. Now their only goal seems to be to stay on top of the heap. They need to stop focusing on eating other people’s lunch and start thinking deeply about what kind of goals might stretch the company once again.

This past month has show Microsoft’s tunnel vision when it comes to the web. The company failed to acquire Yahoo (which was probably a good thing for both companies). Then, Microsoft offered cash back to users of its product search, feebly thinking this would steal customers away from Google. Microsoft ignored the fact that its product search is inferior to Google and didn’t offer enough money to make the step down worth it.

More subtly, Microsoft announced it was ending its book scanning project, leaving the endeavor to Google. Alex Chitu explains:

In other words, the book search engine didn’t make enough money and Microsoft decided it’s better to focus on areas that are more profitable. Instead of improving their search engine with valuable content from books and offering better search results, Microsoft chose to make decisions based on the short-term profits.

But that’s not all. Microsoft also decided to remove several games from its Xbox Live store because people couldn’t find the games they wanted. Apparently, Microsoft’s never been to Amazon.com or it would realize the benefits of the Long Tail and maybe fixed its user interface instead of depriving itself of additional revenue.

This is a lot of mistakes for one company to make. None of these seem like poor ideas over the short term, but they show Microsoft can’t look past its next earning’s report. Google, in comparison, lets its ad service support a research factory of innovation where products are unleashed with the idea for monetizing a distant thought for the future. Google News, Docs, Apps, Notepad, and Reader all have no advertising.

O’Reilly suggests Microsoft needs to define its long term goal, something that doesn’t put it in direct competition with Google, even outsourcing search. I don’t agree Microsoft should give up on search, mostly because I don’t want Google to have a monopoly on search (competition good, remember). But it’s true Google’s already doing well with the “Organize all the world’s information” goal.

Microsoft needs something new, that doesn’t rely on the walled gardens that made it the powerhouse it is. The next stage in computing won’t allow Microsoft to live off overpriced software like Windows and Office; not when free, open-source and online alternatives offer compelling alternatives. Buying Yahoo or Facebook isn’t a strategy unto itself, but needs to be part of a long term goal that recognizes both short term and long term benefits. Microsoft itself needs to change, and that change will happen over the long term.

In truth, Achievement Points mean nothing but bragging rights, but that’s all us geeks need. Xbox 360 introduced gamers to the cute, little pop up that reveals you earned some certain number of points for something you did. Yay. These points are linked to your Xbox Live account so friends and rivals can see how good you really are. You can’t lie about beating Gears of War on the hardest difficulty anymore. Okay, that sucks, I love lying. But Achievement Points, also known as gamer crack, still give gamers a compulsion to play gamers well past it being healthy just to collect all the points they can. It might be better than sex. Actually, I don’t think anyone with a gamer score of over 30,000 would know…

Video game fans know it sucks to invest hundreds of dollars in consoles, accessories, and games only to do the whole thing over again in five years. We do it, but we hate it. Sony’s PS2 is showing the console lifecycle might be lengthening, with awesome games still being releases for the seven year old system. The PS2 even outsells the state-of-the-art PS3 meaning people seem willing to invest a couple years in the aged platform.

But Sony’s PSP handheld is a different beast. John Koller, senior marketing manager for Sony’s PSP told IGN he believes the handheld has a 10-year lifecycle similar to the PS2 and PS3. Using firmware updated and some hardware revisions, they can milk the life out of the PSP. But this is a bad idea and an example when starting fresh is better in a few years.

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Bill Gates hyped a huge announcement for the Xbox 360 at this week’s CES, and like geeks upgrading their hardware, we jumped on the hype without thinking.  The biggest announcements were more downloadable movies and the beginning of IPTV, or in Gates’ words, using the Xbox 360 as a set-top box. BT Group, a leading British telecom company, was announced as the first provider of content through this surface.

But now we’re learning what that really means.  In truth, it almost feels like 360 owners and journalists and anyone who cared were lied to.  The truth is the 360 will not be able to stream content, record content, or possibly even access content without a BT subscription.  All the hype and leaked screenshots and presentations from over a year ago have lead to basically another paid service for the Xbox that basically gets you almost live soccer and some on-demand shows and movies.

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Microsoft’s Xbox brand has been facing an up Mount. Fuji battle since its launch. And while the 360 has faired better than the original Xbox, some recent numbers shown by Famitsu (translated by NeoGAF) shows the Xbox might be farther down the mountain than originally thought.

Famitsu tracks the top 50 best selling Xbox 360 games with the top game not even selling a quarter million units. As Destructoid points out, when you add the total sales of all 50 games, only 1.8 million units have sold - as much November sales of Mario Galaxy and Guitar Hero III in the U.S.

The surprise in these numbers is how even games that attracted huge headlines for first week sales dropped of. Ace Combat 6 helped the 360 console outsell the PS3 in Japan for the first time, selling 77,000 units in its first week. A month later, Ace Combat 6 has only sold 6,000 more copies.

Even games that Japan loves are having trouble expanding the 360’s user base. This will make the 360 Devil May Cry 4 sales numbers versus the PS3’s all the more interesting. Check out the full top 50 after the jump.

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For someone who couldn’t care less about playing Halo 3, I certainly do love writing about it. Well Microsoft has announced Halo 3 smashed all media records pulling in $170 million in only 24 hours. This beats the $150 million opening weekend for Spider-Man 3 and the massive sales of Harry Potter books.

Of course, with video games costing $60 each, Halo 3 sold far less units than than these movies and books, but who’s counting. Still, Halo 3 sold an amazing 2.5 million copies in 24 hours and made September 25th the most active day on Xbox Live history. Don’t forget to eat people. And if anyone’s interested, I’ll be playing Viva Pinata.

With the next-gen races begun, this year’s E3 looks to be a major turning point for the Big Three, Nintendo, Sony, and Microsoft. From exclusive games to price cuts to redesigns to new colors, each console (and handheld) has a lot of hype (Nintendo) and bad press (Sony and kinda Microsoft) to trounce. While everyone’s doing their predications (PSP redesign, I hope), I figure I’ll instead go over what each of the big three has on the line at this E3.

Nintendo

Everyone’s favorite underdog rules the roost (enough cliches?) this E3 with the best selling Wii and DS and massive profits perfect for game development and R&D.

Nintendo needs playable AAA games that finally show the Wii isn’t just a fad. Super Smash Brothers Brawl is out, but look for Metroid Prime 3 and maybe even Mario Galaxy. Announcing no more supply issues would, of course, make everyone happy, though who knows how realistic that is.

But the two biggies: online strategy and a hard drive. WiiWare, the upcoming Wii channel with original games, is the Wii’s answer to Xbox Live Marketplace, shows Nintendo isn’t just using digital distribution for milking their own library. And while their at it, Nintendo will reveal its Mii and online codes for 3rd party developers so we can finally start getting some multiplayer party games. And instead of keeping a library of twenty SD cards with WiiWare and inevitable Sega Saturn and NeoGeo games, let’s just have a hard drive peripheral.

Verdict: For all it’s hype, Nintendo will meet expectations with games, but the buzz with start moving to other places…

Microsoft

This slow and steady giant has a staggering fall line-up of exclusive must-have titles, Halo 3, Mass Effect, and Blue Dragon, plus its own editions of once-PS3 exclusive blockbusters like Grand Theft Auto IV and Devil May Cry 4. But Microsoft won’t let the past limit its future. They’ve still got tricks up their sleeve.

Aside from getting the glowing praise it’s AAA games deserve, Microsoft should and will already prep the future, either with a new game announcement or some new exclusive stolen from Playstation. Either way, Microsoft needs to hype its stellar holiday line up, and accent this with a small but headline generating price cut for the 360. Maybe even announce a Halo 3/360 bundle. And free Xbox Live would stick it to Sony’s anemic online presence.

Microsoft’s wild card will be the long-rumored gaming handheld. While the disappointing Zune may leave a sour taste in Microsoft’s…hands, the Xbox’s growing brand name is proven and soon to be profitable. A handheld puts Microsoft in the larger and cheaper end of the gaming market. Even the “failed” PSP, with 25 million units sold, has outsold all three next-gen consoles combined. Microsoft could again aim for third place in this handheld generation, offering more of a portable PC than a handheld Playstation.

Verdict: The games will impress. The announcements will generate buzz. And a new handheld could be the announcement of the year.

Sony

The PS3 has failed to meet the staggering expectations set by the PS2. Sony has the most to lose should their games and announcements not start showing why the PS3 is worth $600.

First things first, price cut. The free press alone could save Sony enough marketing cash to make this worth it. And with some playable Metal Gear Solid 4 and several top secret announcements, the value of the system will begin to make sense. Also, more information about HOME and a download service for the PSP and PS3 will reveal Sony’s elaborate and free online strategy. Rumbling gamepads and a PSP redesign are near certain announcements.

Unfortunately, the only hype Sony needs to generate is in games, and ones that come out this year. Microsoft and Nintendo have mega exclusives this holiday season but the PS3’s killer apps are months if not a year away. Heavenly Sword and Lair must meet and beat expectations, and hands-on at E3 need to support this. Some other AAA games, even if they’re original IPs, will make the PS3 worth buying before the new year.

Verdict: The PSP will generate huge buzz with its redesign and new download store, both out by the fall, but the PS3 will still suffer from being an inexpensive Blu-Ray player that also happens to play games.

Give yourself a long weekend, take some adderall, and plan for a non-stop gaming marathon for those ever worthless yet oh so valuable Xbox Live achievement points. Games Radar shows how by playing these 11 games, you can churn up an impressive number of points and have the sore thumbs to prove it.

Sales of the Xbox 360 in Japan have increase almost nine times since the release of the RPG Blue Dragon in the beginning of December. This boost even allowed the Xbox 360 to outsell the Playstation 2 for a short time.

Microsoft has been struggling to improve its international market share, especially in Japan where Sony’s Playstation and Nintendo have near total dominance. Blue Dragon, the Xbox 360 exclusive, is almost a love letter for Japanese gamers. Blue Dragon teams Hironubu Sakaguchi, the creator of Final Fantasy, with character designs by Dragon Ball Z creator Akira Toriyama, and music by Final Fantasy’s music composer Nobuo Uematsu for a visually stunning and critically acclaimed RPG.

Blue Dragon’s success could be just another piece of kryptonite against Sony. It’s questionable whether there will even be enough Playstation 3s by the next holiday season. Blue Dragon could be the next big franchise with more international support than Xbox’s Halo and Gears of War. Also, popular RPG Dragon Quest has left Playstation for Nintendo. With systems costing so much now, it’s hard to own mor ethan one. If these exclusives remain, Blue Dragon on Xbox, Dragon Quest (and Zelda) on Nintendo, and Final Fantasy on Playstation, then the console wars might be getting more vicious not only on the companies, but for us fans. How are we supposed to choose?

Exclusives were looking to become less prevelant as product costs skyrocket. Elder Scrolls ported to Playstation and Metal Gear Solid is rumored to go multi-platform. Namco reported designing games for the Playstation 3 requires sales of 500,000 units, which is getting harder to do as game prices and length continue to increase. Blue Dragon’s success in Japan shows the Xbox has legs outside of the U.S. and that means Sony and Nintendo no longer have safe harbors. This might mean more exclusives, which Xbox seems to have the leg up. Gears of War and Halo are more than a match for Final Fantasy, Zelda, and Mario. And Xbox has Mass Effect and Lost Planet ready to pound the competition in the coming year. For this Playstation fan, I’m starting to think Xbox is the system to bet on.