Microsoft Breaks Console Model with New Xbox(s)

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There are a couple of rules when it comes to game consoles.  First you don’t change them very often (the PlayStation 3 and Xbox 360 remained largely unchanged for a decade), you don’t price them over $500 (Sony did that initially with the PlayStation 3 and ceded the market to Microsoft), and you don’t have multiple systems of the same generation in market at the same time (it confuses folks). Well Microsoft just tossed this rule book out with the Xbox One S and Project Scorpio.  But I think it can actually work if the products are positioned properly.

Let me explain.  

Xbox One S

If you look at the Xbox One S it is basically an upgrade with tuning from the Xbox One.  It recognizes that since Nintendo’s game system largely dropped out of the market the camera wasn’t really wanted anymore and it has been returned to provide better graphics at the same price point – and with a smaller footprint as a result.  

The end result is a box that can play games at 4K HDR (High Dynamic Range) levels and make the current generation of high end TVs look spectacular.   Positioned as a competitor to Apple TV but with additional benefits (and an additional cost) this should play well for gaming cord cutters.   It costs and performs in line with a high-end Blu-ray player, and it plays the Xbox titles so you basically get the game part for free.   This should have enough power for the current generation of VR headsets and expectations are that HTC or Oculus Rift (likely both) will work this new system once released and games become available.

One interesting feature is that both this and Scorpio support AMD’s FreeSync technology, which currently isn’t available in TVs but is part of an increasing range of monitors.  This suggests we may actually have some gaming TVs show up that support this as well. 

Xbox Scorpio 

Now Project Scorpio is even more interesting because it appears to be more of a dedicated high and gaming machine. Part of the problem with gaming on regular PCs, and Steam attempted to deal with this when they launched their systems, is that the background applications can create problems for the games.  In effect you rarely get the gaming performance you paid for unless you don’t run anything else in the background and we all run stuff in the background.   So, with a gaming dedicated PC, you should be able to use a lower powered configuration and get better performance if you not only don’t have the apps but don’t have the Windows functions you don’t need in a dedicated gaming box.  

So the end result should be a gaming PC that performs like a console but has far more power and likely would be iterated more often for players who like to be closer to the edge of performance but don’t want the headaches of building their own systems or doing anything other than just playing the game. 

Of the two systems, this is likely the one that will play 2017 VR games well (4K level graphics at high frame rates into two displays) and this alone may push buyers to this product. 

In effect this is a Steam Machine pushed which should have less problems (no blinking yellow light of death common with some of them) and the result should please those it is targeted at. 

Wrapping Up:  Nice Win for AMD, Chord Cutters, and Non-Technical Gamers

AMD is all over these announcements and this is a powerful win for them as they continue to dominate the console game space.  In addition, given Xbox’s close relationship with Windows in general it should give them strategic advantages for PC gaming as well.  However, the success of these consoles will come down to how well Microsoft markets them.  If buyers get confused by the complexity Sony will get the benefit.  Given Sony is using AMD as well, AMD wins in either case.  That’s a pretty nice place to be.  

Oh, and yes, I want a Project Scorpio!




Edited by Maurice Nagle
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President and Principal Analyst, Enderle Group

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