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Will Microsoft’s ‘all-in-one’ strategy with Xbox One pay off?

Having seen the North American release of Sony’s PlayStation 4 (PS4) on November 15, 2013, the world is now braced for the imminent release of Microsoft’s competitor console – the Xbox One (XB1) – which is set for release in 13 key global markets on November 22, 2013. Crucially, Microsoft is positioning its console as an ‘all-in-one’ multimedia entertainment hub, whereas Sony is currently focused on the gaming aspect of its new console.

Interestingly, the opposite of this was true last generation, as Sony positioned its PlayStation 3 (PS3) as a multimedia entertainment system, which included a Blu-Ray player and retailed for a substantial starting price of $499 in the US – a $100 premium over the top-spec Xbox 360, Microsoft’s former flagship console. Unfortunately for Sony, this did not pay off and consumers held back on purchasing a PS3 until the console’s price was dropped significantly in the following years.

However, Microsoft’s offering is the more expensive this time around, with its recommended retail price (RRP) of $499 in the US representing a $100 premium over the PS4’s RRP of $399. Notably, however, the XB1 includes the next generation Kinect sensor, as well as a number of additional multimedia capabilities.

For instance, the XB1 will also function as a set top box (STB), therefore quite literally fusing gaming and conventional television in one supposedly convenient package. This is a feature lacked by Sony’s PS4. Furthermore, the XB1 will launch with a greater number of multimedia apps than the PS4, strengthening its multimedia offering. By way of contrast, the PS4 is being positioned as a gamer and developer-focused machine, with less of an emphasis on multimedia entertainment.

Undoubtedly, the PS4 will appeal to hardcore gamers and early adopters, and the news that sales have already surpassed the 1 million mark certainly confirms the console’s popularity. However, even if Sony does hold the upper hand at release, the XB1 could turn out to be much more popular later in the generation.

The XB1’s multimedia focus, although receiving criticism from the hardcore gaming community, undoubtedly serves to bolster its value proposition. In fact, the XB1’s added multimedia capabilities will certainly serve to attract more casual consumers, who are more likely to hold off on purchasing a console until later in the console’s life cycle. In turn, the XB1 could see a surge in popularity which could be further driven by any potential price cuts in the not-so-distant future.

Essentially, although PS4 may have an advantage at the very start of the next generation, I believe that Microsoft is playing the long game.

Find out more on how Microsoft is playing the long game with the Xbox One, and how it can create a competitive advantage for itself over the next few years in my latest case study, Microsoft Xbox One: The battle against Sony PlayStation 4 – available on the MarketLine Store.

For more updates on the technology and telecoms sectors, follow me on Twitter:@Matt_MarketLine

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