Breakout

Console wars continue: Microsoft and Sony at E3

Nine months into the latest console war between Sony (SNE) and Microsoft (MSFT) it's hard to tell which of these companies is in revival mode and which is the dying giant. Despite its well-earned reputation for ineptitude, Sony is laying the boots to Mr. Softie. The PS4 is outselling the XboxOne by 40% and there isn't a ton of reason to believe that gap is going to close soon. Both companies laid out their console strategies yesterday at the Electronic Entertainment Expo, or E3 game conference, in Los Angeles.

Consistent with a campaign that's been marked by missteps and changes on the fly, Microsoft largely ignored the vaunted home media center attributes of the XboxOne in an effort to win back hardcore gamers. The company announced it would be re-releasing its popular Halo franchise for the XboxOne. Microsoft also released a $399 version of the XboxOne that didn't include the once-popular Kinect motion-detection add-on for which it has released very few compelling titles.

Sony concentrated largely on games. It said a new version of the wildly popular Grand Theft Auto V will be available for the PS4 in the fall and allow users to transfer their progress from prior console platforms. A Microsoft version is said to be coming later.

It's very early in these console wars, but it's hard not to notice the degree to which Mircrosoft has stumbled out of the gate.

In the long run, the console wars are all about the networks. The ambition, especially for Microsoft, is to become the hub of the house. That vision has either passed them by, thanks to the proliferation of handheld apps, or is years away. Having been an early adopter of the XboxOne, I can tell you this: The console is not ready for prime time as a box replacement.

With shares having climbed all the way back into the $40s, the bar is set higher for Microsoft than it once was. Between its reactive posture and early setbacks in consoles and the lets-just-call-it-flop-already Surface 3, it's hard not to notice that Microsoft has just come out with two clunky mastodons that look very much like prior tone-deaf consumer efforts. Let's hope Microsoft under Nadella can show greater ability to adjust on the fly from mistakes than it did under Ballmer. If not, Microsoft shareholders could end up getting Clippered.

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