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Is Microsoft Corporation (MSFT) Making a Blunder With Its Newest Xbox?

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It was supposed to be the biggest console unveiling since… the Xbox. Gamers anticipated the new console, waiting for the latest installment from a company that helped transform the console gaming industry into what it is today.

Then Microsoft Corporation (NASDAQ:MSFT) revealed the Xbox One — and the claws came out.

Microsoft Corporation (MSFT)

The post-unveiling online chatter shows gamers are still confused about gaming digital rights and backward compatibility. Non-gamers — whom Microsoft Corporation (NASDAQ:MSFT) would like to lure in with the Xbox One ­– are left wondering how something with the name “Xbox” could be anything but a gaming console.

Microsoft has made the mistake in trying to please everyone, and so far it seems no one is happy.

Gaming the system
Microsoft Corporation (NASDAQ:MSFT) made a crucial error with the Xbox One launch: It failed to target its core customer base. As Ars Technica pointed out, the Redmond company talked for 10 minutes about how the system could connect to live TV, yet only showed three short, lackluster gaming clips. Microsoft tried to woo consumers in the vast streaming market instead of focusing on the people who have made the Xbox brand as successful.

While Microsoft Corporation (NASDAQ:MSFT) could patch things up with gamers at the E3 gaming conference later this month, they’ve already left a bitter taste in the mouths of their customers. More importantly, they did it without creating a splash with the average consumer.

Let’s step back and think about this for a minute. How likely is it for the average consumer who wants a streaming video unit to buy a $400 Xbox One? I’d say ridiculously unlikely. Not when that same consumer can buy a $50 Roku player or a $100 Apple Inc. (NASDAQ:AAPL) TV. Those systems offer an amazing amount of content, are much smaller, and arguably less complicated to set up and use for beginners.

Apple sold 5 million Apple TVs in 2012 ­­– not bad for a “hobby” — but it’s the amount of content the company streams that’s impressive. Apple takes up 35% of all home network video streaming data in North America on its iPod, iPad, iPhone, Macs and Apple Inc. (NASDAQ:AAPL) TV. iPad streaming alone is credited with 10% of all entertainment traffic streamed in North American homes. Although the Xbox One comes with a long list of streaming capabilities, grabbing streaming time away from Apple and other competitors won’t be a slam dunk.

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