Xbox vs. PS4 – The shifting sands

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User experience likely to aid Microsoft in the next generation.

  • Sony has crushed Microsoft when it comes to hardware volumes in the current generation, but it is so far behind on the user experience that the next generation might be quite another story.
  • Microsoft has announced the new user experience coming to the Xbox in November which combined with several new features, will meaningfully extend its lead over PS4.
  • The upgrade coming to the Xbox One in November will include:
    • A fast gamer centric user interface with plenty of eye candy with strong commonality with Windows 10.
    • Users will be able to access all the features of the user experience while remaining in game play.
    • The experience has been optimised to accentuate the community features such that users are increasingly drawn into everything that Xbox has to offer.
    • The Xbox One will also be able to work as a fully functional DVR but this will require a TV Tuner and extra storage.
    • Media, games will be able to be streamed to other Windows 10 devices.
  • The new UI will be running in Windows 10 and so features like Cortana will also be available on Xbox One and will become the pillar of all voice interaction on the device.
  • In the long run this also opens up the Xbox One to non-games developers as apps that run on PCs, tablets and phones should also work on the Xbox One.
  • With this update the Xbox One becomes much more a part of the Windows ecosystem rather than a standalone games machine.
  • Sony has done a brilliant job of capitalising on Microsoft’s initial mistakes around the launch of the Xbox One.
  • Furthermore, the fact that it is a slightly better games machine at the same price has made it a no brainer this time around.
  • However, the user experience on the PlayStation 4 is barebones and frustrating at best.
  • This means that user willingness to explore and discover other features that Sony might add to the device over time will be minimal.
  • I suspect that in the next generation of consoles (around 2017), the user experience and the ecosystem will be much more important than it is today.
  • This will give Microsoft a massive advantage over Sony unless Sony gets its act together and moves to make the PS4 as delightful as the Xbox One.
  • This is all about software which is something that Sony has struggled with on almost every occasion.
  • Hence, I think that in the next generation the balance of users will shift much more in Microsoft’s favour as Sony is not showing any signs of moving to address this problem.
  • Microsoft remains my top choice in the ecosystem but I still think that Sony is the only Japanese company in with a real chance even if that chance appears to be fading.

RICHARD WINDSOR

Richard is founder, owner of research company, Radio Free Mobile. He has 16 years of experience working in sell side equity research. During his 11 year tenure at Nomura Securities, he focused on the equity coverage of the Global Technology sector.