7.) Microsoft continues to lose money in their gaming division, but prepares to release the Xbox 360. Microsoft contends that they expected losses throughout the life of the Xbox, but intends to make money on the Xbox 360 for the first time since entering the game market in 2001. Nintendo suffers a heavy drop in profits due to the cost of developing the Nintendo Revolution and because of poor GameCube sales as the console reaches the end of its life. However, they are still posting profit. Sony reduces its losses to under $100 million, and announces that they will be firing 7% of their employees by 2008, roughly 10,000 workers.

8.) Microsoft introduces the Xbox 360 leading into the Christmas season of 2005, at least six months prior to the PS3 or Nintendo Revolution. The system is well designed and performs well, launching the next-generation of gaming consoles. Apple Computer, Sony's #1 competitor in the handheld music player market, introduces an iPod capable of playing video. With a much greater battery life and storage capacity, the iPod offers features that compete with Sony's PSP, but offers no game functions. Sony finds itself battling Apple in the media industry, Nintendo in the handheld gaming industry, and Microsoft in the home console industry. Now heading into 2006, Sony begins to follow through with the layoff of 10,000 workers that it announced in 2005.

Continue to Page 6: Nintendo sidesteps fight -->