Originally posted by FromWithin
Piracy had nothing whatsoever to do with the success of the Playstation. When it was released, a CD-writer would have set you back over £1000 (not to mention the SCSI PC you would have needed), and blank CDs were about £15 each. The ability to copy games was out of pretty much everybody's reach. Even though the swap-trick became well-known quite quickly, piracy was not a problem except for commercial copiers.
Piracy may have had nothing to do with the initial success of the Playstation, but you can't ignore its impact on the console's continued longevity. From the days of the Spectrum onwards, people have bought the console that everyone else has, mainly because they can either buy dodgy copies from their friends or borrow the games and create their own copies. The last time I heard the Playstation discussed in public, three kids were cajoling their friend for being the only one with an unchipped machine.
Everyone I've met who has owned a Playstation has had it chipped ('cept for that one kid, natch, but then I didn't actually talk to any of them). Every Playstation owner I've met has a collection of pirated games, and the number of pirate copies is usually significantly larger than the number of originals.
I think you also have to lay more blame at the door of Sega. The Saturn was undoubtedly a mistake, and demonstrated Sega's complete misreading of the market and its movement towards 3D. However, Sega had already ruined their reputation with the Mega CD, 32X and Game Gear - they kept releasing sub-standard hardware and abandoning it a few months later. (Of course, they eventually did that with both the Saturn and the Dreamcast. Now there's a shock!)
Who was going to spend ~£300 on a slab of black plastic that would be obsolete and worthless within a year? After three mistakes, it is not surprising that the public waited to see what Sony could produce instead.
From the developer's point of view, they did indeed split the market with the 32X and Mega CD. From the perspective of the average punter, Sega kept releasing overpriced, underpowered hardware with no software support. Mix in the bad press that the Saturn and Sega itself were receiving, even before its release (Sega Power were increasingly sceptical about the machine, especially as it became more and more apparent that it was a Frankenstein's monster inside the case; they were also unimpressed by Sega's treatment of the Mega Drive expansions) and it is hard to imagine anyone but the most die-hard Sega fans buying a Saturn at all.
And now you have to lay some of the blame at Nintendo's door. Once again they released their new hardware months later than their competitors, a trend started with their reluctance to update the aging NES. With Sega's reputation in tatters and an indefinite wait before Nintendo got their act together, the Playstation was the only option.
The rest is fairly obvious: the early-adopters buy the Playstation; the Playstation gets all the best games because it has the largest established user-base; Sega abandon the Saturn; Nintendo stick with cartridges and drive away 3rd-party developers, partly because of licencing costs and the cartridge limitations, and partly because the PS already has a large section of the market cornered; the Playstation becomes cool; piracy becomes cheap; Sony win.
The most astounding thing is the mind-boggling level of arrogance and stupidity exhibited by Sega and Nintendo. They must surely have gone to the same business school as Commodore. After years of paying vastly inflated prices for their games, though, I can't help but take some satisfaction in seeing them get their collective arses kicked.