Wednesday, May 14, 2014

Console Post of the Week: Microsoft

Microsoft announced yesterday that they'll be selling a Kinect-less Xbox One for $399, beginning next month.

This might seem curious, given how Microsoft has spent several million marketing words justifying why Kinect HAS to be included with the One. It's too integral to how the system works to remove, you see.

In a business, though, nothing is integral if it's failing.

Wait--don't jump on me for using the word "failing". Not yet.

Let's take a look at why this is happening. Three reasons (not saying there aren't more).
1. Sales
The PS4 has sold seven million units worldwide as of April 16. The One has sold five million units as of April 17.

These numbers, though, have a key difference. Sony's number is "sell through", which represents actual sales to consumers. Microsoft's numbers are "sell in", which represents sales to retailers.

Why, after Sony touts a big sales number, would Microsoft respond the next day with a number that's defined substantially differently? Well, because they couldn't use the same definition--it would be too embarrassing. They have the data. It was a PR decision not to use it.

Is that a problem? Not if the trend is in the right direction. Clearly, though, it isn't. Titanfall was released on March 11, and that was going to be the hammer. Instead, the PS4 still outsold the One in March in the U.S.

2. Pricing
If Microsoft saw the price of the One dropping to $399 by the holiday season, they wouldn't be doing this. They would wait. If they didn't see a price drop coming, though, they'd be heading toward the second holiday season where they were priced 25% more than their direct competition.

Based on the numbers, they must not think they can afford that.

So if they have to do something, how do they get to $399 immediately? This is their only play. And it makes sense, if you look at #3.

3. Kinect
As a gaming device, Kinect has failed.

This pains me greatly, because I think Kinect is one of the coolest things I've ever seen. It should have revolutionized gaming. It should be a centerpiece of Microsoft's strategy.

It didn't, and it's not.

Let's be blunt: Kinect games are crap. I've played them, I've bought them, and they're almost universally disappointing. It's great if I can wave my arms and yell "Whoop whoop" to perform some command with my home entertainment system, but that's the back door, not the front door. Microsoft entirely failed to walk through the front door here.

I wish they had.

Maybe Microsoft will fix this. Maybe they'll come out with a game as compelling as Wii Sports. Maybe they'll come out with something even better, and when they do, they can justify requiring people to pay a substantial price premium for the One with Kinect included.

Until then, in an environment where it appears not enough consumers are buying into Microsoft's vision relative to the competition, they have to alter their vision.

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