No More Kinect Means Big Changes at Microsoft

Computer titan Microsoft announced that it will begin selling its new XBox One console without an accompanying Kinect in June, bringing the console's price tag down by $100. Is this the best move for Microsoft right now?

May 14, 2014 at 10:33PM

Your cable company is scared, but you can get rich
You know cable's going away. But do you know how to profit? There's $2.2 trillion out there to be had. Currently, cable grabs a big piece of it. That won't last. And when cable falters, three companies are poised to benefit. Click here for their names. Hint: They're not Netflix, Google, and Apple


Earlier today, Microsoft (NASDAQ:MSFT) announced that it will be unbundling its Kinect sensor from the Xbox One, effectively lowering the price of an Xbox One from $499 to $399. The effect of this move is two-fold for Microsoft; first, and most obviously, it means the Xbox One will cost the same amount as a Sony (NYSE:SNE) PS4. As of mid-April, Sony had sold more than 7 million PS4s around the world, while the most recent numbers put Xbox One sales at closer to 5 million. Reducing the cost of an Xbox One is a quick and easy measure for Microsoft to try to close that gap, as a lot of consumers chose the cheaper PS4 when the new console generation began.

The less obvious effect of ditching the Kinect is the creation of a rift among Xbox One gamers. Starting in June, when Microsoft plans to begin offering the Kinect-less Xbox One, you'll suddenly have a large group of gamers who bought the Xbox One with the Kinect, and those who didn't. That means game developers will have to decide whether they want to create a game that supports the Kinect and its usage, but most probably won't want to make a game that uses hardware a large portion of their customers won't have. And while you will be able to buy the Kinect as a stand-alone product once it's debundled, why would gamers want to buy something that their games don't need?

So in the short term, this is a good move for Microsoft -- the release of a Kinect-less Xbox One in June coincides with E3, which will have created a lot of excitement among gamers and may add to a boost in sales. But in the longer term, this hurts Microsoft's investment in its Kinect, which, considering the blossoming motion-controlled portion of the gaming market, may be the wrong choice down the line. For now, gamers will just have to wait and see, while investors should keep an eye on sales figures in June to find out if people really want an Xbox One without a Kinect. 

Mark Reeth has no position in any stocks mentioned. The Motley Fool recommends Apple, Google (A and C shares), and Netflix and owns shares of Apple, Google (A and C shares), Microsoft, and Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't 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.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information