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Microsoft Corporation (MSFT), Sony Corporation (ADR) (SNE): Two Companies Backtracking to Get Ahead

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Companies often make mistakes. When they do, they have to back up before they can go forward again. Their reputation is at stake, sales hang in the balance, and billions of dollars could be lost. Here are two companies backtracking to get ahead:

Microsoft Corporation (NASDAQ:MSFT)’s mistake

Last month, Microsoft Corporation (NASDAQ:MSFT) unveiled its $499 Xbox ONE console at the E3 game conference. Touting high resolution images and an advanced interactive features, the system looked cool, but its wonder was short lived. Gamers were soon fuming over Microsoft Corporation (NASDAQ:MSFT)’s newest policies.

Microsoft Corporation (NASDAQ:MSFT)

New guidelines forced Xbox One users to connect to the Internet once a day in order to play games. Earlier this year, many gamers had suffered through a bad experience with Electronic Arts, when the company forced users to continually connect with EA’s servers in order to play the newest Sim City. EA’s servers couldn’t handle the initial traffic, and many gamers were left with a game they couldn’t play. The new policy instantly reminded gamers of this bad memory and had them looking to competitor Sony Corporation (ADR) (NYSE:SNE) for an alternative.

Gamers looked, and they saw Sony Corporation (ADR) (NYSE:SNE)’s sleek new PS4 priced at just $399. In addition to playing games without an Internet connection, the PS4 allows users to sell and trade games without game publisher restrictions, another unpopular policy that Microsoft Corporation (NASDAQ:MSFT) had opted to go with.

Microsoft’s Xbox has long been the “top dog” among adult gamers, yet earlier this year the IDC announced that Sony Corporation (ADR) (NYSE:SNE) had sold over 77 million PS3s worldwide, 1 million more consoles than Microsoft Corporation (NASDAQ:MSFT). It appears consumers are slowly beginning to favor Sony Corporation (ADR) (NYSE:SNE), and Microsoft Corporation (NASDAQ:MSFT)’s latest gaffe may accelerate the trend.

Backing up

After a resounding outcry, Microsoft announced it would reverse some of its unpopular policies. Users would no longer need to connect to the Internet, and the company revoked restrictions concerning how its video game discs are traded, resold, or rented.

Microsoft’s entertainment and devices division saw its revenue grow 56% year-over-year last quarter after the membership for its pay-to-play online gaming platform, Xbox LIVE, grew to 46 million members worldwide. If Microsoft wants to keep this number growing, it will have to beat out Sony. Before it announced its changes, 71% of gamers intend to purchase a PS4 compared to an Xbox One. Only time will tell if Microsoft’s backtracking has swayed consumer preference.

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