Business Approach Comparison Sony PS4 and Microsoft Xbox

So MS finally faced reality and will sell a SKU without Kinect for $399.

Along with the release of some big exclusives like Halo or GoW, that should help sales a lot.

 

There was no point previously either. The gamer wants a powerful console at a good price. He got a lesser system at a higher price. The people interested for the media capabilities and voice commands werent interested in games and the price was high. The rest interested in both were waiting for a price drop. Hard to do that without selling the console at a loss.

If MS could offer the console at the same price as the PS4 with Kinect I am sure it would have sold like crazy

 

I posted in the other thread about it but my post probably makes more sense here. I think it's because MS are shifting to more of a services company so their goal now is to get people hooked on their services like Outlook, Bing, Office, OneDrive, Apps, Skype, etc. To that effect, anything that gets in the way of that needs to be eliminated. If including of Kinect gets in the way of having people use MS's services (ie, if it increases the xb1's price too much that people don't buy in), then it needs to go. Same like on Windows Phone where there's no point in charging a licence fee for it, the point is to get people to use MS as a services company hence give the phone away free to carriers. I suspect Windows will become the same one day where you no longer buy windows outright but it becomes a small yearly fee and is always kept up to date, since the ultimate goal even there will be to have MS be your service provider for everything possible.

So yeah the xb1 plays games, windows phones can make phone calls, and windows tablets let you watch cat videos on youtube. But in the end the real goal is to get everyone on the planet hooked to MS as a service company. That's my take on all this anyways. Going with that, having Kinect be standard no longer makes sense for them since for a percentage of the world audience it basically increases the barrier to entry to MS services by $100.

 

But how do they then market that MS services box? Side by side against the competition, the two machines are pretty much identical save for one being a bit more powerful. The only difference is exclusives, which will matter to some, and OS layer, which'll matter to some, but by and large I imagine the mainstream gamer, and the subsequent snowballed masses, will just go with the better console at the same price.

Best I can see, the following few years are going to be a battle of exclusive content. Both systems will probably go toe-to-toe with 'apps'. Sony even have Morpheus on the horizon as a USP and to keep up interest. It looks to me like MS has cut off their only key differentiator, meaning they've nothing to battle competition with beyond branding and marketing.

 

They need to market the big picture where you can live in a MS hardware world and everything is shared and connected. Edit a file on your OneDrive on your phone, check it out on your xb1 later. Do video calls with all your same contacts on your tablet, phone or xb1. Watch a netflix show on your phone, go resume it later on your xb1. Listen to your tunes on your tablet, and have same tunes, playlists on your pc and xb1. Edit your resume on your pc, read it again on your xb1, show it to others on your phone via Office and OneDrive. Run your favorite apps on your pc, resume using them on your phone or xb1. Browse the web on your tablet, use all the same bookmarks and history on your xb1. Etc, etc, all connected, all unified, all one and the same.

Of course this vision is currently incomplete...but I think the new CEO is finally ramming some of this through, stuff that Balmer was just sitting on.

Personally I don't think the power difference matters at all, not enough for the masses to care or even notice quite frankly. I think that was well proved last gen, and it's even less noticeable now. Exclusives will matter but I don't mean just games, they need to tempt people with exclusive services and media as well. Game aren't commodities quite yet but it's gotten to the point where I question how much exclusive games matter anymore. It's not like the old days where you waited a year to get that one amazing game, now there are more amazing games than most people can play in 3 lifetimes, and the vast majority get ported to all platforms.

To me, MS need to make their platform easier to enter and stay there which means lots of cheaper hardware, console side included. It also means they need to complete the damn vision...they are still woefully behind on implementing everything but things are slowly coming together. Their key differentiation will be all the stuff mentioned above, how they can be a one stop shop for everything. I don't think "power" or "games" are good enough differentiators anymore. Games matted in the NES days where they had a lock on most all the games, but that's not the case anymore. Likewise with power it would only matter if it was a WiiU level of difference, the power difference between the xb1 and ps4 won't matter. Price will matter and getting the big picture across.

Once they code it all of course...they still have a lot of work to do but looks like the boat is being steered in the right direction.

 

Correct. They zig when they should zag and zag when they should zig. X1 plus Kinect at $399 (which it should have been from the start) was always the optimal bundle.

 

That's a MAMMOTH understaking though, perhaps mostly because iOS and Android are entrenched. Before their MS ecosystem works seamlessly, they need people to own an MS phone, which hardly anyone wants to do. Even a great MS phone is going to come up against the existing app/content barrier for other handheld users. What would it take for me to switch from Android to Windows phone? A heck of a lot more than a good value handset, that's for sure! And without a MS phone, cross-device content is no use. Meanwhile, Google and Apple are doing similar and are ahead of the game. So MS have them on the one side, and Sony gnashing at the console space undermining XB's value there as a Windows component. It's an Everest-esque uphill battle!

 

Yep.

I would bet that the majority of people who would buy a console just for an exclusive already have a One. So removing Kinect, gaining price parity with the superior system and releasing Gears is going to do very little to nothing to boost their sales.

 

Android is so far ahead of both Windows Phone and iPhone world wide that if people consider Windows Phone dead then iPhone should be considered a partial corpse as well. It's grim right now for anything that isn't Android. The unification of it all though is what will help Windows Phone though. What MS needs to work towards, and looks like they are, is the obliteration of the concept of being locked into a phone, tablet, console or pc. They need to get people locked into their various apps and services and MS hardware simply serves as the delivery mechanism of whatever that may be. To that extent, that is what will ultimately prop up the lesser popular pieces of hardware like Windows Phone, once they can get people to see that there is no difference between it and their tablet or console and that all the same apps and services work on everything.

I agree that there is a pile of work to do but at least under the new CEO it actually looks like they are doing it. Google and Apple are ahead but MS is doing well in emerging markets where future expansion seems to be, so I don't think it's over for them. I can see them overtaking Apple at some point but there doesn't seem to be much that can stop Android at this point. Unlike most here though I really don't see Sony as a threat at all to me MS are not competing with Sony in the grand scheme of things they are mostly competing with Google.

 

This was clearly the goal behind allowing the release of the Nokia X. Its not tied to G APPS at all but instead have substituted MS ecosystem for storage, mail. Seems to be doing well enough too.

 

However, Kinect is a big enabler for functionality that handles voice and video input. Other applications benefit from expanded input capabilities in lieu of touch or PC inputs.
Microsoft's Surface and phone lines should have this by default.
PCs have don't have that standard, although laptops can have embedded cameras. They can get cheap cameras that might be more palatable from a cost standpoint than a Kinect kit.
I've lost track, but has official KB/M support come up for Xbox One?

If not, dropping Kinect has left the console in an awkward place where it either has Kinect and its cost, or it rules itself out of certain key apps or its constrained input becomes a problem.

 

I have a feeling we will see another price drop by MS this year followed with a $100 one next year .

At this point the $400 kinectless xbox one wont do well against a more powerful $400 ps4. I bet we will see it at $350 for the holidays and then $250 holiday 2015 with xbox two in 2016.

 

They're also reversing policy on keeping Hulu and Netflix behind the paywall.

Total slinking away with tail between its legs.

 

that actually makes sense , the 360 is aging and fewer games are coming to it , by doing this ms keeps those systems connected to tvs and thus can sell xbox videos , music or games

 

I would be surprised if content sales through XBL, besides DLCs for games, are in any way significant.

Actually, if MS can't improve their market standing, maybe they push for the next generation sooner than later, like in 4 years.

Better for us, we'll get better hardware for console prices.

Yeah the PC will always have more power but no $400 PC is going to play games with the reliability of convenience of a console

 

We will see a new xbox in 2016 or ms leaving the market.

 

It is important, even more so with Cortana now on the scene. But assuming they want to get more xb1's out there to bring more users into the MS services fold then they have to drop the price. If they don't want to lose money on each xb1 sold then that means dropping kinect. I have to assume once the new CEO rolled in that meetings were had and priorities changed. Do they want standard voice control or do they want more people using Skype, Onedrive, etc? Is the priority getting motion games out there or getting more users to use Xbox Music? Hence, out went kinect. Who knows, maybe their research showed that world wide few people people actually used kinect enough to make it worth keeping as standard. Either way at $500 it put the xb1 in contention with tablets for user dollars. That's a tough sell today, they really need to get the price down.

 

Wow. Well you can't say MS don't listen to critiques. This is yet another humongous U-turn and you have to hand it to them, they can take a punch and hopefully they can get up from this one. Personally I feel that this is another sign that they lost the plot big time for whatever inexplicable reason. And all the boys defending MS's choices as 'good business decisions' should go back to school.

 

This is a good move and of course necessary.

For those saying "Oh it'll still lose to PS4", maybe, but I'd wager effectively most people that bought X1 (especially the core gamers who are early adopters) did not consider Kinect much if any of a value add. Thus, A fair amount of people were already paying 499 for a "Kinectless" Xbox, in theory. Almost as many as were buying PS4 in North America, for example.

Basically, X1 sales weren't terrible at 499, they cant possibly do anything but get better at 399.

I'm in that boat, I'll get one now, but did not at 499.

But, announcing it already for June 9? That's an entire month to completely torpedo your sales, essentially...

This isn't the last thing they can do, either. With DDR3, and Sony's money troubles, they can undercut the PS4 too. I'd guess they will do that next year, maybe $349.

 

Anyone who is holding his purchase because he want's the kinect-less one is still going to be a sale. No loss here.
Also, there must be a few gamers who considered a PS4 within the next month that are now potential sales.