Microsoft Corporation (MSFT)’s Xbox One Will be a Massive Success

Given the moves that Samsung’s making, it’s clear there’s a market for these features. But Microsoft has offered a better solution.

The Xbox One addresses a far larger market

According to a report from 2012, there are over 130 million “gamers” in the US. Yet, this statistic is a bit misleading. The number of US gamers has doubled since 2008, as free-to-play social games have grown in popularly. However, these gamers generally wouldn’t be interested in purchasing a dedicated console.

Realistically, the market for a high-end game console is perhaps 50-60 million in the US, at most. In fact, as of last fall, the Xbox 360 has sold only 70 million consoles worldwide.

The Xbox One offers the potential to far exceed that number. Although HDTV sales have started to decline, over 43 million LCD TVs were sold in the first quarter of 2012 alone.

Certainly, it would be insane to believe every owner of an LCD TV will buy an Xbox One. But the potential is there. To put it another way, nearly all of the people buying the Xbox 360 were hardcore gamers; the Xbox One gives buyers a compelling reason to own it even if they never play a single game.

Can it affect the stock?

Microsoft Corporation (NASDAQ:MSFT)’s stock was little moved on the day the Xbox One was unveiled, and traded largely alongside the market on Wednesday. Even if the Xbox One was a flop, it really wouldn’t affect Microsoft’s larger business, which remains dependent on Windows and Office. For all of 2011, Microsoft’s entertainment division (which includes Xbox) generated only about 1/27th of the company’s profit.

But Xbox One won’t be a flop. It offers a simple solution to the growing TV interface problem, and should attract a lot of buyers who aren’t otherwise interested in gaming.

Although Xbox is seen as a minor part of Microsoft’s business now, the division could balloon in the coming years. Microsoft’s potential to dominate the living rooms of millions of consumers does not appear to be factored into its stock price

The article Microsoft’s Xbox One Will be a Massive Success originally appeared on Fool.com and is written by Salvatore “Sam” Mattera.

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