A New And Improved XBox, Microsoft’s (MSFT) Electronics Ace

All the evidence points to the sales of the Nintendo Wii slowing. That would make sense. More than 20 million have been sold in the US. The market gets saturated at some point. The latest industry research figures show Wii sales running down month-compared-to-previous-month. The Microsoft (MSFT) Xbox 360, in the meantime, is holding its own. Sales of the Sony (SNE) PS3 are still anemic and the Japanese consumer electronics firm may never recover from a botched launch.

Microsoft (MSFT) appears ready to exploit its growing position as the No.2 console in the industry. According to CNET, the world’s largest software company may be ready to launch Xbox 360 2.0 a little over a year from now. The tech site says that a new machine could allows “games played on the more advanced Xbox would look or perform better.”

What may be a rumor or partial truth now is likely to be a reality in the future, especially if Microsoft is willing to stick with habits of spending its way into markets and then accelerating the spending once it has developed a substantial market share. The Xbox is an invention which has been in the market for nearly a decade. It was originally launched as a way to get a piece of the huge and lucrative market controlled by the Sony PS2. By launching before the new generation of Sony’s PlayStation, Microsoft hoped to take  the first position among video game lovers.

The Microsoft plans stumbled because of something that it could not predict. Nintendo, just a few years ago a modest-sized firm, brought its Wii to market with a low price point and a simplicity of operation. Consumers flocked to it because it was remarkably easy to use and did not require the dexterity and experience that using the Xbox or PlayStation did. The Wii became a runaway success and Microsoft’s plans were thwarted.

Now the Wii looks vulnerable, and Microsoft, which has an almost unlimited access to engineers and marketing capital, is not likely to let that vulnerability go unexploited. According to all of the rules of engagement the Redmond uses to push into markets, a new Xbox is on the way.

Douglas A. McIntyre