Sony's PlayStation 4 Continues to Outsell Microsoft's Xbox One

After a price drop, Microsoft's console remains behind Sony's in sales.

Jul 19, 2014 at 3:00PM

Sales of Microsoft's (NASDAQ:MSFT) Xbox One video game saw a spike last month -- according to Microsoft, it sold twice as many consoles in June as it did in May. The sales spike was far from surprising: Early last month, Microsoft rolled out a new version of the Xbox One that retailed for just $399 -- the same price as rival Sony's (NYSE:SNE) PlayStation 4.

But despite the cut, Sony's console continues to outsell Microsoft's in the United States. According to Sony, its PlayStation 4 was the top-selling video game console during the month of June.

Sony's early advantage
Both Microsoft and Sony's newest video consoles debuted last November, putting them on equal footing in terms of installed base and software libraries. Microsoft's console, however, was hamstrung by its price tag -- at $499, it was a full $100 (25%) more expensive than Sony's $399 PlayStation 4.

This stark difference in price worked in Sony's favor -- while retailers offered discounts to move Microsoft's console, Sony was faced with shortages -- it couldn't manufacture enough PlayStation 4s to satisfy demand.

The price difference was largely the byproduct of Microsoft's Kinect 2.0 -- the voice and gesture-based controller was bundled with every Xbox One console. Sony's PlayStation 4 came with no such accessory, but gamers seemed not to care.

Initially, Microsoft insisted that the Kinect was central to the Xbox One's design, and that removing it would be virtually impossible. Nevertheless, that's exactly what Microsoft did -- in May it announced that the Kinect would now sell as an optional add-on, and that the base Xbox One console would be available for $399 -- the same price as Sony's PlayStation 4.

TV no more
Although the Kinect was utilized by a handful of Xbox One games, its primary purpose seemed to be TV-related. By listening for voice commands and monitoring a user's hand gestures, Microsoft's Xbox One could replace a traditional TV remote.

As initially presented, Microsoft's Xbox One aimed to be at the center of a user's living room, serving as the focal point of the entire entertainment experience. These ambitions extended beyond Kinect to original programming -- when Microsoft unveiled the Xbox One last year, it announced that it had created Xbox Entertainment Studios, and had begun working on original programming -- TV shows that would be served up to Xbox One owners through Microsoft's Xbox Live service.

But Xbox Entertainment Studios is no more. Microsoft is closing the studio, though two of its projects -- the Halo TV show and Halo: Nightfall -- will reportedly live on.

At any rate, with the end of Xbox Entertainment Studios and the move to make Kinect an optional add-on, Microsoft appears to be doubling down on gaming, subtly rebranding the Xbox One as a pure gaming device.

Is Microsoft doomed to second place?
It's still early in the current console cycle -- Microsoft's Xbox One and Sony's PlayStation 4 have been available for less than a year (their predecessors launched almost a decade ago and continue to see new game releases), and Microsoft's tighter focus could ultimately make the Xbox One a superior gaming machine.

But it's alarming that, even with the removal of Kinect and the subsequent price drop, Microsoft's console cannot outsell Sony's in its home market. With CEO Satya Nadella recently reiterating the importance of Xbox to Microsoft's larger business, it's clear the Xbox team still has much work to do.

Leaked: Apple's next smart device (warning, it may shock you)
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Sam Mattera has no position in any stocks mentioned. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple and 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.

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.

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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.

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