Mama Robotnik said:
Is it a case that you form assumptions based on what judgements would make business sense for the company to follow? Or is it more based on history of a company and what you'd expect given their business history and philosophy? Or do you form a number of possible scenarios and narrow them down to a most-likely path? Or something else entirely?
Since you are something of a gif-celebrity (serious props to you), I'll give you my secret: Every one of my forecasts is based upon a subjective view that all players in the industry will behave rationally. I'm an eminently rational fellow myself, and although I can't cite the number of pixels in Link's sword, I know most of the nuts and bolts about the industry. When I am wrong, it's usually because I overestimate one or more constituent's reaction to a move made by another. For example, I thought that more Sony fanboys would support PS3 at $599 than turned out to be the case. Often, I just plain guess wrong, as I did with the cost curve for PS3. It never occurred to me that it would cost over $400 to manufacture three years after launch, but that is shaping up to be the case.
So to answer your question directly, the first guess was the right one. I base my judgments on what I think makes the most business sense. I tend to discount company history, and sometimes, that is a mistake. In this thread, many people say Nintendo won't launch a new Wii because it is not like them to do so. In my view, they HAVE to do so, or risk losing sales to Sony and Microsoft, who are each hopeful of capturing the "trade up" market.
I completely discount company philosophy, as most companies change over time. Look at Sony this cycle, with a bleeding edge box. Last cycle, they put a 295 Mhz processor (waiting for the flames in case I'm off by 10%) when Microsoft chose a 733Mhz (more flames coming). They chose commodity over cutting edge. Before that, they went 32 bit when Nintendo went 64 bit. The PS3 is a deviation from their past philosophy, and may be what got Kutaragi the boot.
As Donny will attest (he's on my distribution), I write well over 1000 pages of this stuff each year, so I don't spend a lot of time on "scenarios". Almost all of my "predictions" are responses to reporter questions, and my answers are usually on the fly. That was the case with Wii HD (Bonus Round in 2007), 4 million WoW accounts (NY Times), and many others. I'm a bit more thoughtful when I publish a note, but only slightly more thoughtful, since I write 20 or more pages of notes a week.
I don't expect anyone to take me as a soothsayer, just take my opinion as it is intended: an educated guess designed to promote discussion.
In the next gif, can I be someone cool?