Microsoft (NASDAQ:MSFT) entered the gaming console market rather late with the Xbox but has managed to gain significant market share thanks to the growing popularity of Xbox 360 console and the Kinect motion gaming add-on. Xbox has been the top-selling console for months and sold close to a million units during Black Friday. The Xbox 360 was launched more than six years ago and competes with Sony’s (NYSE:SNE) Playstation 3 and Nintendo’s Wii. Microsoft is rumored to be planning to launch the next version of the Xbox, the Xbox 720, in 2012. Microsoft may unveil the Xbox 720 at the Consumer Electronics Show in January 2012. [1]
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Xbox 720 Launch will Boost Console Sales for Microsoft
Microsoft’s Entertainment and Devices division, which includes the Xbox, has shown the highest growth in revenue in the last couple of quarters, while Windows sales have lagged. The launch and extreme popularity of the Kinect also led to a jump in Xbox sales. Microsoft also continues to invest in the Xbox Live online gaming network to increase subscription revenues.
The launch of a new Xbox 720 console will definitely help Microsoft increase its market share in the gaming console market. Microsoft currently has a 19% market share in gaming consoles, and we expect this to increase over our forecast period.
Xbox, Kinect, Zune and other devices together account for nearly 8% of Microsoft’s $32 Trefis price estimate, which stands nearly 25% above the current market price.
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