After a rough Tuesday, the Dow Jones Industrial Average (DJINDICES:^DJI) bounced back on Wednesday. The Dow was up about 1.7% at 11 a.m. EDT, trailing the other major U.S. stock indices. This doesn't mean the sell-off is necessarily over, but investors have taken a break from punishing high-flying tech stocks.
Both Microsoft (NASDAQ:MSFT) and Apple (NASDAQ:AAPL) stocks jumped on Wednesday following a few days of steep declines. Microsoft announced a release date and pricing for its upcoming Xbox game consoles, positioning it to take advantage of elevated demand for gaming products. Meanwhile, Apple countersued Epic Games in its ongoing legal battle with the game developer.
Microsoft sets date and prices for new game consoles
Microsoft will be launching two new Xbox game consoles later this year that will compete with Sony's upcoming PlayStation 5. The timing of the launch has some positives and some negatives. With unemployment elevated due to the pandemic, demand for pricey new game consoles could take a hit. On the other hand, people spending more time at home could ultimately boost demand for entertainment products like game consoles.
The Xbox Series X is the high-end version of Microsoft's newest Xbox, capable of driving 4K resolutions at 60 frames per second. That power will come from a custom CPU and GPU from Advanced Micro Devices, backed by an ultrafast solid-state drive for storage. Microsoft revealed on Wednesday that the Xbox Series X will launch globally on Nov. 10 for $499.
Microsoft also revealed that it will be launching a lower-end Xbox aimed at gamers on a budget. The Xbox Series S comes with a less-powerful CPU and about one-third the graphics-processing power of the Series X, making it capable of gaming at a lower 1440p resolution. The Series S also won't feature a disc drive, while the Series X will support Blu-ray. Those downgrades will bring the price down to $299 when the Series S launches alongside the Series X.
In addition to offering a low-cost game console, Microsoft will bring the upfront cost of jumping into the Xbox ecosystem even lower with its Xbox All Access subscription plan. Gamers can get an Xbox Series S along with Xbox Game Pass Ultimate for $24.99 per month for 24 months or pay $34.99 per month for an Xbox Series X.
Microsoft's Xbox One game console, launched in 2013, was outsold by more than a factor of two by Sony's PlayStation 4. This time around, the company's dual-console strategy could help it keep pace with its rival. Shares of Microsoft were up about 4.5% Wednesday morning in a rally that was preceded by a steep multiday decline.
Apple escalates its battle with Epic Games
Epic Games, the company behind the wildly popular Fortnite game, as well as the Unreal game engine, sued Apple after the tech giant removed Fortnite from the App Store. Epic had implemented a direct-payment system to bypass Apple's fees, which violated Apple's policies. Unsurprisingly, this led to a steep decline in Fortnite players on iOS devices.
On Tuesday, Apple countersued Epic for breach of contract with its direct-payment stunt. Apple is asking for punitive damages and a block on Epic's "unfair business practices."
"Epic's lawsuit is nothing more than a basic disagreement over money. Although Epic portrays itself as a modern corporate Robin Hood, in reality it is a multi-billion-dollar enterprise that simply wants to pay nothing for the tremendous value it derives from the App Store," Apple said in the court filing.
While Epic clearly violated Apple's policies, those policies could ultimately lead antitrust regulators to act. The European Commission opened a formal antitrust investigation in June to probe whether Apple's rules for app distribution violate competition rules. U.S. regulators have also been looking into the company's policies.
Shares of Apple were up 4.5% Wednesday morning, rebounding like Microsoft from a multiday slump.