Having faced multiple hardware debacles ranging from Zune to Kin, Microsoft (Nasdaq: MSFT) is out to prove naysayers false with Xbox add-on Kinect, a motion sensor and voice recognition technology-based device that allows users to control games and movies with gestures and voice.

The controller-free gaming device Kinect will be available at stores from Thursday at $149.99 with a pack-in game "Kinect Adventures," and if purchased with a 4GB Xbox console, will cost $299.99.

Kinect uses four microphones and a depth camera, color motion camera and a distance sensor to track a user's presence in the room.

With new feature that can track up to 48 parts of the body, Kinect brings an altogether different experience into motion sensing gaming technology. Competitor Nintendo Wii created games based on its remote tracking technology, which limited the scope of games to handheld games like tennis, bowling, and boxing. But Kinect opens a whole new gamut of games by allowing users to control games through body movements.

Microsoft is targeting casual-gamers rather than serious gamers with Kinect; it is primarily targeted as a family entertainment device.

It will directly compete with Nintendo's Wii and Sony's (NYSE: SNE) Move controller in the motion-sensing gaming segment. It is also attempting to boost up sales of its Xbox 360 consoles, which were released in 2005.

Microsoft's traditional revenue model of selling license for Windows OS is under duress as tablets begin to cannibalize the PC market. The Seattlepi blogs reported that Gavriella Schuster, General Manager for Windows Product Management, confirmed that netbooks are getting cannibalized by tablets.

Microsoft recently launched its Windows Phone 7 to take on Android-based smartphones and iPhones. However, there are multiple OS like BlackBerry's QNX OS, HP's webOS, Nokia's MeeGo and Symbian that are vying for space.

Microsoft's Windows has failed to be an OS of choice on tablets as it is considered too feature-rich for a tablet that utilizes minimal computing power. Also, with Android Gingerbread, Honeycomb and Chrome OS destined to hit tablet market, Microsoft's hands are full.

As the market evolves, companies like Apple and Google (Nasdaq: GOOG) have devised a strategy of creating an ecosystem of devices and apps around their OS to rule the market. Recently, Apple (Nasdaq: AAPL) launched Apple TV, its iOS based set-top box that streams online content and content from other devices like smartphones and PCs. Google launched its Google TV, which integrates web with the TV, allowing web search on TV.

In such an environment, Xbox could be Microsoft's best bet, as it sits in a user's living room and uses a TV as its interface. Xbox could possibly become Microsoft's next PC -- it has a lot of storage space available, and it runs its own OS, which is a modified version of Windows 2000 kernel.

Xbox also offers Microsoft a revenue model similar to Apple's, whereby it can have complete control over the apps and games coded for Xbox, and can thus leverage on a closed-walled garden approach, a revenue model that it does not have on a PC.

Xbox currently allows streaming content from ESPN and Netflix, which also gives it a presence in the converging world of TV and web -- a segment targeted by Apple TV and Google TV. With cloud-computing capacity, Xbox can be further augmented to stream and play music and movies. Other devices can be integrated with the Xbox console to stream content as well.

Kinect currently allows Xbox users to use hand motions to forward or rewind a movie or audio. Thus it can further leverage on motion-sensing and voice technology to run integrated devices controlled by Kinect.

With Xbox and Kinect, Microsoft has an excellent duo of hardware around which it can create an ecosystem of apps and other devices to rule the living room, a space for which Google and Apple are fighting.

International Business Times, The Global Business News Leader

Google, Microsoft, and Nokia are Motley Fool Inside Value picks. Google is a Motley Fool Rule Breakers selection. Apple and Netflix are Motley Fool Stock Advisor recommendations. Motley Fool Options has recommended a diagonal call position on Microsoft. The Fool owns shares of Apple, Google, and Microsoft. 

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