Microsoft Corporation is still trying its hand at the hardware business. Rumors emerged on Friday that the firm was planning a slew of big hardware releases in October. The news, which likely doesn’t sit well with the firm’s investors, is worth looking at in contrast to the PS4 VS Xbox One battle.
The firm, lead by Xbox head Phil Spencer, has been making a push to spur demand for the console. The PS4 VS Xbox One battle had been very one-sided thus far, and Microsoft is working on changing that. As Satya Nadella appears looking to hardware for growth once again, there’s lessons to be learned in the console gaming world.
PS4 VS Xbox One is a losing battle
Microsoft, unlike the other hardware segments it’s in, entered the PS4 VS Xbox One battle on a high note. Though the Sony Corp (ADR) console picked up steam at the end of the cycle, for most of the period when the PS3 and Xbox 360 were on sale Microsoft Corporation was ahead.
With the launch of the Xbox One, it seemed that the firm had a winner on its hands. It was the presentation from Sony Corp that changed everything. Both firms had put the publisher above the console buyer and tried to put in features that those making games loved, and those that loved games hated.
Sony reneged at the last moment, and set its lead in the PS4 VS Xbox One battle long before either console went on sale. Microsoft ended up with a suite of features that most people hated, and a console that cost more than the one it was competing with.
That’s when Microsoft lost the PS4 VS Xbox One battle, a market it should have won, or at least competed strongly in. With its Lumia Range of Windows phones, its Surface range of tablets, and it Microsoft Band range of wearables, Microsoft is trying to spread its hardware success outside of gaming.
PS4 VS Xbox One offers lessons for hardware
A report from The Verge says that Microsoft will unveil the surface Pro 4, the Lumia 950 and 950XL and the Microsoft Band 2 at the event in October. Each of those markets is dominated by Apple Inc., a firm that Microsoft seems to want to replicate.
Each of those markets is still making a loss for Microsoft. The phone segment lost Satya Nadella’s firm more than $7B earlier this year, and the firm still hasn’t made enough money to make up for the massive $900M loss it made in the tablet market after the launch of the first entry in the Surface line.
Apple likely makes more money on gaming than Microsoft does right now. The firm hasn’t put loss-making hardware onto the market, and people have bought millions of games on iOS. Microsoft is behind Apple in hardware, and it’s behind Apple in game sales at the same time.
Microsoft may have pushed into hardware on the back of its major win in the Xbox 360 VS PS3 battle. The PS4 VS Xbox One fight has gone very differently, and shown the firm that offering the same thing to users isn’t enough. It needs to offer more than Apple in order to get ahead in hardware.
To date it’s not doing that. Windows 10 is full of tracking software and, inexplicably, Microsoft is looking for users to pay money so that they can remove ads on solitaire.
PS4 vs Xbox One is the only hardware worth doing
Microsoft is doing badly in the PS4 VS Xbox One battle, but the market is still the firm’s most successful hardware presence. Microsoft may be losing money with the Xbox One, but it’s nowhere near the level of losses the firm has been hit with in the phone and tablet business.
Microsoft doesn’t have a chance of making real money in the PS4 VS Xbox One battle, but the firm isn’t losing the same kind of money it is in the rest of its hardware concerns.
The Xbox One is alright. Microsoft is no longer spending the big money on third party exclusives, and the biggest feature it’s putting on the Xbox this year, Windows 10 and backward compatibility, are cheap ways to make the hardware connect with gamers.
As investors get more and more skeptical of Staya Nadella’s intentions in the gaming world, the budget for the Xbox division is likely to suffer. That doesn’t mean it can’t do good work. Phil Spencer’s strides toward making the device a better fit for many gamers may have a real effect on sales, and it’s certainly impacting the way people see the Microsoft console.
Microsoft hardware reaches a bottom line
Losing the PS4 VS Xbox One battle isn’t the worst thing that could happen to Microsoft in gaming. It’s not likely that the firm is going to have abandon the segment, even though that’s what many of the firm’s investors are going to be looking for.
That means no write down, and no massive quarterly loss as a result. The Xbox One is worth a lot for Microsoft. As fewer and fewer people come in contact with Windows, the Xbox One, and Minecraft, is a great way to brand the firm.
The Xbox One is the bottom line. That’s why Phil Spencer says he doesn’t care about the Xbox One VS PS4 battle. Microsoft is more concerned with whether it’s able to proving it’s able to do hardware at all. The gaming segment is the only proof it has that that’s true.
Microsoft is intent on following through on its hardware business, despite the fact it’s clear failure on almost every front. The Xbox is the closest thing to success the firm has, despite the fact that the PS4 VS Xbox One battle is going so badly.
The Microsoft hardware business looks worse without the Xbox One. That’s why we’ll be seeing Halo sequels for a long time yet, and why Phil Spencer is promising a focus on first party titles for some time to come.