Image source: Microsoft.
What happened?
Microsoft (MSFT +1.90%) unveiled some new hardware at the E3 conference this week. The first was a slimmer version of its Xbox One, called the Xbox One S. The console is available in "robot white" and is 40% smaller than its predecessor -- making it the smallest Xbox ever.
The Xbox One S supports 4K Ultra HD Blu-ray movies and video streaming, High Dynamic Range (HDR) support for video and streaming, and has its own internal power supply. The 500 GB version will start at $299, with a 1 TB version priced at $349 and a limited edition 2 TB version priced at $399.
The company also revealed a few details about its upcoming virtual reality and 4K gaming console, called Project Scorpio. Microsoft said it will be "the most powerful console ever created."
The new console will exist alongside its current Xbox lineup, will be compatible with all current Xbox One accessories and games, and debuts around the holidays in 2017.
The company also announced nearly 20 new games for the Xbox One, new features for Xbox Live, and the Xbox Play Anywhere program, where users can buy a game once and play it on a Windows 10 PC or gaming console.
Does this matter for shareholders?
The new Xbox One S and the upcoming Project Scorpio console should help Microsoft boost some of its lagging gaming hardware sales. The company said in Q3 2016 that hardware revenue in its gaming segment was pushed down because of lower volume of console sales and lower Xbox One pricing.
The Xbox One S is a solid update to the company's gaming console, but investors should probably keep a closer eye on the upcoming Project Scorpio once it's released. Microsoft will be attempting to grab a piece of the growing virtual reality (VR) market with the device, and it needs to catch up to Sony's lead in the space.
Sony's PlayStation 4 already has VR capabilities and the company is about to release its VR headset in October. Sony says its VR headset will cost $399 and will work with 50 games.
The VR market is expected to be worth $70 billion by 2020, and Microsoft is gearing up for a fight with Sony to dominate the spot. Project Scorpio is launching much later than Sony's VR system, which means that Microsoft may be playing catch-up for a while -- even after this week's announcements.
