Selling Xbox One Without Kinect Pays Off for Microsoft

Sales of Xbox One doubled in June, but still did not top Sony's PlayStation 4.

Jul 21, 2014 at 1:59PM

Dropping the Kinect motion sensor device from its base Xbox One package appears to have paid off for Microsoft (NASDAQ:MSFT) as sales of the console doubled in June.

From the launch of Xbox One in November 2013, the system had struggled to compete with Sony's (NYSE:SNE) PlayStation 4. That was due at least in part because the Microsoft console sold for $499, thanks to the presence of Kinect, while PS4 cost $399.

Though sales for Xbox One doubled in June, the console still lagged behind its competitor, according to data from NPD Group. This marks the sixth consecutive month Sony has outsold its rival. Though neither company regularly releases specific sales totals, the last numbers the companies released were in April when Sony claimed 7 million PS4s sold and Microsoft said it had shipped 5 million Xbox Ones to retail. Both consoles are selling faster than the previous generation.

Jason Hellmann, Daniel Kline, and Jake Mann discussed whether Microsoft can catch up, where Nintendo (NASDAQOTH:NTDOY) fits in, and how much game titles will play into the battle, on the latest edition of Business Take, the show that gives you the Foolish perspective on the most important business stories of the week.

Microsoft is really pleased

Though dropping Kinect and lowering the price of Xbox One clearly did not cut into PS4 sales, it did improve the fortunes of Microsoft's console. A statement released by the company celebrated that increase and attempted to hype upcoming game releases as a way to build on the sales momentum.

We're excited to welcome so many fans to Xbox this summer and we can't wait for them to get their hands on the wide selection of new games available this year on Xbox One, including Halo: The Master Chief CollectionSunset OverdriveForza Horizon 2, and Ori and the Blind Forest. Xbox One is the only place you can play these games along with creative independent titles and blockbusters such as Assassin's Creed UnityCall of Duty: Advanced WarfareDestinyEvolveGrand Theft Auto V, and dozens more.... Starting in August with the release of Madden NFL 15, new blockbuster hits will launch for Xbox One at an incredible pace throughout the fall, as we head into the holiday season. Gamers love the holidays and we are lining up incredible deals and special promotions to celebrate. 

Sony, of course, has plenty of heavily hyped new games on the horizon as well. With both consoles on equal footing as far as price it's possible that exclusive titles become even more important. A fence-sitter who slightly prefers the Xbox game slate might have either waited or gone with a PS4 to save $100. Now, the desire to play one specific title might be enough to tip someone to buy either system.

That doesn't make the PS4 any less attractive, but it does make Xbox One an equal option. Sony had an advantage for over six months where it essentially won every tie and maybe even some where it was losing slightly. Now it's a level playing field and both systems have to stand on their merits. Sony has an overall lead and PS4 is still selling well but we're much too early in this console generation to declare a winner.

"I feel like Sony has something to be worried about," Hellmann said. "Nintendo has also made some pretty serious announcements and I think they can be a contender." 

There can be more than one winner

Of course, it's possible that the market has room for both Xbox One and PS4, with perhaps even a place for Nintendo's WiiU. Though WiiU has been lagging behind its competitors in sales, it has shown signs of life since the release of Mario Kart 8. That title was June's best-selling disc-based game, which drove purchases of the Wii U and games for the system. Sales of WiiU increased by 233% and games jumped by 373% in June 2014 compared to June 2013, according to NPD.

In the previous generation both the Xbox 360 and the PS3 sold over 80 million units while the original Wii topped 100 million. It's still very early in the game but with all three companies having strong release schedules it's possible all three systems could be successful.

What do you think? Watch the video below and share your thoughts in the comments section.

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Daniel Kline is long Microsoft. Jake Mann 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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