This May Be the the End of Microsoft Corporation As You've Known It

Now you can buy the Xbox One with also paying up for the Kinect. Credit: Microsoft Corporation.

When Microsoft Corporation (NASDAQ: MSFT  ) announced plans to unbundle the Kinect from Xbox One sales, cutting the effective price of the console to $399, it framed the decision as a response to customer feedback. Are we witnessing the birth of a new Microsoft? One that actually tries to give customers what they want, rather than what Mr. Softy wants to sell?

Host Ellen Bowman puts these questions to Fool analysts Nathan Alderman and Tim Beyers in this week's episode of 1-Up on Wall Street, The Motley Fool's Web show in which we talk about the big-money names behind your favorite movies, toys, video games, comics, and more.

Nathan says the move appears to reflect a broader shift in philosophy under new CEO Satya Nadella. If so, it's a welcome change. Not only will users be able to get the newest Xbox without also paying up for a Kinect, but Mr. Softy is also removing the requirement to subscribe to Xbox Live Gold in order to access streaming channels such as Netflix, Red Bull TV, and soon, HBO GO.

Of course there's also a financial motivation behind the changes. According to the latest available figures, Microsoft had shipped 5 million Xbox One consoles. By contrast, Sony (NYSE: SNE  ) has already sold more than 7 million PS4 systems to gaming customers. Changing the value-for-dollar equation appears to be part of Mr. Softy's catch-up equation.

Tim also notes that the Xbox One is key to Microsoft's strategy to control the hub of all home computing, including gaming and entertainment. Why? PCs are increasingly giving way to smartphones, tablets, and consoles and Mr. Softy can't afford to be left behind in the face of intensifying competition. Anything that convinces consumers to stick with the Xbox -- or try it, if they haven't already -- is likely good for the company over the long term.

Now it's your turn to weigh in using the comments box below. Do you expect the Xbox price changes to affect Microsoft stock? Why or why not? Click the video to watch as Ellen puts Nathan and Tim on the spot, and then be sure to follow us on Twitter for more segments and regular geek news updates!

How to find an invest in the next great growth story -- before the rest of the market does
Every investor wants to get in on revolutionary ideas before they hit it big. The problem is, most investors don't understand the key to investing in hypergrowth markets. Want to learn how? Our new special report reveals the process for investing in early-stage disruptors while introducing you to one stock that's aiming to reshape a $14.4 trillion industry. Click here to get the full story in this eye-opening report.


Read/Post Comments (12) | Recommend This Article (6)

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 May 17, 2014, at 2:03 PM, maxtoo wrote:

    Microsoft has to do something to fix their imagine. Their past is already hurting them with the general public. This business now of controlling everything tech with Windows 8, Xbox One, WP8, Surface, etc. is not working. Because of this I have no interest in anything Microsoft.

    They need to go back to being a good software company. If they want to sell xbox, phones and tablets they need change their approach with the public. Right now it isn't good!

  • Report this Comment On May 17, 2014, at 8:48 PM, domiresource wrote:

    I love the Mr. Softy name, first of all. The reality is if the competition is outselling you, it's a result of one to three problems: poor product, poor pricing or poor marketing. How did Google penetrate the tablets market with its Android offerings? Stupidly low prices. And this attracted hordes of manufacturers of the hardware, possibly including fake manufacturers in Asia and Latin America.

    After so much foot dragging, Mr. Softy finally introduced Surface, arguably a good product but overpriced. If Surface had been launched at $199 - $399 (RT & Pro), the story would have been different. Even now, Google has started chipping away the PC market with market acceptable low prices of the Chrome machine. Mr. Nacelle has got to watch his back. If Sony's PS4 is beating the Xbox at a ratio of 7:5 talking millions, I think it's good strategy to reduce the Xbox price by unbundling the Kinect. MSFT may not immediately pull a higher than normal prices but investors will be relieved to know that sales will be stable and even rebound over time.

  • Report this Comment On May 17, 2014, at 8:51 PM, domiresource wrote:

    Mr. Nadella, not Nacelle, apologies.

  • Report this Comment On May 18, 2014, at 12:32 AM, smilingdon wrote:

    It would be refreshing for a major corporation to consider what the customers think.

  • Report this Comment On May 18, 2014, at 2:40 PM, JJ82 wrote:

    No, this is all PR BS.

    MS has not changed its "Vision" one tiny bit and it that "vision" that has created every single issue the company has today.

    Giving Windows 8 a start screen is not "THE" issue, its a small tiny part of it.

    The Surface? Bombed for a reason, built for that MS "Vision".

    Windows phones, built on Windows 8 and rejected because its built on that "vision" and giving that OS away for free does not remove the issues with it.

    Xbox One, its an ENTERTAINMENT SYSTEM, not a gaming system. It was made thinking that it was going to be in every livingroom doing everything. Not a single person that does not play games is going to buy it and since its made to do everything, it does NOTHING better than whats out there. Giving live away for free isn't some nice thing to do, its THE thing to do as people already have those apps on other devices they can use for FREE since they already pay for access to them with the companies. As for removing the Kinect, big deal, the system was still built around it so now its a system with many functions not available to those that buy it...and on a system with weaker hardware than its competition on top of it. Why? Because of that VISION again, a vision so narrowminded they used DDR3 instead of DDR5 which was actually made for graphics all because they weren't focused on graphics, they were focused on streaming media.

    Also, that vision includes a cloud based future knowing full well that ISPs were spending 100s of millions to get rid of Net Neutrality which is going to cause the price of anything internet related to SKYROCKET...and also during a time when the required internet speeds are limited to less than 5% of the population of America and even less everywhere else outside of South Korea.

    BRILLIANT!

    So, the end of MS as we know it? Sure, they will do what they did during the Ballmer years, shrink another 2/3rds.

  • Report this Comment On May 18, 2014, at 5:37 PM, moopert wrote:

    Cutting the price $100 won't accomplish much if the games aren't there. There's nothing I've seen coming out in over a year that's a true system seller. Msoft banked on Titanfall being one, and it failed in that aspect.What's left on the slate for it? Quantum Break? Sunset Overdrive? Project Spark? These aren't going to move a $400 system. Halo 5 is over a year away during which time the systems will be collecting dust on shelves because noone will buy a gaming system without quality exclusive games.

  • Report this Comment On May 18, 2014, at 6:46 PM, jayeats wrote:

    Fools

    Xbox gamers are still on 360 because that is where the bulk of the multiplayer gamers are. It will go to xbox one but it will take time. Can we get a count of xbox one xbox 360 vs ps3 ps4

    And we can talk.

  • Report this Comment On May 19, 2014, at 1:03 AM, Ibmblue1 wrote:

    Honestly, really? MS is bigger than that. This must be a joke.

  • Report this Comment On May 19, 2014, at 2:49 PM, Michael8773 wrote:

    If MS are really going to change their ways they need to stop ignoring the Visual Basic 6 (VB6) community.

    According to the Tiobe index, May 2014, Visual Basic (VB6) is the 5th most popular programming language in the world. This is an amazing fact given that Microsoft stopped active development over 16 years ago! The huge VB6 community that has built much of the worlds mission critical applications feel left behind. This is because Microsoft refuse to update this language, attempting to force the developers to move to incompatible new software development tools (like .Net).

    Microsoft's .Net by most of this community is not seen as a superior alternative. According to uservoice.com, most VB6 developers simply want a 64-bit version of VB6 to continue their market dominance into the next 16 years. Thus far MS has not only failed to act but failed to public make any posts concerning this phenomena.

    Other data points show VB6 is not just of aging programmers but is also being picked up by new generation after new generation of developers.

    According to Linus Torvalds, inventor of Linux, "I personally believe that Visual Basic (vb6) did more for programming than Object-Oriented Languages did. Yet people laugh at VB and say it's a bad language, and they've been talking about OO languages for decades."

    How long will Microsoft neglect the most dedicated community the software world has ever known?

  • Report this Comment On May 20, 2014, at 8:09 AM, Zoltan667 wrote:

    So true, Something is rotten in the middle at Microsoft! Why?! well, it's like someone wanted to sabotage the company.

    Much of Microsoft's success rests on the shoulders of Visual Basic 6.0 language.

    As Michael8773 says, Visual Basic (VB6) is the 5th most popular programming language in the world in 2014 and 1th in the polls of the voters on the Internet.

    Imagine that! any of the languages ​​that Microsoft designed after VB6, none is in top 10 in 2014, except VISUAL BASIC 6.0 !

    Why not make a new version of VB6 ?!

    As I said, it sounds like sabotage inside Microsoft.

  • Report this Comment On May 21, 2014, at 3:57 AM, VB6Programming wrote:

    Well said Michael8773.

    The VB6 programming language is Microsoft's most popular despite being 16 years old and ignored by Microsoft for the last 12 years.

    Just because Microsoft's internal politics led to a policy of 'out with the old, in with the new' leaving huge amounts of VB6 code (Gartner estimated 14 billion lines) still in use in corporates and government. This hits sales of Windows, XP users (still 29% of Windows users even after support ended) aren't sure if they dare upgrade. And many of the 6.1 million VB6 developers moved to other languages - including Java, Microsoft's largest competitor. And meanwhile Microsoft missed out on web and mobile (tablet/phone) programming languages.

    Satya Nadella said at Build 2014 "It's crazy to abandon what you built and crazy to not let what you build work on other platforms". And yet no sign of movement from Microsoft on an updated VB6.

    The vote for an updated VB6 on the UserVoice site http://visualstudio.uservoice.com/forums/121579-visual-studi...

    is now the fifth highest (out of over 8,000)

  • Report this Comment On October 01, 2014, at 8:27 AM, vitaliy50 wrote:

    We all need to adapt to changing times and Microsoft is in a good position to do this and still not be left in the dust. I think it's about time that they drop their prices and un-bundle to give customers new choice. It only makes sense - Vitaliy@ http://helprace.com

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2961610, ~/Articles/ArticleHandler.aspx, 11/24/2014 8:09:19 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement