In planning and designing console hardware, companies like Microsoft (NASDAQ: MSFT ) , Sony (NYSE: SNE ) , and Nintendo (NASDAQOTH: NTDOY ) need to have a good deal of foresight for what their respective systems require in order to thrive. Gaming consoles are usually supported for a minimum of four years by these companies and must have a technological makeup and feature set that allows them to stay relevant throughout their lifecycle.
When Microsoft was planning its most recent console, the Xbox One, it envisioned a future in which the device was the center of the living room entertainment setup. It also placed great emphasis on the Kinect 2.0 camera technology that was included with every console. All of this was planned well in advance of news that Sony's PlayStation 4 would feature more powerful hardware and debut at a lower price point. Does an upcoming patch for the Xbox One suggest that Microsoft is readying a Kinect-less SKU in order to better compete with Sony?
Where have all the casuals gone?
Microsoft's ability to attract both casual and hardcore gamers with its Xbox 360 console and software made the company a popular favorite to win market share lead in the most recently begun round of the console war. The version of the Kinect that the company introduced for the Xbox 360 was wildly successful and went on to become one of the best-selling peripheral accessories in gaming history. By making the new Kinect camera central to the Xbox One, Microsoft could continue chasing the casual audience that Nintendo had courted with the Wii while also improving the console's multi-media capabilities. The apparent migration of casual gamers to mobile and the early sales lead established by Sony's $400 PS4 have called the value of Xbox One's Kinect into question.
Patching in a tune-up
While the patch has yet to be announced by Microsoft, a number of generally credible outlets have reported that the Xbox One is set to receive a significant update in the near future. The patch would see processing reserves devoted to the Kinect camera and video features freed up for developers to use for more conventional graphics processing. Such a move would represent a distinct change in strategy and product vision for the Xbox One. Leading up to the system's release, Kinect functionality and multi-media capabilities received major focus. This focus sometimes eschewed the notion that the device was primarily a gaming console.
It's said that the Xbox One currently reserves about 10% of its GPU's power for Kinect features. The upcoming patch will supposedly reduce that to approximately 2%, which would indicate a significant change in priorities on Microsoft's part. The PlayStation 4 has already demonstrated its power advantage across a number of multi-platform titles. Even with the still hypothetical patch, PlayStation 4's GPU and RAM would still give it a distinct advantage over the Xbox One. Still, Microsoft would likely be wise to allow reserves to be shifted toward graphics rendering.
It's not just U
Microsoft's Xbox One shares a dilemma with Nintendo's Wii U. Both systems are currently packaged with an expensive controller that is driving up price and limiting appeal. The Wii U's GamePad controller, which features a large touch screen, can safely be written off as a dud. While the ability to play games on the system's controller instead of a television may be appreciated by some fans, it has not caught on with the public at large. Nintendo failed to create software that showed why the GamePad made its new console worth signing up for. The company has been stuck marketing an overpriced piece of kit that receives minimal third party support. Similarly, Microsoft has not adequately demonstrated why users should spend the extra money for Kinect-enabled experiences.
Count on Kinect-less Xbox One in 2014
There are differing viewpoints within Microsoft as to whether or not maintaining the Xbox brand is a worthwhile investment, but all current indications point to the company doing whatever it takes (within reason) to ensure that the Xbox One is a success. Offering a Kinect-less SKU that is priced at parity or below Sony's PlayStation 4 would shake things up considerably, and this should be a relatively easy strategy for Microsoft to implement.
At this early juncture, Sony deserves credit for having crafted the product vision that is most in line with what it will take to become this generation's market leader. If the rumored GPU patch goes through, it will be another sign of Microsoft playing catch-up. It will also be a sign of a Kinect-less Xbox One on the horizon.
Speaking of the center of your living room...
There are other major forces at play working to shift the way you'll be entertained in the future. There's $2.2 trillion out there to be had and when the chips fall, three companies will be poised to benefit. Click here for their names. Hint: They're not Netflix, Google, and Apple.