Microsoft’s steps to make Xbox a mainstream entertainment platform

Infotech Lead America: Microsoft’s steps to make Xbox console will formally evolve beyond a gaming device with the forthcoming Xbox set-top box (STB).

Microsoft has pushed the Xbox as both a gaming and home entertainment device, but consumers would not typically consider purchasing an Xbox unless gaming was top-of-mind, largely due to the Xbox’s high price point and its historical product positioning. Microsoft will change that in 2013 when it releases the next-generation Xbox equipped for both entertainment and traditional console gaming, as well as an Xbox set-top box that consumers can use to access core entertainment services and casual games.

Xbox STB will run Windows 8 at its core to further unify the end-user experience across all screens and will come equipped with a chipset that enables it to operate as an always-on device. The key sticking point for success with Xbox STB is its price point. Microsoft has made hardware pricing missteps recently, particularly with the Surface tablet, and the Xbox brand alone is not strong enough with casual consumers to generate high sales. If Microsoft gets the price point right, Xbox STB has the potential to be a compelling device as an entertainment hub.

Windows Phone sales quadrupled year-to-year as OEM partners released more devices at a range of price tiers.

Windows Phone 8 and the handset companies helping push the platform achieved a small level of success in 4Q12 as Windows Phone sales grew 400 percent year-to-year, although the baseline for growth was small in comparison to iOS and Android. Windows Phone continues to garner around 3 percent of smartphone market share in the United States and 2 percent globally, but will likely see a small uptick following the holiday shopping season. Compared to the last iteration of its mobile operating system Windows Phone 7, Windows Phone 8 (WP8) launched with far greater OEM and carrier support and was buoyed by the launch of Windows 8 for tablets and PCs in the same time period.

WP8 came to market on flagship phones ranging from the low to mid and high ends of the market from both HTC and Nokia, as well as on Samsung hardware that received a smaller marketing push due to Samsung’s focus on Android and its popular Galaxy Series devices. Microsoft and its partners were also able to develop closer relationships with Tier 1 carriers in the United States, enabling greater visibility for Windows Phones in AT&T, T-Mobile, and Verizon retail locations. Momentum will continue to build for Windows Phone as new models from companies like Huawei and ZTE make their way to market.

Michael Soper, Networking & Mobility Research Analyst, Technology Business Research
[email protected]

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