Microsoft's (NASDAQ:MSFT) decision to unbundle the Kinect motion sensor from its Xbox One console has far-reaching impact for the future of the struggling gaming system.
Though the move is an admission that its strategy has failed, Microsoft had to make it. The decision should lead to an increase in sales, which Xbox One badly needs. Host Jason Hellmann and Fool contributor Daniel Kline discussed the impact and whether customers would eventually buy a Kinect anyway, on Business Take, the show that gives you the Foolish perspective on the most important business stories of the week.
Unbundling Kinect dropped the price of Xbox One to $399, matching the price of Sony's (NYSE:SNE) PlayStation 4, which Kline covered in Why Microsoft Announced a Cheaper Xbox Without Kinect.
"What I didn't write about in my article and where I think Microsoft is kind of brilliant is that at $499 for Xbox One versus $399 for the PS4, Xbox One is expensive," Kine explained. "You're going to have this device in your house -- this $399 console -- and it's going to be there for somewhere between eight and 10 years based on the life cycle of the last consoles. It's hard to believe that at some point during that your kids aren't going to say '...There's this awesome game and I want a Kinect for Christmas.' Microsoft didn't so much give up the sale, they just pushed it off a little bit which they can absolutely afford to do."
Hellmann agreed with that logic calling the motion sensor, which had originally been a key part of the company's strategy, an up-sell item. "It's kind of an expensive accessory," he said.
The two went on to discuss ways Microsoft could entice customers to add the device, such as bundling it at a discount with a high-demand, Kinect-enabled game. Kline also talked about the key part Kinect played in Microsoft's launch strategy for the console and how he did not believe the price change was a sign the company had given up on it.
Microsoft has not put Kinect for Xbox One as a stand-alone for sale yet, but the accessories section of the Xbox website does show the device with the promise that it's "coming soon." Amazon has a number of Kinects for Xbox One for sale both new and used from a variety of vendors, but all appear to be the version of the Kinect sold bundled with Xbox One uncoupled from the console.
Do you believe Kinect has a future as a stand-alone device? Will you be more likely to buy an Xbox now that the price has come down? Watch the video then share your thoughts in the comments section below.
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Daniel Kline is long Microsoft. Jason Hellmann 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.