Thursday, June 12, 2014

Matt's Microsoft Vision

Microsoft: hire this man immediately.

I’ve been thinking a lot about the consequences of MS unbundling the Kinect, and what it means for the long term value proposition of the system. And I think I’ve come to a conclusion about what MS needs to do to make the best out of the situation. 

The Kinect-less version needs to be extremely core gaming focused. This means that you're basically shuttering any serious ambitions that may have existed for what I like to call ambient Kinect use in core games.  I personally find that to be quite a sad thing, but much like the removal of some of the online only features, it’s a so it goes thing; too much too soon, and not being able to cleanly demonstrate the value in a change adverse market. You focus all your marketing efforts to core gamers around this thing. You only talk about games, and you talk about games a lot in all your gaming centric places. You make sure you have a lot of high value content coming at a rapid pace centered around core gamers.

Meanwhile, you devote a tremendous amount of resources to expanding your value proposition to non-core gamers centered entirely around the Kinect. You invest heavily in kids games, in sports entertainment, in fitness, in multimedia, and in making your platform as app like and integrated with Windows as possible. Once you have some compelling use cases there, you focus on the more expensive bundle in marketing directed to non-gaming related venues; you get more heavily involved in cross promotion for fitness and major sporting events, toy stores and children's tv shows, you push creative kinect apps and every unit is a devkit stuff to hackathons. You build out business apps and demo the value of the Xbox One as a low cost presentation device. You make sure home automation scenarios play incredibly well. You focus heavily on transformative experiences and futuristic feeling scenarios. And you never ever bring up any of it anywhere near a gaming related event. You sell everyone *else* really hard on Kinect, while rarely bringing up gaming, and you keep the gaming community buried under a constant stream of gaming related news that barely mentions Kinect. MS absolutely has the resources to do both at the same time.

This may seem somewhat counter intuitive, selling the less dedicated audience on the more expensive proposition, but there is almost no value proposition to an Xbox to non-gamers or non-core gamers at the moment, and even less without Kinect. So there isn't that much of a difference in selling a 400 or 500 dollar device to the broader market; you need something really compelling to get them interested even at the lower price, and if you have that, the extra hundred probably doesn't matter that much. It's not like there's any competition in most of the areas you can go, at least for now. 

So you simultaneously create two brands, the Xbox for top tier gaming with best in class multiplayer, connected experiences and exclusives, and Kinect for crazy future magic experiences. You frame it as Xbox One for the best gaming (and very quietly you occasionally say, and it’s even better with Kinect), and then for the other group you frame it as Kinect with Xbox One is like being in the future!

Kinect for Windows and universal apps makes leading with Kinect when targeting the broader market even more important. It lets you combine the value for both form factors under a common image; Kinect is the magical thing, and the box you run it on is more a matter of use case and need. It also helps realign the framing for value on the Xbox One; a 500 dollar system that draws immediate comparisons to HTPCs and much more expensive desktops and laptops makes it seem like a bargain, for that broader market. The current frame of it being an excessively overpowered Roku box, which can also play games, doesn't come out so great for it there. 

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