Videogame enthusiasts are looking forward to the release of Microsoft's motion-sensitive videogame control system, code-named Project Natal, later this year. Maybe investors should be doing the same.
That's the underlying message in an analysis of Project Natal issued this morning by Sarah Friar and Derek Bingham of Goldman Sachs. The analysts make a series of assumptions—including an $85 retail price for the camera-based system—and estimate that Natal will boost Microsoft's revenue by $1.7 billion in its 2011 fiscal year (which begins in July 2010) and $2.3 billion in its 2012 fiscal year.
It's a bullish position, to say the least, and it will no doubt be greeted with some skepticism. For a bit of context, Microsoft's entire Online Services Business posted only $3 billion in revenue in the 2009 fiscal year, out of $58.4 billion in companywide revenue.
The Goldman Sachs analysts obviously believe consumer demand for the motion-sensitive Project Natal device will be big. In a note to clients, they say they expect Natal to reach a 56 percent "attach rate" less than two years after its launch, meaning that more than half of new and existing Xbox 360 owners will buy Natal for their consoles. By comparison, they say, Nintendo's Wii Fit achieved a 41 percent attach rate over a similar time period.