The company faces strong competition from Sony Corporation (ADR) (NYSE:SNE)‘s PlayStation 4 this holiday season. The PS4, by comparison, has received much better press and seems to be the preferred choice of gamers by a considerable margin. Sony Corporation (ADR) (NYSE:SNE)’s system is set to launch at $399 in comparison to the Xbox One’s $499, and news has surfaced that the PlayStation 4 pre-orders outnumber those for the new Xbox by 4:1 in the Netherlands. Industry insiders have stated that the figure is similar for North America.
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The Xbox One was initially set to ship without a pack-in headset. It didn’t need the device, after all; communication could by handled by the powerful microphones in the Kinect. The fact that Kinect is being de-emphasized and a headset included is a clear sign that Microsoft is still struggling to define its product and that it is reacting to some very troubling data. At $100 more expensive than the PS4 and with negative public perception slow to dissipate, Microsoft sees the risk of the Xbox One getting slaughtered at the market and is moving as fast as it can to rectify the situation. As it stands, the Xbox One has provided one of the biggest PR disasters in the history of gaming.
Speaking of disasters, it’s worth devoting a little time to Nintendo Co., Ltd (ADR) (OTCMKTS:NTDOY)‘s Wii U. Unlike Microsoft and Sony Corporation (ADR) (NYSE:SNE), Nintendo Co., Ltd (ADR) (OTCMKTS:NTDOY) is wholly dependent on its ability to find success in the videogame market. While its 3DS handheld is performing about as well as could be hoped given the rise of mobile and web games, the Wii U is a flop of unprecedented proportions. Approximately nine months after release, sales of Nintendo Co., Ltd (ADR) (OTCMKTS:NTDOY)’s newest console are tracking below Sega’s ill-fated Dreamcast. Nintendo Co., Ltd (ADR) (OTCMKTS:NTDOY) has stronger franchises than Sega and will likely support their device for a longer period of time, but the writing is on the wall. Look for the Wii U’s lifetime sales to wind up somewhere in between the Dreamcast’s 10.6 million and the GameCube’s 21.74 million.
Sony Corporation (ADR) (NYSE:SNE)’s gaming division looks to capitalize on substantial advantages heading into the next console cycle. Its console presently enjoys a substantial mindshare lead over the Xbox One and the collapse of Nintendo Co., Ltd (ADR) (OTCMKTS:NTDOY) on the console front means one less substantial competitor. Furthermore, recent news of Sony Corporation (ADR) (NYSE:SNE)’s partnering with Viacom shows the company understands the importance of services in the coming generation and is positioning itself to reap the benefits of the digital content distribution space.
The reversals regarding Kinect requirements and the pack-in headset indicate that Microsoft is finally finalizing a vision for the Xbox One. The company has the incentive and funds to secure content and jump-start the system, but realizes it may not be enough at this point. I predict that Microsoft will release a Kinect-less Xbox One before June, 2014 that is more in line with what consumers seem to want: the PlayStation 4.
The article What a Pack-in Headset Says About the Future of Xbox One originally appeared on Fool.com is written by Keith Noonan.
Keith Noonan has no position in any stocks mentioned. The Motley Fool owns shares of Microsoft.
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