The next-generation console painted itself into a corner early on as Microsoft outlined some downright draconian content policies. Sony’s PlayStation 4 is comparable in every way that matters, but it also comes without restrictive content licenses and costs $100 less than the $499 Xbox One. It looked like game over in the first round.
But Microsoft quickly apologized for its heavy hand over what gamers can and can’t do with their Xbox One games, and it ended up removing most of the unpopular restrictions. The console is still more expensive than the Sony Corporation (ADR) (NYSE:SNE)product, but maybe that’s not enough to hold the product back anymore.
Analyst firm Robert W. Baird says the Xbox is on a winning track. Analyst Colin Sebastian ran checks against the supply chains of both consoles and came away with a dramatic conclusion: “Microsoft Corporation (NASDAQ:MSFT) may have the benefit of a 2-3x unit advantage at launch compared to Sony’s PS4.”
That’s not a small victory, but a savage rout. If Sebastian’s sources are on the money, Microsoft will most definitely win this round of the console wars.
Well, Redmond will take the early battles, anyway. Both systems are expected to launch into heavy demand, with manufacturing capacity becoming the limiting factor at first. In other words, Sony Corporation (ADR) (NYSE:SNE) might still rule the roost when it comes to public opinion and the potential for long-term success. But Microsoft Corporation (NASDAQ:MSFT) shows mastery of the supply chain game at this point — secure more components, build more units, and look good in the early sales statistics.
The real takeaway from this unexpected win is this: Microsoft is serious about hardware.
We all know Microsoft Corporation (NASDAQ:MSFT) as a software giant, built on decades of success via Windows and the Office suite. That’s how Bill Gates got his Dow Jones Industrial Average (INDEXDJX:.DJI) membership card, and these are still the core operations of a market giant with a $266 billion market cap and $78 billion in 2012 sales. But that’s changing fast.
The recent and ongoing reorganization into a “devices and services” company is for real. Redmond is beating hardware specialist Sony at its own manufacturing game. The feat is even more impressive when you consider that most of a modern game console’s parts are made somewhere in Southeast Asia. Sony Corporation (ADR) (NYSE:SNE) has these sources right in its extended backyard, and Microsoft is still slapping its hand away with authority.
There’s still a lot more to say and do before the cows come home, but Microsoft Corporation (NASDAQ:MSFT) may be onto something good with the new hardware focus. The lessons learned in building consoles might even translate into smartphone and tablet success somewhere down the road. Maybe that’s how Microsoft Corporation (NASDAQ:MSFT) will earn its keep as a Dow member over the next decade.
The article Can Microsoft Still Win the Console Wars of 2013? originally appeared on Fool.com and is written by Anders Bylund.
Fool contributor Anders Bylund holds no position in any company mentioned. Check out or follow him on Twitter and Google+.The Motley Fool owns shares of Microsoft Corporation (NASDAQ:MSFT).
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