Microsoft and the Xbox One
Contents
Executive Summary 2
Introduction 3
Microsoft 3
Xbox 4
The Original Xbox 4
Xbox Live 5
Xbox 360 5
The New Next Generation – Xbox One vs PlayStation 4 5
Defining the Industry 6
Gaming Console Market Revenues 2003-13 (US$ million) 6
Revenue forecasts for 2013 7
Industry Trends 7
Loss-leading strategy 7
Innovative Technologies 7
Gaming in the Cloud 7
Rise of Indie Game Developers 8
Porter’s 5 forces analysis 8
Value Chain Analysis 9
Operations and Supply Chain 9
Distribution 10
Marketing 10
Follow-up Services 10
Support Functions 10
Human Resource 10
Finance 10
Capabilities, Core Competency and Competitive Advantage 10
Microsoft Xbox Capabilities 10
Core Competency and Competitive Advantage 11
Cloud Computing 12
Xbox Live 12
Exclusives 12
Recommendation 13
Executive Summary
Microsoft entered the new console generation on the back of strong position it held with the Xbox and the Xbox 360. They have a strong following with an install base of over 75 million and online hit in the form of Xbox Live. The question was where could it go next and how could it position itself for the new generation. Were they a gaming console or an all in one box that would be the centre of your entertainment unit? This analysis dealt with Microsoft and their competitive strategy with regards to the Xbox One. Microsoft had started leaning towards an all in one entertainment box during the dying years of the Xbox 360 and had started focusing on product offerings, like Netflix service and deals with ESPN for content only available on their platform. They also invested heavily in cloud processing; this could represent a key differentiator between the Xbox One and any competitors. But in June 2013, they partially backtracked on their initial plan in regard to the Xbox One and announced a host of changes that would change the way consumers interact with the machine and the service. With a mobile gaming market developing alongside the console market, Microsoft’s decision and position
Executive Summary 2
Introduction 3
Microsoft 3
Xbox 4
The Original Xbox 4
Xbox Live 5
Xbox 360 5
The New Next Generation – Xbox One vs PlayStation 4 5
Defining the Industry 6
Gaming Console Market Revenues 2003-13 (US$ million) 6
Revenue forecasts for 2013 7
Industry Trends 7
Loss-leading strategy 7
Innovative Technologies 7
Gaming in the Cloud 7
Rise of Indie Game Developers 8
Porter’s 5 forces analysis 8
Value Chain Analysis 9
Operations and Supply Chain 9
Distribution 10
Marketing 10
Follow-up Services 10
Support Functions 10
Human Resource 10
Finance 10
Capabilities, Core Competency and Competitive Advantage 10
Microsoft Xbox Capabilities 10
Core Competency and Competitive Advantage 11
Cloud Computing 12
Xbox Live 12
Exclusives 12
Recommendation 13
Executive Summary
Microsoft entered the new console generation on the back of strong position it held with the Xbox and the Xbox 360. They have a strong following with an install base of over 75 million and online hit in the form of Xbox Live. The question was where could it go next and how could it position itself for the new generation. Were they a gaming console or an all in one box that would be the centre of your entertainment unit? This analysis dealt with Microsoft and their competitive strategy with regards to the Xbox One. Microsoft had started leaning towards an all in one entertainment box during the dying years of the Xbox 360 and had started focusing on product offerings, like Netflix service and deals with ESPN for content only available on their platform. They also invested heavily in cloud processing; this could represent a key differentiator between the Xbox One and any competitors. But in June 2013, they partially backtracked on their initial plan in regard to the Xbox One and announced a host of changes that would change the way consumers interact with the machine and the service. With a mobile gaming market developing alongside the console market, Microsoft’s decision and position