Microsoft (MSFT +0.48%) made a number of major announcements during its press conference at Gamescom, the world's largest video game conference, earlier this month.
Photo: Microsoft
Most centered around upcoming features for its video game console, the Xbox One. Although the device is not a major contributor to the company's bottom line, it is an increasingly important part of the broader Microsoft ecosystem and could play a key role in engaging consumers in the years ahead. Below are three key takeaways from the conference that investors should know.
Windows 10 is coming to Xbox One in November
The new operating system, Windows 10, will roll out to Xbox One owners in November. The update will bring a new user interface, along with Cortana -- Microsoft's digital personal assistant -- and support for Universal Windows apps.
Cortana is powered by Microsoft's search engine, Bing, and is becoming an increasingly integral part of Windows. It plays a central role in Windows 10 for traditional PCs, allowing users to search the Internet with voice commands, set reminders, and create calendar events. Cortana for Xbox One will offer similar functionality and include some gaming-specific commands. After years of losses, management expects Bing to achieve profitability some time in the next year. The Xbox One could play a key role in that shift.
Then there are Universal Windows apps that come with Windows 10. Universal Windows apps live in the Microsoft app store and can be run across all Windows 10 powered devices -- PCs, laptops, Windows Phone, the Xbox One, and the Surface family. For users, that could mean a better experience -- developers could design innovative new apps that make use of the Xbox One, or port existing apps to the console. At the same time, it could improve the quality of the Windows ecosystem, as the ability to target the Xbox One makes the prospect of creating a Universal Windows app more attractive to developers.
Xbox One will be able to record TV shows
With support for a wide variety of streaming apps and the ability to control cable boxes and audio receivers, the Xbox One is already a capable multimedia device. But its media capabilities will increase significantly next year -- Microsoft intends to add DVR functionality to the console.
Last year, the company released an adapter for the Xbox One that allows it take in over-the-air broadcast signals. With this new functionality, users will be able to record shows and watch them later. Several devices already exist that can accomplish this feat -- such as the TiVo Roamio OTA DVR -- but most offer far fewer features than console and often come with hefty subscription fees. With growing interest in cord-cutting, DVR functionality could make the Xbox One attractive even to those with less interest in gaming.
Xbox One exclusive Crackdown 3 will utilize the power of Azure
During its press conference, Microsoft showed off several upcoming Xbox One games, including Halo 5 and Rise of the Tomb Raider. The most interesting one from an investor perspective, however, is Crackdown 3, a third-person action game that relies on the cloud.
Crackdown 3's multiplayer mode is powered by Azure, Microsoft's cloud computing platform. Xbox One hardware is limited, but by tapping into Azure, Crackdown 3 developers can deliver an unprecedented experience -- literally everything in the game is destructible.
Other developers could also make use of Azure, giving the Xbox One an advantage over rival consoles. But more significantly, it stands as a testament to the company's cloud ambitions. During the earnings call in July, CEO Satya Nadella boasted that Azure usage increased by "triple digits" during the quarter, and that for enterprise mobility services, Azure now has 17,000 customers. Commercial cloud revenue (which includes Azure) is one of the most significant factors driving its stock. Crackdown 3 provides an interesting example of Azure in action.
