Console PS4

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The man who fought Microsoft’s (Nasdaq: MSFT) first “console war” says it looks like his former company lost the most recent battle to arch rival Sony.

Ed Fries, who led the team that created the first Xbox in 2001, said things seem to be slowing down in this installment of the high-stakes sales battle between the Xbox and PlayStation franchises.

And the winner is: “I think it’s PS4 by a nose, ” he said.

Fries said things could change with the upcoming release of virtual and augmented reality devices. Microsoft and Sony have taken different approaches in that emerging space and so that wildcard could still shake things up.

But the way things stand now, Fries said Microsoft doesn’t look like it will quite be able to close the gap after his former company bobbled the Xbox One launch in November 2013.

Xbox is a major division of Microsoft. It employs thousands of developers itself and has attracted countless others to the area as it has risen to one of the top brands in the space.

In many ways, the success of Seattle's entire emerging video game industry rides on the back of the console that helped put it on the map.

Fries, who left Microsoft in 2004, was watching from the sidelines like everybody else when the company debuted the Xbox One without a whole lot of enthusiasm from the gaming world. It marketed the console less toward hardcore gamers, and more as a general entertainment device, alienating its primary audience.

There’s since been a regime change at Xbox, and most seem to agree it’s working. The company slashed prices during the holiday shopping rush and started to close the gap.

But, even the most recent numbers show Microsoft still lags millions of units behind. The company also reported Xbox revenues were down 24 percent in the most recent quarter compared to the same time last year, thanks in large part to that aggressive price slashing campaign.

But the comeback may have come just a little too late.

“The two sides say nice things about each other; they compliment each other’s cool games, ” Fries said. “It looks to me like most of the excitement is kind of over in the console war for this generation. It looks like Microsoft is gaining a little traction back, but PS4 got a really early lead that will be hard for Microsoft to catch."

When it's all said and done, Sony will end up just slightly ahead, he said.

Console wars have been ramping up every few years for more than two decades as industry giants jockey for position whenever they each release a new generation of machines.

Whichever company sells more units at the beginning will reap the benefits for years to come. So, in many ways, the fate of huge businesses all comes down to a product sales arms race right at the moment the product launches.

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