Microsoft is an American technology company that deals with computer software, hardware, electronics and digital distribution. It is preeminent known for the Windows operating system and the Microsoft Office applications. Microsoft was predominantly a software company with its foray into exclusively Microsoft computer hardware being the launch of the Xbox in 2001. It has since released other versions of Xbox to the Xbox 360 being the first home console (7th generation video console).
(1.) Existing competitors
Figure SEQ Figure \* ARABIC 1: video console market shares retrieved from statista.com, 2015
The biggest competitor for Microsofts Xbox is Sonys PlayStation. Nintendos Wii is also a sizeable competitor. Since the release of Xbox One and PlayStation 4 in November 2013, within a week of each other, the PS4 has sold a total of 27,684,836 units as of November 2015, while the Xbox One has sold 15,078,055 in the same period (Keating, 2015). Gaming is a popular culture and consumers are always after the latest technology in the market this makes the game console market especially competitive (Keating, 2015). A new release from a big player in the market can create a great shift in consumer demand from its competitors. Companies therefore need to have their eyes on their research and also the developments being made by their competitors.
The dynamism of the game console market cannot be overemphasized. Atari ushered America into the video game era and was highly successful up to the early 80s when the video games market was flooded with cheap and low-quality gaming consoles that caused the market to crash. Nintendo built itself up from the crash by signing exclusive deals with their video game developers and solidified their place in the video game market. Sony however, revolutionized the video game market with the introduction of PlayStation. It used its specialty in hardware to its advantage by building architecture for the PlayStation that was compatible with the many game programs. PlayStation went on to put Sony at the most video game consoles sold in America and worldwide. Sony still holds this position to date. The PlayStation is trusted and its brand is stronger worldwide
Nintendo has been in the video game console market longer than both Sony and Microsoft. It is dedicated to the production of gaming products and holds the third position in video game console sales in the U.S and worldwide.
(2.) Possible Competitors
There is currently a rush by startup companies to create cheap Android-based gaming consoles (Nunneley, 2016). Games previously only compatible with gaming consoles are making their way into phones. The big players are not worried about smartphones replacing gaming consoles for many reasons beginning with the touch screen. Samsung however developed a gaming pad for Samsung and other developers are following suit. It may take time but smartphones will form a threat to video game consoles.
Apple produced a fourth generation gaming console that failed due to problems with the hardware. Should Apple decide to join the sixth generation gaming market, it would be a huge blow to Microsofts Xbox. The iOS has great gaming capabilities as shown by the adaptability of mobile version games that were previously console games (Newman, 2013). iOS can maintain the graphics and capabilities of the game as it were on console. Apples game center and its embrace of buttons in gaming also make it a great potential in the video game console market (Newman, 2013). Apple only has to come up with the hardware for its gaming console and thence become a competitive threat to Microsoft what with its healthy customer base.
The Xbox market like that of other gaming consoles is composed of the youth. Consumers span from the 10-year-old age bracket the to early 30s. Microsofts Xbox was released late in the video game console timeline and despite its many advantages over the PlayStation, consumers who started out using PlayStation and Nintendo are unfamiliar with its user interface finding it bulky and complicated. The mid-20s to the early 30s segment for Xbox is therefore small with most of these consumers being loyal to PlayStation. The below 24 market segments for Xbox is however large as these consumers acknowledge Xbox capabilities. Since people stop playing video games as they grow older, the Xboxs market is expected to grow. This growth could however be constrained as fathers have a great impact in which video game consoles their children grow up using and therefore become loyal to, as most of the consumers in this bracket are loyal to PlayStation
(4.) Resource Providers
Though Xbox is a physical product, the resource providers that are of special importance and have a large effect on the quality and hence the demands for the product are the programmers. Microsoft has the edge over its competitors as it is a software company unlike its main competitor Sony which, though dealing with software mostly specializes in hardware. The Xbox therefore has the monopoly over the programming.
Microsoft, however, lacks the advantage Sony has in hardware. PlayStation enthusiasts have criticized Xbox as being too bulky both internally and externally.
(5.) Threat of alternative industry provider
Xbox moved its production of Xbox 1 to China and so did PlayStation with PlayStation 2. China is known for its extensive provision of electronic raw materials. There is therefore the little threat of alternative industry providers as far as hardware goes.
Global Unit Sales of Video Game Consoles (2015). Retrieved from http://www.statista.com/statistics/276768/global-unit-sales-of-video-game-consoles/Keating, Lauren. PS4 Versus Xbox One in Numbers. Retrieved from http://www.techtimes.com/articles/109466/20151123/ps4-vs-xbox-one-numbers.htmLangshaw, Mark (2013) retrieved from http://www.digitalspy.com/gaming/news/a453849/atari-retrospective-the-rise-and-fall-of-a-gaming-giant/Nunneley, Stephany (11th June 2016). Sony Feels the PC is PS4s main competition within the market not Xbox One.
Retrieved https://newsblock.io/s/57d47a34ab6cbc0300b76919Newman, Jared (2013). Google and Console Makers Beware Apple Already has the Makings of a Great Game Console. Retrieved from http://techland.time.com/2013/07/01/google-and-console-makers-beware-apple-already-has-the-makings-of-a-great-game-console/
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