Microsoft Sells 8 Million Kinects In Sixty Days As Ballmer Rules

Steve Ballmer gave his annual address at the Consumer Electronics Show. Among the things that he mentioned was that Microsoft (NASDAQ: MSFT) had sold 8 million Kinect video game consoles in sixty days. The Kinect version of Xbox 360 allows people to use body movement and voice to play video games. Nintendo has a similar device, but many experts says that Kinect is more advanced and has features the Nintendo product does not.

Ballmer gets to claim a victory with Kinect after a series of disappointments in product launches by the world’s largest software firm. Its Windows Mobile software sales have been eclipsed by Research In Motion (NASDAQ: RIMM), the Apple (NASDAQ: AAPL) iPhone, and Google (NASDAQ: GOOG) Android operating systems. Microsoft’s joint venture with Yahoo! (NASDAQ: YHOO) in the search industry has shown no signs that it has cut into Google’s market share.

Microsoft’s success with Xbox shows that it can never be completely counted out of a market. Redmond spent billions of dollars to chase perennial video game leader Sony (NYSE: SNE). The Xbox now outsells the PS3 in most markets. Experts believed that when the Nintendo Wii sold better than Xbox or PS3 that it could hold a permanent lead. The Wii was considered a simpler and more accessible game system for average consumers who did not want a complicated game system.

Microsoft was able to “buy” its way into the game business with billions of dollars in R&D and marketing. The company’s electronic device sales are still only a tiny part of Microsoft’s sales. It has admitted that it needs to make and keep gains in its larger divisions which include Windows, business software, and its servers and tools division. Microsoft also believes that search is absolutely critical to its future success. Ballmer claims that his Bing search product will eventually win clients from Google.

Investors in Microsoft have kept its stock price low for a decade. Wall St. believes that Ballmer is whistling past the grave yard. Microsoft’s Windows franchise will not be dominant in the software field as consumers and businesses move from the use of PCs to portable devices like smartphones.

Ballmer is nothing if not tenacious. His energy has been misplaced some analysts would say. The company has been late to a number of the sectors where it needs to have a major presence. It is no use to try to catch Google in the mobile phone business or Oracle (NASDAQ: ORCL) in enterprise software products.

Microsoft knows that it is bleeding, although it will not admit it publicly. But, Ballmer has resources which Wall St. has largely ignored. Microsoft has one of the great R&D machines in the world. It also has Ballmer, who is a champion of lost causes.

Douglas A. McIntyre