What can Microsoft learn to keep itself afloat?
Having industry leadership now is as useful to the future as a cockpit altimeter and gyrocompass would be to your child’s nanny. After Nintendo’s Wii was released, reclaiming that top spot for PS3 would forever be elusive.
The most important factor is innovation. The Nintendo Wii’s remote turned the tables of the industry with a motion-activated controller. The Wii tore into and beat individual PS3 and Xbox 360’s sales by more than 30 million units globally. This evidences the gravity of innovation.
Games’ exclusivity is the second most important frontier. The fact that Microsoft Corporation (NASDAQ:MSFT) is going to spend $1 billion dollars and have 15 exclusive titles in the first year of the Xbox One means the company is going for a total onslaught on the industry. Forget about the hardware profiles which have been put up on every tech magazine online. Partnerships with Activision Blizzard, Inc. (NASDAQ:ATVI) and EA Sports are key. Microsoft’s best-selling game “Halo” will also be made into an exclusive action TV show, and Steven Spielberg will have role in it directing. Titles sell consoles.
The bottom line
Low Wii U sales have created the perfect environment for the Xbox One. Microsoft can take the button and run away with it. For the first five years after 2003, Microsoft Corporation (NASDAQ:MSFT)’s gaming division had been reporting losses. Things took a turn for the better from the 2008 fiscal year onward when Microsoft made its first profits from the Xbox division. The company has never managed to break even to date, presenting a $3 billion loss on the balance sheet. But Xbox is now an established brand with incredible brand loyalty, and if the last five years are anything to go by then Microsoft can maintain their graph on the green. Sony, meanwhile, has faced turbulence and suffered a $2.6 billion loss last year.
Microsoft Corporation (NASDAQ:MSFT) is also still hoping to push another 25 million units so that the Xbox 360 will hit 100 million consoles sold in the next five years. I firmly believe that the next generation is for Nintendo to lose. As much as it will be shared by the PS4 and Xbox One, the latter will have the upper hand. The basic life span of a present-day console generation is 7 years, so this is just one reason that Microsoft is a company to go long for.
The article The Next Console Generation Is Microsoft’s originally appeared on Fool.com and is written by Frank Midega.
Frank Midega has no position in any stocks mentioned. The Motley Fool recommends Nintendo. The Motley Fool owns shares of Microsoft. Frank is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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