Thursday, March 29, 2012

Microsoft's Future

The Xbox 360 debuted late in 2005 and offered two different packages for consumers, a pro console and a core console. The pro bundle came with a twenty gigabyte hard drive and one wireless controller while the core console only came with a wired controller. The only aesthetic difference that I know of is that the pro console had a chrome plated DVD tray while the core console’s DVD tray was white. What is so important about selling two slightly different packages of the console? Well it showed that Microsoft knew that there was a market for people who only needed a basic version of the console. This two product segment approach allows for an increase in sales since people who normally would wait for a price drop have a cheaper alternative from the start. However Microsoft didn’t need any incentive in selling their console since it was sold out for a few months after launch. According to rumors it seems like Microsoft might try something similar to this strategy again with the next generation of consoles.

Supposedly Microsoft plans on releasing a compact version of its current Xbox 360 that will focus on arcade games, Kinect apps and media apps. According to the same rumor the next Xbox will launch a year after this mini version and will play all the same arcade games and apps.  It seems apparent that Microsoft has created an all-in-one entertainment hub with its Xbox 360 at the center. Microsoft has been inching its way to this media focused console ever since the introduction of the Xbox 360. From the start the Xbox 360 was able to stream audio and videos from computers connected to the same network. Eventually through Xbox Live, Microsoft was able to secure a type of On Demand movie service that was eventually incorporated into Microsoft’s Zune Media network and Netflix. With the latest dashboard upgrade Microsoft has updated the user interface to match the Windows 7 Mobile phone interface (which is also the style used in Windows 8) and allowed for various media firms to develop apps to run on the Xbox 360. Apps include things like Facebook, HBO, Netflix, SYFY, Hulu and ESPN. Microsoft understands that customers want the convenience of having all your favorite television programs, music and games in one simple package. Consumers are going to be demanding this sort of device because Xbox Live users are spending more than 50% of the time on Xbox Live watching videos and listening to music
Well what should Microsoft focus on doing in the future for this compact Xbox 360? I think they should price the device somewhere around $100 to $150 to compete with Apple TV. Microsoft should also try obtaining more Cable Television Networks to display their content on the 360 eventually allowing the device to be a substitute for cable television boxes. The gaming aspect of the device should not be limited to Kinect apps or arcade games but should embrace new technology. They can essentially use this device to enter the cloud gaming market and compete against OnLive for a part of their market share. Cloud gaming allows the consumer the option to play traditional games if the demand ever arises and lets the customer have a sense of safety if their future demands are uncertain.

It seems that Microsoft has a first mover advantage over Sony and Nintendo in providing an all-in-one media package. It is quite odd to find that Sony hasn’t tried to embrace all these media apps considering the Playstation 3 slogan was “It only does everything.” Sony has however begun using these various apps within its latest handheld, the PS Vita, which indicates that Sony may incorporate apps into future Playsation 3 firmware or the next Sony home console. Nintendo has always been cautious in approaching a media centered device and has tried to keep its consoles strictly as a gaming medium. Microsoft’s future in the gaming industry is going to be determined on how well they can balance providing quality gaming content while still maintaining their advantage in a convenient all-in-one media device. 

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