Here's How Xbox One Will Pull Ahead of PlayStation 4

As PlayStation 4's lead on Xbox One shrinks, Microsoft looks set to pull ahead with the targeting of new geographic markets in 2014.

Mar 20, 2014 at 2:53PM

Microsoft (NASDAQ:MSFT) and Sony (NYSE:SNE) have been engaged in a constant battle for video game supremacy ever since the former released the original Xbox console in 2001 as a competitor to the latter's PlayStation 2 video game system.

With the launch of the next generation of video game systems last holiday season, not much has changed except for the dramatically increased technical specifications and enhanced multiplayer/social-sharing capabilities of available consoles. Over a decade later, both companies are still battling each other for the top spot in consumers' living rooms.

However, Microsoft's latest announcement regarding new market availability means the Xbox One system is about to seriously step up the competition against Sony's PlayStation 4. When combined with Xbox One's recent sales momentum, Microsoft looks set to pull ahead of Sony for console dominance.

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PlayStation 4. Source: Company Website 

The announcement
On March 18, Microsoft announced that the Xbox One would be available in 26 new countries in September, including PlayStation 4's signature Japan market as well as many Nordic and South American countries. 

This is in keeping with Microsoft's earlier promise that it would make the console available in Japan in 2014. Yasuyuki Higucji, president of Microsoft Japan, explained in an interview last year, "For the launch of Xbox One, Japan is a Tier 2 country and not a Tier 1 country, so it'll come with the second wave, that will be delayed a little bit [compared to North America]." 

The announcement also confirms the delay of Xbox One's release in many European countries like Switzerland, which is reportedly due to technical problems with the Xbox Live Marketplace, the virtual store/social hub for Xbox consoles. 

Just in time
While the delay of reaching new marketplaces is no doubt a bit disappointing for Microsoft and a short-term positive for Sony's gaming unit, the fact remains that Xbox One is poised to enter many new markets in 2014 and capture market share.

The move for Microsoft is happening at a good time. According to VGChartz.com, Xbox One console has sold 3.62 million units versus PlayStation 4's 6.01 million units, approximately. However, PlayStation 4 has been available in more markets than Xbox One practically since both systems were launched. For comparison, Nintendo's Wii U console has sold 5.91 million units worldwide, approximately. 

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Xbox One. Source: Company website. 

Gathering momentum
Despite lagging in total sales to Sony and the PlayStation 4, Microsoft is building serious momentum with sales of its Xbox One. Microsoft's system witnessed a 60% increase in sales for the month of February. 

In a recent announcement, Microsoft announced, "February NPD Group figures released today showed that Xbox One continues selling at a record-breaking pace with 258,000 units sold in the U.S. in the month of February, surpassing Xbox 360 sales by over 61 percent at the same point in time." 

The Xbox One console is now officially the most successful launch in Xbox brand history. Perhaps even more important is that March could end being an even better month for Xbox One sales considering the eagerly awaited Titanfall multiplayer game from Electronic Arts (NASDAQ:EA) released on March 11 exclusively for Microsoft consoles.

In an effort to capitalize on the blockbuster's exclusivity, Microsoft began bundling copies of Titanfall with Xbox One consoles and selling them for only $499, which means the game is essentially free to consumers. While surely a loss of profit for Microsoft, the marketing strategy is sure to be a smart move if it translates into more gamers buying an Xbox One console and continuing to use the Xbox Live Marketplace.

Initial reports indicate that the strategy is working, as Xbox One sales increased a staggering 96% in the U.K. last week. Out of those consoles sold, 70% were bundled with Titanfall

Images

Source: International Business Times

Bottom line
Though the console is still in fewer markets, the pace at which Microsoft is selling Xbox Ones has been gathering steam in recent months. The company's exclusive deal with Electronic Arts' Titanfall means sales most likely continued to increase in March. When Microsoft taps new markets later in the year, the Xbox One could already have the lead on Sony's PlayStation 4.

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Philip Saglimbeni has no position in any stocks mentioned. The Motley Fool owns shares of Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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