As Microsoft rolls out their latest Windows 10 to little applaud new figures show that their once popular Xbox gaming console is being dumped by tens of thousands for the more popular Sony PlayStation 4.
While total share of the worldwide console market hasn’t gotten worse over the last three months, it has not got any better for Microsoft who is a Company who struggles when it comes to consumer marketing.
This is the same Company who 12 years ago told the world that their Windows Media Centre was going to be the B all of content delivery systems. In Australia several Companies invested millions in developing home automation systems around the Microsoft offering only to find that Microsoft was doing very little to support them, the Companies eventually failed.
Earlier today Sony released its quarterly earnings report following similar reports from Nintendo and Microsoft earlier in the month. The numbers show Sony continuing to outsell the Xbox, selling 3 million PlayStation 4 units over the three months ending in June.
Microsoft sold just 1.4 million Xbox consoles less than half (including both the Xbox 360 and Xbox One), while Nintendo sold just 470,000 units of the Wii U during that time period.
Separating out Xbox One sales from the Xbox 360 in the reported “Xbox” numbers is still an inexact science, but we gave Microsoft’s older system an estimated range of 350,000 to 560,000 sales for the three-month period. That’s down from the 500,000 to 800,000 range we estimated for the 360 last year at this time, and it parallels a roughly 30 percent drop in second-quarter PS3 sales from 2013 to 2014.
Xbox Chief Phil Spencer acknowledges Sony’s success with PS4 claiming that Microsoft was working on the problem.
In Europe Sony now has over 75% share of the console gaming market.
One analyst said “If there is one place Microsoft badly wants to beat Sony it is Europe, their Xbox strategy is in serious strife”.
In the smartphone market Microsoft has failed to get past 5% share and along the way they have lost billions.
Recently they were given a $7.5 billion lesson in how not to do business in the consumer market.
Recently Microsoft wrote off US$7.5 Billion after desperately trying to get marketshare by buying Nokia’s phone unit, which it bought a little over a year ago for what it said was US$9.5 billion.
Considering that the deal included $1.5 billion in cash, the write-off means Microsoft now values a business that once controlled 41 percent of the global handset market at just a small fraction of the purchase price.
This desperate play to try and get a place at the smartphone table resulted in Microsoft reporting its largest quarterly loss ever last week ($3.2 billion). It was only the third loss in its history as a public company.
“If you were talking about any other industry, this would be considered a catastrophe that’s the equivalent to a natural disaster,” said Horace Dediu, who spent eight years at Nokia during its heyday and is now at the San Francisco research firm Clayton Christensen Institute, which studies disruptive technologies.
The man behind a lot of the Microsoft consumer mistakes was Steven A. Ballmer, Microsoft’s chief executive, and in the mobile phone market, Stephen Elop, the former chief executive of Nokia.
Microsoft’s still relatively new chief executive, Satya Nadella, gets credit for swiftly confronting reality and taking the hit to earnings. This may have been easier given that Mr. Nadella opposed the proposed deal in an initial poll of top Microsoft officials. But Steven A. Ballmer, his predecessor, was determined to push the deal through as a capstone to his long tenure as chief executive.
Even after the deal was revised, and Mr. Nadella issued a public statement supporting it, two directors voted against it. Both have since left the board.
Now Microsoft is hoping that their free Windows 10 strategy pays off as they desperately try to emulate the success of Google and Apple in the consumer markets.
