Xbox One to Be Sold in China, a Challenge for PS4

There was a time when former Microsoft Corp. (NASDAQ: MSFT) CEO Steve Ballmer had nothing to say about China but what an intellectual property wasteland it was. The government, businesses and counterfeiters made bogus but working versions of Windows, robbing the huge software company of as much as 90% of the sales it would have in the People’s Republic, if its residents would only act in a way that respected Western business ethics.

New Microsoft CEO Satya Nadella has indicated that Xbox is not one of Microsoft’s core businesses. It offers few ways to advance cloud computing and mobile software. However, Nadella understands it is a gateway into consumer living rooms, and it could be a Trojan Horse for other Microsoft products.

China news service Xinhua reported:

China Telecom will be the exclusive carrier of Microsoft Corp’s video game console Xbox One, the first of its kind to launch in the Chinese mainland this autumn, the Chinese operator announced on Thursday.

The console will be sold in China Telecom’s sales outlets from September, the state-owned telecom firm announced at a press conference.

China lifted a 14-year-old ban to permit foreign-invested companies to make game consoles in the Shanghai pilot Free Trade Zone in September 2013, spearheaded by a game-industry joint venture between Chinese Internet television company BesTV and Microsoft with investment of about 80 million U.S. dollars.

The news leaves rival Sony Corp. (NYSE: SNE), which makes the PlayStation 4, to scramble for a way to match Microsoft’s advance, without a foothold in the world’s largest country by population. Sony claims its console has outsold Microsoft’s recently in the United States. Microsoft has countered that a price cut from $499 to $399 helped it double May sales in America. As bragging moves back and forth, the one thing that is certain is that console profits are meaningful to both companies, particularly Sony, which has struggled overall to remain relevant in the global consumer electronics sector.

Because of the size of the Chinese market, the presence of the Xbox makes Sony’s work to sell the PS4 harder. That will only change if Sony can form an alliance with China Telecom or one of the other large carriers in the People’s Republic.

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