Stakes high for Microsoft with Xbox One
New Xbox One meant to be more than just a game console
Microsoft Corp. is determined to own the living rooms of consumers around the world.
With two failed attempts to do so already under its belt, the company makes its latest bid this week with the Xbox One, which hits stores Friday.
The company promises the new video-game console will change everything about the way people interact with TV, video games and entertainment content, mainly thanks to its high-tech camera sensor “Kinect,” which the company says is more precise and responsive than ever before.
In an industry dominated by colourful and unbelievable characters, Microsoft wants the Xbox One to be more than a just toy. The company is trying to fulfil its decade-old goal of conquering the living rooms of consumers everywhere.
Really, the launch is coming at a time when the computing giant needs lightning to strike. With stagnant or lacklustre sales of desktop PC software, tablet computers and phones, Microsoft Corp. is quietly hoping that Xbox One will help it attract some momentum that may have spinoff effects on its other areas of business.
With the console, Microsoft has promised better access to TV shows and movies through gestures, or simple natural speech, which Kinect will understand and interpret. A person who wants to watch hockey can simply say “Kinect, switch to CBC,” and the channel will instantly appear on the TV.
Integration with Microsoft’s Xbox Live service and various online entertainment offerings, including music, and movies on demand, will be beefed up to provide users with more stuff to watch, listen to and do. Using the console’s Internet connection.
Social networking integration, email, web search, video calling through Skype and even cloud storage will be offered through Xbox One.
Oh, and the console plays games, too.
Make no mistake, Xbox One is the anti-PS4 — the console Sony released a week ago.
The Xbox One’s bold and ambitious aim is to become the nerve centre of a person’s living room, allowing them to talk to friends, update their Facebook status, watch TV, download music and play video games, all on one console.
Microsoft has always coveted the living room. The purpose of the original Xbox, which was released in 2001, was to help the giant from Redmond, Wash., secure a spot in the entertainment centre of millions of homes around the world. The company sold more than 24 million units of that console, which paled in comparison to the 155 million units that Sony sold of the competing PlayStation 2. While exact figures aren’t available, it’s widely believed that Microsoft lost as much as $3.7 billion US on that console, or $168 on every console sold.
Microsoft’s second play was the Xbox 360, which brought with it voice commands, through Kinect, Internet browsing, Facebook and the ability to stream media content, including TV shows and movies, directly to a person’s living room TV. The Xbox 360 has sold more than 78 million consoles over the past eight years and pushed Microsoft’s Xbox Live, the company’s online gaming service, to more than 46 million paying subscribers.
The Xbox business now brings in more than $5 billion US in sales annually. In the three-month period between April and the end of June, Microsoft’s Devices & Consumer Hardware business unit, which includes the Xbox, accounted for $1.48 billion US in sales. That was during one of the slowest sales months of the year.
This is why Microsoft is betting so heavily on the Xbox. The device is a hot commodity in the Microsoft stable at a time when its traditional Windows PC business is stagnant. Microsoft reported that sales for its Windows division hit $19.2 billion US during its latest fiscal year, which ended June 30. That marked an increase of 4.6 percent compared with the previous fiscal year — an incremental increase during a year that included the launch of the new Windows 8 operating system. According to researcher Gartner, thanks to the momentum behind the tablet computer movement, PC shipments will fall another 11 per cent this year.
Whether video game fans buy into Microsoft’s vision of the future is another story. There’s already been much debate about whether the new console will a ppeal to the market it needs. There’s also been a lot of debate over the console’s $499 price, which is $100 higher than Sony’s competing offering.
One thing is for sure. Microsoft is taking a leap of faith with this console that isn’t unlike the one it took with the first Xbox back in 2001. Whether the company gets another chance to play in this space will be up to consumers who now have to decide whose vision of the future appeals to them the most.