Will Xbox One Win?

We're getting a new Xbox, and unlike Sony's (NYSE: SNE  ) cryptic PS4 unveiling earlier this year, we actually got to see Microsoft's shiny new toy.

Microsoft (NASDAQ: MSFT  ) unveiled its latest gaming console today -- Xbox One -- and it comes at a crucial time, with industry sales falling sharply for more than three years.

There was a desperate need for Mr. Softy to raise the bar. Did it?

"For the first time, you and your TV will have a relationship," went the introductory clip, leaving little doubt that the software giant's new machine wants to be the cornerstone of your home theater.

The Xbox has always tried to be about more than just gaming, but now it's almost an afterthought. The big selling point of Xbox One and the beefed up Kinect controller make it seamless to switch from gaming, video, music, Internet Explorer, and now Skype and live TV. Tapping into the Xbox Live community and a user's friends provide access to trending content.

A new console isn't a guaranteed shot glass of elixir. Just ask Nintendo (NASDAQOTH: NTDOY  ) . The Japanese video game pioneer wanted to get a leg up on its rivals by introducing Wii U last year. It was a holiday dud, and now even marquee developers are having second thoughts about putting out games for the dual-screen system in the future.

Microsoft won't have that problem. Even though video game industry sales plunged 25% last month (according to researcher NPD Group), the Xbox 360 has been the top-selling console for 21 consecutive months. It will be the last console standing, and that will guarantee at least initial stateside developer support. Toward the end of the presentation, Activision Blizzard revealed that when its highly anticipated Call of Duty: Ghosts comes out in November, exclusive downloadable content will be available to Xbox One gamers.

Does that mean that the new system will be out in November? Microsoft only revealed that it will be out later this year, but it's a safe bet that Microsoft will want to be out in time to cash in on the telltale holiday season and snuff out Sony.

However, even Microsoft knows that updating a tiring platform isn't enough. The introduction late last year of Windows 8 wasn't enough to turn PC sales around. Why should a new Xbox bring back game sales?

It's naturally not just Microsoft investors that will be hoping for a victory lap. GameStop (NYSE: GME  ) -- the leading stand-alone video game retailer -- is expected to post declining sales and earnings for its latest quarter come Thursday. It could use an Xbox One boost, but it may not come.

Forget about the actual sale of consoles later this year. Hardware is GameStop's lower-margin business. The new platform's cloud-based interactivity and 500 gigabyte hard drive point to a digitally downloaded future that should require fewer physical purchases -- and that's if Xbox One owners are even playing. Microsoft unveiled some pretty nifty games today, but this is ultimately about the television screen.

Improved voice controls allow someone to breeze through applications, but don't be surprised if "Watch TV" is the first phrase uttered after "Xbox on" powers up the console. The ability to snap different applications side by side will find folks screening live TV content as they surf the Web or make a Skype group call on the side of the screen. Even the Xbox-defining Halo experience is now becoming a TV show. Seriously. Microsoft also announced that today.

Making TV social is the ultimate goal of Xbox One, and that's no game.

It's been a frustrating path for Microsoft investors, who've watched the company fail to capitalize on the incredible growth in mobile over the past decade. However, with the release of its own tablet, along with the widely anticipated Windows 8 operating system, the company is looking to make a splash in this booming market. In a new premium report on Microsoft, a Motley Fool analyst explains that while the opportunity is huge, so are the challenges. The report includes regular updates as key events occur, so make sure to claim a copy of this report now by clicking here.


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Comments from our Foolish Readers

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  • Report this Comment On May 21, 2013, at 10:39 PM, techy46 wrote:

    Ha, ha the PC's Dead? Nope, the PC's a smart phone, game console and tablet connect to XBox One server. How's that Apple iTV cooming?

  • Report this Comment On May 25, 2013, at 8:31 AM, Staticks wrote:

    Funny how Microsoft/Xbox fans such as yourself keep on citing that same old, tired argument of "Sony didn't show the case" as a weakness in their PS4 presentation. Aside from Microsoft showing the case for their new console, it was a disaster in almost every way compared to the PS4 reveal. It was a PR disaster, and it was a disaster for Xbox fans who expected a focus on games, not cable-box integration or television.

    Not to mention the case is just butt-ugly and huge. Looks like Sony was smart to withhold their console design reveal, and take some more time to refine the look the their console, because now they have something to show at E3 to wow people and create additional buzz--all eyes are on Sony right now because people are anxious to see what the new PS4 will look like. Hopefully it looks better than the oversized box (LITERALLY box!) that Microsoft had on display.

    Will the Xbox One "win?" As far as games, that's not looking likely considering PS4's traditionally strong games lineup, huge developer support, and superior hardware specs. Maybe in terms of cable-box integration, Xbox One will win, but even that is doubtful. I don't see much demand whatsoever for this kind of cable-box functionality, as most Xbox fans are mainly interested in games. Not to mention the vast majority of people who live in the rest of the world, not in the US, can't even take advantage of all these extra TV-centric features.

  • Report this Comment On May 25, 2013, at 11:40 AM, Ruefrak wrote:

    Xbox has been the top seller in the United States, not worldwide. Sony had major problems when they launched the PS3, much of it having to do with its expensive initial price. Now, after being on the market a full year less than the Xbox the two machines have sales parity. That's not the clear cut victory that Microsoft always seems to brag about.

    The main problem that Microsoft had with their launch event was very US focused. It was all about watching live TV, which upon launch will only work in the US. They have partnered with the NFL, which is only popular in the US. They have a machine that is required to be hooked to the internet which is fine if you live in the US.

    The gaming industry is not only in the US and unless Microsoft can appeal to global customers, this machine is not going to succeed.

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