Has Microsoft Dodged Its Xbox One Disaster?

The disastrous unveiling of the Xbox One was a story that dogged Microsoft (NASDAQ: MSFT  ) for much of 2013. The initial vision for the console saw it introducing requirements for online connectivity, restricting the ability to play used games, and making the Kinect 2.0 camera essential to basic device functionality. News that the PlayStation 4 console from Sony (NYSE: SNE  ) would implement no such features, combined with monumentally negative reactions to Microsoft's stated plans for the One, prompted the company to reassess the situation.

Many of the elements that made Microsoft's console a media punching bag were gradually eliminated, bringing the system closer in line with what the PlayStation 4 was offering and saving it from what would have almost certainly been a catastrophic release. Instead, the console looks to have posted respectable launch numbers in North America and Europe. Has Microsoft dodged its largely self-made gaming disaster, or will its Xbox One re-envisioning prove to be too little too late?

The One, then and now
Heading into the new console generation, Microsoft looked to be in excellent shape. The company scored a major coup with the Xbox 360, establishing the system as the go-to console in North America and gaining major ground in Europe. Meanwhile Sony struggled to reclaim lost mind and market share after the highly problematic decision to launch the primary SKU of its PlayStation 3 console at $600, and the Wii phenomenon from Nintendo (NASDAQOTH: NTDOY  ) looked to be dying down.

With the successful introduction of its Kinect camera for the Xbox 360 and the system's blockbuster exclusives, Microsoft looked to be shoring up both casual and hardcore support. The Wii U stumbled early, failing to catch on and suggesting that Microsoft could court much of the Wii audience. There was also reason to believe that a disheveled Sony lacked the clarity and mettle to last through another long console cycle.

While the backlash that surrounded the One's unveiling erased much of this perceived momentum advantage, the system's launch window sales suggest there is still strength in the Xbox brand. Exactly how much should become more apparent in the coming months when the holiday rush has settled and the distorting effects of hardcore enthusiasts give way to the more important mainstream audience. News that Amazon's peak sales period saw both the Xbox One and the PlayStation 4 selling in excess of 1,000 units per minute would suggest healthy competition, but other indicators show that the PlayStation 4 is on its way to establishing a substantial sales lead. An article by Fool writer Leo Sun provides an excellent picture of the sales and trends that are dominating the console war discussion.

Varying results on the North American and European fronts
If early reporting proves to be correct and these trends continue, Microsoft looks to cede many of the gains it made in Europe while retaining a stronger presence in North America. News that the PS4 had become the fastest-selling console in UK history and that it was outselling the Xbox One at a greater than 3:1 rate in Spain would appear to support this assertion. Conversely, both systems posted impressive November sales in North America. The PlayStation 4 edged out the One by a currently unknown margin, but it also enjoyed an extra week of tracking and may have had a larger launch allotment.

Getting ahead of oneself 
While launch sales are fun to compare, they are also historically misleading. Anecdotal evidence suggesting that PS4's are still difficult to find while Xbox Ones are beginning to pile up at retailers looks to establish Sony's console as the clear generational favorite, but the full picture is still far from available. Sony's PS VITA handheld and Nintendo's Wii U console both posted successful launches only to have demand dry up seemingly overnight. Sony's PlayStation 3 got off to a dismal start, but the company did whatever it took to get the console to a reasonable price point and supply it with compelling software. At the tail end of the generation, it managed to surpass the 360 in global sales.

It's all about value
That the PlayStation 4 is markedly more powerful than the Xbox One is not going to be the deciding factor in which console achieves greater success. That bout will come down to what it usually comes down to: which system offers a better perceived value. Tech is important in that respect, but not predictive. The system that offers the most broadly appealing games and has the best online ecosystem stands to have the best footing in the so-called console war.

That said, Microsoft is still paying for its early Xbox One mistakes. The system's hardware makeup and expensive price point trace their roots to a product vision that was soundly rejected. For this reason, Microsoft would do well to study the life cycle of the PlayStation 3 and the strategies Sony implemented to save it: revise the hardware, jettison unnecessary features to reduce cost, and let the games do the talking.

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Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 04, 2014, at 8:07 AM, cfin2987 wrote:

    "That the PlayStation 4 is markedly more powerful than the Xbox One is not going to be the deciding factor in which console achieves greater success."

    Really? Yet this very sight constantly bashes the Nintendo Wii U for this very reason. The "media" never ceases to amaze me.

    "That bout will come down to what it usually comes down to: which system offers a better perceived value" - Again the Wii U

    "The system that offers the most broadly appealing games and has the best online ecosystem stands to have the best footing in the so-called console war." A free online ecosystem and by far the most games available over the ps4 and xbox one. Again the Wii U. The very device that this website disses time and time again.

  • Report this Comment On January 04, 2014, at 8:46 AM, Computerworgen wrote:

    While the PS4 is now beating the snot out of the XBone, the Battle is not over. The Winner will be determined by who gets the best games. As for Value, The PS4 is the clear winner. At $100 less thanks to not having a Mandated Kinect Bar forced upon its users, 1080p vs the Xbones 720p, & not requiring users to pay just to use Netflix makes PS4 a better Value. As for The Wii-U, while it may be a cheaper system, it has been called WEAK & UNDERPOWERED by 3rd party Developers. Not a console a gamer would take seriously. Don't expect to see games that require serious graphics power on the Wii-U. Just more rehashes of Mario & Zelda games.

  • Report this Comment On January 04, 2014, at 9:29 AM, Andaimaru wrote:

    And yet again the Wii U and Nintendo continue being bashed by Motley Fool while Sony and Microsoft get praise.

    What's up? Don't have anything invested in Nintendo so you want to trash talk them? Nice.

  • Report this Comment On January 04, 2014, at 9:32 AM, Andaimaru wrote:

    @Computerworgen Yet it's significantly more powerful than the Xbox 360 and slightly more-so than the PS3 when many developers have decided to develop more titles for those consoles. Seeing the logic here? The real reason, if you want the truth, is that Nintendo's architecture isn't simple to port to. It comes down to the fact that developers are too lazy to port to it simply because it's not as simple to do as Sony and Microsoft's consoles, so they refuse to do it.

  • Report this Comment On January 04, 2014, at 11:26 AM, tkeracer619 wrote:

    take a gander at wiialerts dot com. It shows which console is in stock and where.

    PS4 outselling the xbone and its not in stock compared the the xbone being available at a retailer near you. Give the "war" 6 months. 3x more ps4 will have been sold.

  • Report this Comment On January 04, 2014, at 12:33 PM, Nikki1964 wrote:

    What does Motley Fool have against Microsoft? Or is this one of those fakey sites really owned by Apple. Wouldn't be the first--won't be the last.

  • Report this Comment On January 04, 2014, at 1:25 PM, alexbran wrote:

    I wish microsoft would have kept their policies. It would have been so nice to put my game on my console and never have to use a disc again. I could have simply said xbox go to forza motorsport 5 and played it, even if the disc wasn't in. But now all you stupid NSA fearing granola heads ruined that.

  • Report this Comment On January 04, 2014, at 3:38 PM, QookieMonster wrote:

    " ... That the PlayStation 4 is markedly more powerful than the Xbox One ... "

    This statement alone is enough to dismiss the whole article as a PS4 fanboys bashing on Xbox One. I own both and the difference in "power" is negligible, graphical performance is very, very close, Xbox One's resolution allows it to run at 60fps while PS4 experiences drop in frame rate (very irritating).

    One can not judge a gaming console by itself without taking into account multiplayer online "ecosystem". And (imho) Microsoft's Xbox Live is far superior to Sony's PSN+ Sony has had problems with its cloud service, outages are just a norm, etc.

    If I had to choose one over the other I'd choose Xbox One.

  • Report this Comment On January 04, 2014, at 3:38 PM, captAhab02 wrote:

    Both Wii u and ps4 outsell the Xbox one.

    Alex the fear was not stupid, all people who bought online stuff on xbox360 had the choice to either allow micrisoft to sell there privat data or lose ther digital content.

    With drm people probably would also lose there hard copys value.

  • Report this Comment On January 04, 2014, at 3:39 PM, Cerberus82 wrote:

    I can wait a year and see which is better, not to mention the inevitable price drops that will come. Nintendo, keep making handhelds and stay out of the console market until you grow up like those that made your company what it is

  • Report this Comment On January 04, 2014, at 6:01 PM, lordraptor1 wrote:

    @alexbran

    you are ignorant, first off the majority of consumers spoke not liking the initial policies, second what are you gonna do when you fill up your hard drive and cant replace it cause the hard drive isn't user replaceable on the xboner fail? third running game off the HDD wont be any faster in terms of loading time than running it off the disk and if it is only very slightly do to a hdd being spinning platters which as you add games and data to the HDD will slow down even more ( just as it does on a desktop or laptop pc) only way to truly decrease loading times would have been to implement an SSD of course an SSD would jack the price up an extra 450.00 for something in the 320 to 400gig range ( and this is going off of pricing from newegg).

    my personal opinion is NIETHER system ( sony or MS) is worth the money, they have both concentrated to much on media and less on games although sony has a slight edge in they have put a little less into media than ms has.

    I already have items in my house that do all the media things ( my PC) and all I want or need is a GAME console, as far as I am concerned the game consoles should ONLY PLAY GAMES and of course have the online multiplayer, only real reason for all the media crap is to get you to think the subscription fees are worth the asking price which to me it is not, every game I have that I like to play online are practically dead on both consoles in terms of players because I don't play FPS games and those seem to be the only ones that people seem to keep playing.

    I have only had XBLG when I get free trials and them it just isn't worth it cause when I go to play a game no one is playing said game ( only game I managed to find players for was uno and to me that was just lame.

    kinsct is a joke, it doesn't work well enough to own one and out of everyone I know that has one only one has his connected and he never uses it, everyone else has them in storage, in a closet or sold/traded them in at pawnshops and game stores to the point that they are overloaded with them and no longer taking them and cant even sell them for $30.

    if you really want the Netflix, music, and media USE YOUR PC, a game console should be for GAMES, and the console should cost an arm and a leg and games shouldn't cost 59 to 69 either ( especially with the crap being put out and not even complete requiring DLC to be purchased to complete it making the game cost 100 or more after all is said and done.

  • Report this Comment On January 04, 2014, at 10:48 PM, Bunnyking77 wrote:

    MS did a real job downing gamers prior and after E3. The fact it sold as well as it did is a Christmas miracle.

    As a gamer that's bought all the consoles made in my lifetime. ALL OF THEM btw, I refuse to buy another XBOX branded product.

    I had to replace two XBOX360s and then they talked a gang of smith beginning with Adam Orth, Alberto Penello, Don Mattrick and ending with Major Nelson.

    I'm all good not buying that system because then I would be a tool for letting a company walk all over me and handing them over my hard earned dollars.

  • Report this Comment On January 05, 2014, at 1:00 AM, ty19c wrote:

    @ lordraptor1

    First off can you back up your claim of a majority of consumers not liking the policies, with a survey or study? Just because a lot of people online say something doesn't mean everyone agrees with it. Secondly if I'm not mistaken you can add external storage to the Xbox which isn't ideal but it does mean that it theoretically has unlimited storage.

    I don't know why you are telling @ alexbran, he is ignorant when you skipped his point entirely. Playing any game you own without having to put the disc in would be great.

    Also I don't know why you are commenting on this article when you don't seem to be the type of person this or the last generation of consoles are geared for. Microsoft has on a number of times touted the stats that people use their Xboxs for so much more than just gaming. And it isn't their fault if games you play aren't popular online. Also are you serious about consoles should be cheaper? Would it be nice? Yes. But some people spend $400-500 yearly on a new phone. That is the cost of technology and consoles aren't that bad when you figure they will most likely be relevant for at least 10 years. I agree some games overdue it with the DLC but there must be people buying it or they wouldn't be selling it, and I don't know of any game you can't complete without buying the DLC.

    The Kinect is somewhat of a joke but the Kinect 2.0 is wonderful. It works great, and to not use or at least try a tool that makes things easier is foolish on the part of your friends. Maybe it's just me but at this point hating the Kinect is either because you haven't used it or because it's the cool thing to do. A controller in most cases is still faster but isn't always as convenient.

    Personally I really like the Xbox One. I love being able to switch quickly from watching T.V. to playing games, to using any of the apps. Those that say, "just use a PC, a game console should just be for gaming", do you just use your phone to make phone calls anymore? Probably not. I appreciate that the Xbox doesn't just play games. Since when do people complain about getting more for their money? Finally I totally agree with @alexbran about the change in policies. Microsoft should have tweaked them but not fully reversed course. If you have a problem with the Kinect "spying" on you, start by electing officials who disagree with the NSA's actions and can change them, and then realize that Kinect is one of many things that can spy on you; phones, laptops, even some T.V.s all have cameras now and that is just inside your house. And does anyone really think Microsoft is going to let the government or anybody else spy on people and risk possible legal action and losing their customers while they know people are looking for such things? Probably not.

  • Report this Comment On January 05, 2014, at 4:25 AM, cvxxx wrote:

    Why waste $100 dollars for a device you do not want? I play games. I am not interested in having the cloud or any other thing but playing games. money is very important to me. I do not want to ever have the connection to the internet. I like my privacy.

    When one pays $60 for a game I expect a complete game not half a game with the other maps unusable since I place single player and have no interest of playing with others.

  • Report this Comment On January 05, 2014, at 7:04 PM, Chevyisajoke wrote:

    "That the PlayStation 4 is markedly more powerful than the Xbox One is not going to be the deciding factor in which console achieves greater success."

    Really? Despite the "on-paper" numbers of the PS4, the XB1 gives much more of the power to the developers than Sony.... It's called dedicated memory. Most of the "power" the PS4 has is just to turn it on and keep it running (which apparently not doing anyway).

    And I find it kind of funny that most PS4's are breaking at a catastrophic rate, and the whole "Disc Drive" thing being bad on the XB1 was just conjured up by butt-hurt sony fanboys. I know 4 people personally and many people through social media that do nothing but complain about how much their PS4 either crashes or has broken. EVERYONE I know who has an XB1 including myself, has NEVER had ONE problem at all.

    And who ever says that Xbox is only 720P needs to be forcefully and violently removed from life. The XB1 can do 4K..... which the GayStation cannot do... The XB! is a MUCH better system at EVERYTHING. People need to get over it.

    All the Morons jumping on the PS4 Bandwagon are learning fast that CrapBox they wasted money on is crap.

    At fry's electronic the other day, they had both systems hooked up right next to each other, using the exact same TVs and it was embarrassing how much the XB1 was Better. All that "POWER" and Sony can't do crap with it, because developers have no breathing room. Haha

  • Report this Comment On January 05, 2014, at 7:11 PM, Chevyisajoke wrote:

    @ QuookieMonster. Even though you own and play both, you will be labeled as a Sony hater and MS fanboy because you speak the truth and It's sad. MS's frame rate is immaculate while PS4 struggles to keep up. I forgot to mention that in my rant. But be ready for people to bash your un-bias opinion.

  • Report this Comment On January 05, 2014, at 7:11 PM, Chevyisajoke wrote:

    @ QuookieMonster. Even though you own and play both, you will be labeled as a Sony hater and MS fanboy because you speak the truth and It's sad. MS's frame rate is immaculate while PS4 struggles to keep up. I forgot to mention that in my rant. But be ready for people to bash your un-bias opinion.

  • Report this Comment On January 05, 2014, at 11:12 PM, normgarry wrote:

    The XBOX ONE and PS4 are basically THE SAME. The only difference is a slightly better RAM in the PS4, which really won't make noticeable difference. The XBOX One has far better features and the pass-through HDMI technology is fantastic. Something PS4 doesn't have.

    Forbes and Motley have perpetuated the xboxone hate and they truly KNOW NOTHING ABOUT GAMING AT ALL.

    Both the 360 and PS3 have sold an equal number of systems with no clear winner. That's cause no one wins in this game - they can only lose bad (Onlive).

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