Microsoft (NASDAQ:MSFT) has rapidly gained market share in gaming consoles in the last couple of years with the tremendous success of the Xbox 360 console and the Kinect sensor. In its recent earnings conference call, it revealed that it sold more than 66 million Xbox 360 console units and around 18 million Kinect sensors since their respective launches.
The next version of the Xbox – the Xbox 720 – is expected to launch in 2013. Microsoft may be planning to add 3D display features and touchscreen controllers to the Xbox 720. The Xbox 720 is expected to compete with the next versions of the Sony (NYSE:SNE) Playstation and the Nintendo Wii consoles.  
Xbox, Windows Phone and Kinect account for nearly 6% of Microsoft’s $32 Trefis price estimate, which stands just above its market price.
Xbox 720 to Offer 3D Gaming and Touchscreen Controllers
The Xbox 720 will be launched nearly 8 years after the Xbox 360. It is expected to be revolutionary in terms of features and graphical capabilities, and may be integrated with the Kinect motion sensor. A recent job listing indicates that Microsoft also plans to include 3D gaming features to the Xbox 720. It is also speculated that the new controllers in the Xbox 720 will have an HD display with the traditional buttons and sticks, enabling touchscreen controls. It can be used as a remote control and a web browser. The Xbox 720 is expected to six times as powerful as the Xbox 360, and will also be priced higher than $500.
The Entertainment and Devices division, which includes the Xbox and the Kinect has been one of the fastest growing businesses on Microsoft in the last couple of years. We expect the growth to continue in the coming years. We also expect Microsoft to increase its market share in the gaming console market throughout the forecast period.Notes: