U.S. markets open in 5 hours 30 minutes
  • S&P Futures

    -1.00 (-0.02%)
  • Dow Futures

    +7.00 (+0.02%)
  • Nasdaq Futures

    -14.25 (-0.09%)
  • Russell 2000 Futures

    -1.00 (-0.04%)
  • Crude Oil

    -0.63 (-0.76%)
  • Gold

    +5.50 (+0.31%)
  • Silver

    -0.00 (-0.01%)

    -0.0009 (-0.08%)
  • 10-Yr Bond

    0.0000 (0.00%)
  • Vix

    -0.55 (-3.37%)

    -0.0020 (-0.14%)

    -0.0100 (-0.01%)

    +1,671.26 (+2.68%)
  • CMC Crypto 200

    +20.10 (+1.37%)
  • FTSE 100

    -3.58 (-0.05%)
  • Nikkei 225

    +40.03 (+0.14%)

Microsoft's gaming boss explains its radical reinvention of the Xbox

Phil Spencer
Phil Spencer

(Kevork Djansezian/Getty Images)
Phil Spencer, head of Microsoft's Xbox Division

For the past fifteen years, "Microsoft Xbox" has practically been synonymous with video games.

Even if you've never touched an Xbox controller, you probably know the basic idea: It's a black plastic box that sits under a TV and lets you play top-shelf games on the big screen from the comfort of your couch.

That's about to change, as Microsoft's Xbox business undergoes a major transformation.

Instead of just being a plastic box near the TV, the Xbox will also become an app; a service that fuses Microsoft's Xbox business and the Windows 10 operating system together.

The plan, which will effectively turn any Windows 10 PC into an Xbox, is an important part of Microsoft's efforts to adapt to a changing industry by recasting itself as a multi-device "services" company. And it comes at a time when the Xbox One console has struggled against the rival Sony Playstation.

It's going to be a while before this vision — called "Xbox as a service" by some gamers — fully becomes a reality, as Microsoft tries to solve some tricky design problems. And there's no shortage of hardcore gamers watching skeptically from the sidelines, burned by Microsoft's previous missteps in this arena.

But Phil Spencer, the head of Microsoft's Xbox division, says the Xbox change is a natural evolution that will preserve everything gamers love about the current console while making Windows 10 much friendlier to gamers and more lucrative for developers.

"We want to decouple our software from the hardware on which it runs," Spencer explained at an event in San Francisco last week.

A place for Xbox

The first thing to know is that while this plan centers on bringing the Windows PC and the Xbox closer together, Spencer still sees the Xbox One console as "fundamentally different" from your standard-issue laptop.

"The Xbox, to us, is the best television games system we can build," Spencer said. "Windows PC is a very broad device."

Still, the two platforms have been inching towards convergence for the last several months, with Microsoft CEO Satya Nadella recently calling the Xbox One "just another Windows computer."

Spencer has previously committed to making sure that future high-profile releases like the forthcoming "Quantum Break" come out on Windows 10 and the Xbox One simultaneously — and that buying a copy for one will get you a copy for the other. You'll even be able to save your game on a PC and pick it up again on an Xbox One, and vice versa.

quantum break windows 10
quantum break windows 10

"Quantum Break" running on Windows 10.

A big piece of the endgame here involves the Microsoft Universal Windows Platform strategy. Basically, a developer has to write a Universal Windows App just once, and it'll run on any Windows 10 device, anywhere — from a Microsoft Surface Pro 4 tablet, to a Lumia 950 smartphone, to, yes, the Xbox One.

It's going to make that so-called "cross-buy" feature much easier for a developer to put into their games. And when games are easy to buy on an Xbox or a Windows 10 PC, developers can sell a lot more games.

Microsoft takes a cut, while simultaneously making Windows 10 a more desirable option for gamers — important, given Microsoft's focus on getting to a billion Windows 10 users within the next two to three years.

The PC Experience

Windows 10 already brings much of the Xbox experience to the PC. The Xbox app that comes with Windows 10 lets you chat with your Xbox Live friends, buy games from the Xbox games store, and best of all, stream games from the Xbox console to your PC.

It's just that the Xbox One is Microsoft's home-grown Windows-powered machine for playing video games. The Xbox One is offered at a consumer-friendly $349 price point, and engineered to make it as simple as possible to turn it on, put in a game, and play on your big-screen TV. And there's no plans to mess with that winning formula.

"We're committed to that experience," Spencer said.

The gameplan, instead, is to rethink how the console should behave in the larger context of Windows 10. If people want to play on the couch, fine. If they want to play from their tablet or laptop on the road, also fine. The game shouldn't be limited by the device it's running on, goes the idea.

"They want to play where they want to play," said Spencer.

Star Wars Battlefront mod
Star Wars Battlefront mod

(Martin Bergman)
This fan-made modification for "Star Wars Battlefront" shows how much further a PC can push the envelope than a console.

By making the Xbox a piece of software that can run on a Windows PC, it means that you potentially get all the benefits of PC gaming, too:

The graphics on PC games are (usually) better, the options for customizing your games are greater, and you can upgrade your hardware as your budget allows — instead of waiting years for a new Xbox or PlayStation, your PC can get better on your own timetable.

There's been some pushback on this convergence from hardcore PC gamers, who find that high-profile Windows Store releases like "Rise of the Tomb Raider" don't offer the same high-end graphics options as Steam, Valve's incredibly popular and 150-million-user PC digital store and social network. But Spencer has committed to addressing those problems.

And then there's a small but vocal minority takes it as a betrayal that games like "Quantum Break," once promised as exclusive to the Xbox One, will also come to Windows 10 — after having spent money to buy the exclusive titles, they feel stung that it's now available to the masses.

Spencer is less understanding on that front: "We spend zero time thinking about games other people can't play," Spencer said on stage.

The new Microsoft

By shifting the center of gaming gravity from the Xbox console to Windows 10, Microsoft is playing to one of its strengths.

Sony's PlayStation 4 is dominating the console wars, with 35.9 million units sold. The lagging Microsoft has stopped reporting sales of the Xbox One entirely (analysts peg sales at around 18 million units).

But Windows is still the preferred operating system for the PC gaming faithful. New games, new accessories, and new technologies come to Windows before they go anywhere else.

Facebook's Oculus Rift virtual reality headset, for example, is only compatible with the Windows PC. Same for the HTC Vive Pre headset.

In fact, Facebook and Microsoft have a partnership on the Oculus: The VR headset will come with the Xbox One controller at launch, and just today, the two announced that Oculus Rift support is coming to "Minecraft" for Windows 10.

Oculus Rift CEO Brendan Iribe Palmer Luckey
Oculus Rift CEO Brendan Iribe Palmer Luckey

The Oculus VR cofounders showing off an early headset, with Xbox controller in hand.

Even direct competitors like Steam do the bulk of their business on Windows. That doesn't bug Spencer, though — quite the opposite. It's his job to make Microsoft good for gamers, regardless of where they want to play.

"Steam's success is such a reflection of Windows gaming's health," Spencer says.

Instead of focusing on competition, Spencer says that the current approach is a reflection of the change driven from the top by Microsoft CEO Satya Nadella, where it's more about giving customers all the choice they want.

If Windows 10, the Windows Store, and the Xbox One are the best places to play games, the customers will come. If not...well, they're still using Windows. Either way, the key is making people happy.

"I think [Microsoft CEO] Satya [Nadella] has done a great job setting a vision for the company that's inclusive of other people's success," Spencer says.

NOW WATCH: Billionaire Minecraft founder Markus Persson proves money doesn’t buy happiness

More From Business Insider