Microsoft Corporation (MSFT) Will Face New Competition With its Next Xbox

What’s more, hardcore gamers are better suited to PCs. While game consoles used to perform as high-end gaming computers for low consumer prices, it appears we reached price parity several years ago. Cevat Yerli, CEO of Crytek – a game developer with inside information on both the PS4 and next Xbox – said it’s impossible for consoles to match game PCs ever again.

“If you predict how hardware evolves at the current speed of evolution, and then take consumer pricing evolution, already two years ago you could see, whatever launches in 2013 or 2014 or 2015, will never beat a PC again.”

Microsoft’s new competition

While the video game console market is considerably tame with just three main players, the battle for the living room is still heating up. New entrants into the space are popping up every month, from small names to big companies like Intel Corporation (NASDAQ:INTC), which – finally! – officially announced it’s building a TV-service last month.

In fact, Intel’s plans include a camera device to identify users and serve personalized ads. Intel Media boss Erik Huggers even compares the device directly to Microsoft’s Kinect. The potential for motion or voice control exists as well, as Intel works out deals with content providers to bring a complete cable-TV and DVR replacement to your living room.

There is, of course, the 800 pound gorilla – Apple Inc. (NASDAQ:AAPL) – that stands to compete in the living room as well. The company already has its foot in the door with its AppleTV set-top box, and could release a full-fledged SmartTV in the near future. An Apple television set could provide the same entertainment features as Microsoft Corporation (NASDAQ:MSFT) as well as a Facetime app to compete with Skype capabilities. It could even bring popular iOS games to the big-screen, and wrap it up in one nice package.

Moreover, Microsoft will find itself competing against all television manufacturers. As the TV replacement cycle shrinks, and more SmartTVs are sold with more built in features, the appeal for a set-top streaming device diminishes significantly. Even with its voice-control and gaming potential, Microsoft’s Xbox will face some stiff competition from all-in-one devices from the likes of Samsung, Google, and potentially Apple – companies Microsoft Corporation (NASDAQ:MSFT) has had significantly less success competing against in recent years.

The last generation

As a child that grew up with an affinity for video games, it’s sad to think we may be facing the last generation of what we call game consoles. Microsoft is poised to beat out Sony and Nintendo in the next generation of console sales, but I expect those sales to be significantly diminished from the spectacular performance of the current generation (3 of the top 5 best-sellers of all-time).

The landscape is shifting, and the battle for the living room is still just beginning. Microsoft Corporation (NASDAQ:MSFT) has the potential to create a great product, but the competition is fierce and will come from all angles. Investors shouldn’t be expecting the company to continue the level of success it saw in 2011 and 2012 into the future with its next Xbox.

The article Microsoft Will Face New Competition With its Next Xbox originally appeared on Fool.com and is written by Adam Levy.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.