Microsoft Dis-Kinects Xbox One
With Sony's PlayStation 4 increasing its commanding lead over the Xbox One, Microsoft made a play Tuesday to goose sales of its computer game console.
The company announced it would start selling Xbox One without its Kinect controller -- which allows a US$100 price cut -- and it removed the requirement that Xbox users subscribe to Live Gold to access streaming services they already subscribe to, such as Netflix and Hulu Plus.
The new $399 pricetag puts Xbox One on a par with PS4, which has shipped millions more units than its competitor.
"We're excited today to be able to respond to our fans who have been telling us for some time that they'd like to have more options on how to get an Xbox One," said Xbox Chief Marketing and Strategy Officer Yusuf Mehdi.
Those options apparently include buying an Xbox One without Kinect.
"There's a lot about Kinect that I really love, but we've also heard from people that they just like to play games with a controller in their hand, and they play multiplayer through Xbox Live," said Phil Spencer, vice president in charge of Microsoft Studios.
"What we wanted to do for those people is make sure that there's a version of Xbox that really meets the exact needs that they have," he said.
"We'll continue to innovate on Kinect," Spencer promised. "I think it's an important differentiator for us, but I also know that there are people out there that want to make the choice when they want to make it."
PS4 Tight Supply
The potential undesirable consequences of Microsoft's Kinect marketing practices have been a source of anxiety for some time.
"There's been a lot of concern since the launch of Xbox One about tying it to Kinect, which would drive the price up," said Rob Sanfilippo, an analyst with Directions On Microsoft.
"When Sony announced the price for the PS4, it was a glaring obstacle for the Xbox One, which had a $100 higher price point," he told the E-Commerce Times.
"Xbox One and PS4 had successful launches, but PS4 has taken the lead in sales by multiple millions of consoles, and there's a good argument to be made that a lot of that is due to the price differential," said Sanfilippo. "Now that Microsoft can have a console SKU'd at a price that matches the PS4, I think it will better compete."
The PS4 had a two million unit lead in consoles shipped over the Xbox -- seven million versus five million -- according to numbers Sony and Microsoft released last month. Shipped units don't always turn into sales, however.
"Xbox One units have had a difficult time selling in the stores, so while Microsoft may have shipped five million units, they have way more inventory than they expected," Eric Smith, an analyst with Strategy Analytics, told the E-Commerce Times.
"Meanwhile, PlayStation has shipped seven million units in the same time period and hasn't had a problem selling out," he continued. "There are lots of reports of tight supply everywhere."
Aside from price, Sony outmaneuvered Microsoft out of the gate.
"Sony did a better job of promoting their product. They connected with gamers. They made their machine a gamer-first experience, whereas Xbox One was an experiment in trying to reach a broader audience with multimedia functions," Smith said.
"Your early adopters of a game console are hard core gamers," he added, "so it's not too big of a surprise that the gamers chose the box that is more focused on games."
In addition to effectively lowering the price of Xbox One, Microsoft is sweetening the console's appeal by allowing free streaming of other vendors' subscription services. In the past, Xbox users had to subscribe to the Xbox Live Gold service to stream those services through the console.
"Dropping the requirement to have Gold in order to stream was necessary, given that smart TVs and gadgets like Chromecast or FireTV offer that capability without requiring any additional cost," Carolina Milanesi, chief of research at Kantar Worldpanel ComTech, told the E-Commerce Times.
"The move allows customers to enjoy more value out of the box," added Ross Rubin, principal analyst with Reticle Research.
"It also closes a perceived need to double dip in order to enjoy streaming services on the Xbox," he told the E-Commerce Times. "That double dipping made the Xbox a less desirable platform for streaming."