Microsoft Shocks Sony by Announcing Kinect-Less Xbox One at $399


It's no secret that Sony has been winning this round of the console wars. The company's most recent sales data had the PlayStation 4 eclipsing 7 million units sold to consumers as of April 6. Microsoft's last quarterly report showed 5 million Xbox Ones shipped to retailers. Now, Microsoft has announced that it will ship a version of its console without the Kinect camera in an attempt to reinvigorate its platform and limit Sony's gains. The system will hit U.S. retailers with a $399 MSRP. That's not the only big change in the works.

Sony's PlayStation Plus online service has been offering offering superior value and building a user base lead over Microsoft's Xbox Live. Consider that Microsoft once stood as the undisputed leader of online console gaming and it's clear that Sony has accomplished something with its platform. Microsoft has announced a series of changes to Xbox Live that look to make it much more competitive. Welcome to the Xbox One's comeback push.

Microsoft reshapes the console battlefield
The revelation that Microsoft will ship its console without the expensive Kinect camera is the biggest gaming news to hit this year. Particularly shocking is the timing for the announcement and the launch of the company's new SKU. While many analysts and industry watchers predicted that Microsoft would make this move, it's arriving earlier than most were expecting. The new $399 Xbox One will hit all territories in which the platform is currently available on June 9, just in time for the E3 gaming conference. The price reduction should substantially better Microsoft's standing in the console race. It gives the platform an actual shot of achieving market leadership.

Xbox Live gets a value boost
Microsoft is also making serious changes to its Xbox Live online platform, offering better value in hopes of better competing with PlayStation Plus. Introduced with the original Xbox, the Live platform stands as one of Microsoft's greatest accomplishments in the gaming space. The company was ahead of the curve with its push for online gaming, and it reaped the benefits. The success of Live on Xbox 360 generated incredible margins for the company. Heading into the current generation, Xbox Live was Microsoft's greatest gaming asset. The company got overconfident, however.

Sony's PlayStation Plus currently offers users access to a greater number of games for its subscription cost. If PlayStation 4 users decide not to subscribe to Plus, they can still access services like Netflix, something not currently available on the Xbox One. A June update will change all of that, however. Xbox One and Xbox 360 users will be able to access video streaming and other services without needing a Live subscription. Additionally, Microsoft looks to seriously beef up its Games with Gold initiative. The heightened value push will help Microsoft's online service better compete against PlayStation Plus and stop user bleed to the rival service.

A strategy to combat Sony's early gains
Performing well early in this console generation is more important than in any previous cycle. The fact that both the Xbox One and the PlayStation 4 now require paid subscription for online play means that there will be fewer users who are active in both ecosystems. This made the lead that Sony has established particularly troubling for the Xbox One's prospects, but it's clear that Microsoft has at least recognized the gravity of the situation. The company is making the necessary moves to improve its gaming prospects. Most importantly, it is addressing perceived value deficiencies in its hardware and online platforms, allowing the focus to return to its offering of exclusive games and media services.

It just got real...
With the announcement of a Kinect-less Xbox One, Microsoft has seriously improved its competitive chances in the console wars. What's more, the speed with which the company has acted portends very well for the future of the device. If the Xbox One were left to languish too long at its current $499 MSRP, the situation would have been disastrous. It's undeniable that Microsoft botched the rollout of its latest console, but it's also clear that these mistakes have been recognized and that they are in the process of being rectified. The console wars just got a whole lot more interesting. 

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Keith Noonan has no position in any stocks mentioned. The Motley Fool owns shares of Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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