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5 Reasons Why Microsoft's Xbox One Could Still Beat Sony's PlayStation 4

By Keith Noonan - Mar 23, 2014 at 7:00AM

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The PlayStation 4 has emerged as the clear favorite to win this console cycle, but it's still too early to call. Here's why the Xbox One could win the fight.


Early sales tracking has the Sony ( SONY 0.95% ) PlayStation 4 quickly pulling ahead of the Microsoft ( MSFT 0.01% ) Xbox One. The PS4 has a lower price point and features more powerful hardware than the Xbox One. Furthermore, Sony's PlayStation Plus service is broadly perceived to offer better value than Microsoft's Xbox Live. All of these factors have led to the widespread belief that the PlayStation 4 will easily coast its way to market leadership. That said, it's very early in the console race and the Xbox One still has the opportunity to claw its way to the top. It may not represent the most likely scenario, but here are five reasons why Microsoft could still claim market leadership in this console cycle.

Winning Japan is irrelevant
The Xbox One never stood a chance of generating big sales in Japan. Microsoft's Xbox and Xbox 360 consoles failed to find a significant audience in the territory and the types of games that drive the Xbox platforms have limited appeal in the region. The PlayStation 4's momentum lead in North America and Europe and all-but-guaranteed market victory in Japan had many speculating that the system would dwarf the sales of the Xbox One. Now, sales data from the country suggests that PlayStation 4 is flopping in Japan. Making matters worse for Sony's system, there is a serious lack of upcoming software for the platform that will entice a Japanese audience and turn things around.


Sony's development studios are having serious problems
Sony recently laid off approximately fifty people at its Santa Monica Studios and cancelled the studio's new IP. Amy Hennig, one of the chief writers and creative minds behind the highly successful "Uncharted" series from Naughty Dog, recently departed from Sony's premier games developer amid rumors she was forced out as a result of tensions with other major figures in the studio. Evolution Studios had to go back to the drawing board to rework its upcoming racer Driveclub, a game that was supposed to be available at PS4's launch. SCE Japan's The Last Guardian has been in development for seven years and hasn't been shown publicly since 2010.

The Xbox One could achieve price parity with PS4 this year
The PlayStation 4's pricing advantage stands as one of the driving forces behind its momentum lead over the Xbox One. Rumors have swirled suggesting that Microsoft would ship an Xbox One without the Kinect 2.0 camera or a system that features no disc drive as a means of lowering the Xbox One's price. Microsoft's latest console will fare much better in the collective consumer conscience if it is priced at level or below the PlayStation 4.

Xbox One has bigger exclusives and a stronger 2014 lineup
Sony's big exclusive offerings on the PlayStation 4 in 2014 are Infamous: Second Son, The Order: 1886, and Driveclub (if the title is still coming this year). None of these games will approach the sales or profile of the recently released Titanfall from Electronic Arts. Outside of the "Gran Turismo" series, Sony lacks exclusives that can match the sales of Xbox exclusives like the "Halo" and "Gears of War" franchises.


History has a tendency to repeat itself
When the PlayStation 3 launched at an exorbitant $599 price point, many were quick to declare the death of PlayStation. When the system frequently received graphically inferior versions of multi-platform games, it seemed obvious that Sony's platform would never catch up with the explosive Xbox 360. The Xbox One's current problems are largely similar to those that plagued the PlayStation 3 early in its lifecycle. Sony turned things around and PlayStation 3 has surpassed the Xbox 360 in global sales. Microsoft still has the opportunity to get the Xbox One to a more market friendly price and deliver the strong lineup of exclusive content necessary to shift the tide.

Foolish takeaway
PlayStation 4 remains the console in the best shape to sure up market leadership. Regardless of what's going on with Sony's development studios, the company made the right moves when it comes to hardware and pricing. Still, it's way too early to write off the Xbox One.

This console generation will be won and lost in North America and Europe, with Japanese sales proving to be a very small factor. Xbox One is lagging behind PS4 in both of those territories, but the success of the Xbox 360 in Western markets shows that victory is more about strength of product than strength of brand. Approximately four months after their respective launches, the PlayStation 4 and Xbox one have yet to be defined. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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