The next generation of Microsoft Corporation (NASDAQ:MSFT)’s video game console, the Xbox One, is scheduled for release later this year. The Xbox One will ship with upgraded hardware, a new operating system, and a host of new features and services.
Several of these new features are controversial, including a requirement that the Xbox be connected to the internet while playing a game, even if the game does not require an internet connection. The Xbox will also ship with a new version of the Kinect that includes a microphone that stays on even when the Xbox is asleep, so that you can wake it up via voice commands.
More than a gaming console
However, the biggest news coming from the new Xbox, bigger than the upgraded gaming capabilities, the complicated always on internet connection, and somewhat creepy Kinect is the transformation of the Xbox into a home entertainment system.
The Xbox One has a DVR included that is designed for recording games, but Microsoft Corporation (NASDAQ:MSFT) has promised to talk to the ‘TV guys’ in an attempt to get more functionality for it. The Xbox One can also take over from your cable set top box and will come with Microsoft services including a music service and Skype. A Blu-ray drive is also standard and the new Xbox supports 4k resolution which is good for gaming and watching movie theater quality content.
Since the Xbox One also runs Windows, developers will have an easy time porting their applications to run on the Xbox. You will also be able to use your Windows 8 tablet or smartphone as a companion device for a more interactive TV or movie experience. Even on the current Xbox 360, users spend more time in entertainment apps than they do gaming.
The competition’s failure
Microsoft Corporation (NASDAQ:MSFT) is not the only company trying to get its foot in your living room. Apple Inc. (NASDAQ:AAPL) has Apple TV, which although described as a hobby and has no advertising, has sold more than 13 million units. Half of these 13 million were this year; however the Apple Inc. (NASDAQ:AAPL) TV has been on the market for years and is only now beginning to show signs of growth. There have been rumors swirling for over a year now that Apple Inc. (NASDAQ:AAPL) is about to launch an actual TV, though these rumors have recently languished.
Google Inc (NASDAQ:GOOG) already has several TV’s and set top boxes through their Google Inc (NASDAQ:GOOG) TV initiative. However, Google TV has had a very lukewarm response with hardware partners like Logitech backing out and others slow to join. Google Inc (NASDAQ:GOOG) TV runs a version of the Android operating system, but at this point, it is years out of date and the app selection is limited.
A different angle
Microsoft Corporation (NASDAQ:MSFT) comes at the issue of getting its console on your TV from a different angle. They have sold more than 75 million Xbox 360’s and they will no doubt sell that many if not more Xbox One’s. Thus, they have the distinct advantage of already being hooked up to your TV. Another advantage is the integration with other Microsoft services like Skype and Skydrive and the usage of a version of Windows 8 (though not the same version as desktop Windows 8). This will give non-gamers who use the Xbox One some familiar services and allow Microsoft Corporation (NASDAQ:MSFT) to sell the Xbox as more than a gaming console.
Wii U & PlayStation
Nintendo and Sony Corporation (ADR) (NYSE:SNE) also have some of these same advantages with their PlayStation and Wii U consoles. However, Nintendo’s Wii U has not seen the sales that Nintendo had hoped for and is lacking the game development that all new gaming consoles need.
Sony Corporation (ADR) (NYSE:SNE) is lacking the platform that Microsoft Corporation (NASDAQ:MSFT) brings with Windows and Sony Corporation (ADR) (NYSE:SNE) usually targets more hardcore gamers with the PlayStation consoles. This leaves Microsoft as the most likely of the video game console makers to succeed in transforming their console into a successful entertainment device.
A hidden gem
While Apple and Google debate what the best way to get into your living room is — a set top box, a TV set, or maybe even releasing their own casual gaming system — Microsoft Corporation (NASDAQ:MSFT) can focus on tweaking its offerings to make sure the new entertainment users of the Xbox One have the best experience possible.
Microsoft is behind in the smartphone world, the tablet world, and Windows 8 has struggled with desktop and laptop adoption, but Microsoft has stumbled on a gem with the Xbox that puts it at the head of the pack when it comes to your living room.
The article Microsoft’s One Success originally appeared on Fool.com and is written by David Danna.
David Danna has no position in any stocks mentioned. The Motley Fool recommends Apple and Google. The Motley Fool owns shares of Apple, Google, and Microsoft. David is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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