Can Microsoft Still Win the Console Wars of 2013?

Microsoft (NASDAQ: MSFT  ) and Sony (NYSE: SNE  ) are doing all they can to win the 2013 edition of the video game console wars. One analysts believes Mr. Softy may have done enough to overcome early missteps, calling the Xbox One a winner for the holidays.

The next-generation console painted itself into a corner early on as Microsoft outlined some downright draconian content policies. Sony's PlayStation 4 is comparable in every way that matters, but it also comes without restrictive content licenses and costs $100 less than the $499 Xbox One. It looked like game over in the first round.

But Microsoft quickly apologized for its heavy hand over what gamers can and can't do with their Xbox One games, and it ended up removing most of the unpopular restrictions. The console is still more expensive than the Sony product, but maybe that's not enough to hold the product back anymore.

Analyst firm Robert W. Baird says the Xbox is on a winning track. Analyst Colin Sebastian ran checks against the supply chains of both consoles and came away with a dramatic conclusion: "Microsoft may have the benefit of a 2-3x unit advantage at launch compared to Sony's PS4."

That's not a small victory, but a savage rout. If Sebastian's sources are on the money, Microsoft will most definitely win this round of the console wars.

Well, Redmond will take the early battles, anyway. Both systems are expected to launch into heavy demand, with manufacturing capacity becoming the limiting factor at first. In other words, Sony might still rule the roost when it comes to public opinion and the potential for long-term success. But Microsoft shows mastery of the supply chain game at this point -- secure more components, build more units, and look good in the early sales statistics.

The real takeaway from this unexpected win is this: Microsoft is serious about hardware.

We all know Microsoft as a software giant, built on decades of success via Windows and the Office suite. That's how Bill Gates got his Dow Jones (DJINDICES: ^DJI  ) membership card, and these are still the core operations of a market giant with a $266 billion market cap and $78 billion in 2012 sales. But that's changing fast.

The recent and ongoing reorganization into a "devices and services" company is for real. Redmond is beating hardware specialist Sony at its own manufacturing game. The feat is even more impressive when you consider that most of a modern game console's parts are made somewhere in Southeast Asia. Sony has these sources right in its extended backyard, and Microsoft is still slapping its hand away with authority.

There's still a lot more to say and do before the cows come home, but Microsoft may be onto something good with the new hardware focus. The lessons learned in building consoles might even translate into smartphone and tablet success somewhere down the road. Maybe that's how Microsoft will earn its keep as a Dow member over the next decade.

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  • Report this Comment On July 24, 2013, at 3:28 PM, stockwoodie wrote:

    I wish I had the option to buy XBO withOUT Kinect. I didn't like using the last Kinect and I'd rather save $100. MSFT has been making HUGE missteps in their Operating System and Application Software. I've always been a big MSFT fan, but I bought my first 'i" product this year because I've been getting fed up with MSFT's ability to ostracize it power users and say, "my way or the hightway". One of my biggest complaints is the butchers of Office with the ribbon, with no "switch" to put the menus back. I've been using Office for ??? years and I don't want to relearn where everything is located (and it's NOT intuitive either). I use it at work and it still sucks. I may end up getting a PS4 this time, even though I'm anti Sony because of all their "proprietary" hardware/devices (a simple example would be SD cards. Why does Sony need their own "expensive" SD card)? Dumb.

  • Report this Comment On July 24, 2013, at 3:31 PM, CrawFu wrote:

    It is WAY too early to be talking about who will win the console war. There is so much that can happen between now and the release date, not to mention things will change greatly once they are commercially available. It's not really worth discussing at this point. That said, the +$100 price point for the Xbone is a substantial obstacle to overcome. A lot of gamers are young people without a great deal of disposable income, and price is a significant factor in which console they, or perhaps their parents, will have to consider. Historically speaking, Sony did Microsoft a huge favor by pricing the PS3 significantly higher than the Xbox 360 and they spent years playing catch up. Unless MS throws in some games or other extras, they face an uphill battle.

  • Report this Comment On July 24, 2013, at 4:04 PM, stockwoodie wrote:

    True... If MSFT would have priced the surface @ $359 when it was released, I would have 100% purchased it instead of my iPad mini (first "i" product ever). I was disappointed when the RT was released at $500 for a "unproven" device with little to no software available.

  • Report this Comment On July 24, 2013, at 8:46 PM, chilero wrote:

    MSFT is opening up the Xbox One to independent developers. There is good chance that devs will jump on the opportunity to supply apps/games. The ecosystem will grow around the Xbox One. I don't think Sony will have anything like it.

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