Lewis Pulsipher @ Gamasutra: "An example I used with computer networking students about "what business you're really in" is the failure of the great railroad companies (Santa Fe, Union Pacific, NY Central, etc.). The great railroad companies dominated late 19th century business; past the middle of the 20th, most were bankrupt. This happened because they thought they were in the railroad business, when they were actually in the *transportation* business.
How does this apply to games? Some video game companies apparently think they're in the technology business, when they're actually in the entertainment business (even the ones making "serious" games will prosper if those games are also entertaining, as for example "America's Army").
I think this can be applied to the Sony vs. Nintendo console competition. Sony thinks technology, Nintendo thinks entertainment (also applies in handhelds, it appears). (And this should have been obvious to Sony, because the *really* good technology, PCs, doesn't make it as a major game platform compared with the whimpy consoles.)"