Analyst DFC Doesn’t Think The Xbox Has a Future

Microsoft unveiled two new consoles during E3 this year and appeared to embrace Windows gaming in a way which we’ve never seen before. This is a pivotal moment for the console industry as both Sony and Microsoft move towards a different strategy by allowing multiple specifications to coexist. Prior to this move, consoles relied on a single specification and optimisations over time to remain competitive. Microsoft strongly believes in consumer choice and revealed the Xbox S, a slimmer version of the Xbox One and Project Scorpio which can apparently offer a true 4K gaming experience. Unfortunately, analyst DFC isn’t impressed with Microsoft’s revised business plan and said in an investor’s call:

“The most immediate problem is Microsoft effectively killed the Xbox One Slim right out of the gate,”

“If there were many Xbox 360, Wii U and even PlayStation 4 consumers interested in an Xbox One this holiday season they have now been told to wait until Scorpio arrives in 2017. Microsoft can only hope that the buzz around Project Scorpio goes away soon but with the cat out of the bag that is unlikely.”

“There are all kinds of other problems with Microsoft’s mixed messaging. The pricing on the original Xbox One is great, and the Slim is wonderful, but all the important new games will be on PC, so why invest in a console? Just upgrade your PC. And if you do want a console why buy now when Scorpio will be here later. All of this is a net dampener on new hardware sales now and really opens the door wide open for Sony and even Nintendo for the NX.”

Not only that, DFC argues that the Xbox brand might not even exist very soon and remains critical of Microsoft’s gaming division:

“The biggest issue is whether Microsoft will even have a game division by the time Project Scorpio launched,”

“It is no small irony that the E3 events went on at the EXACT same time as Microsoft CEO Satya Nadella was announcing the $26 billion acquisition of LinkedIn.”

“When the PlayStation launched Sony was a more diverse company trying to use its game system to promote Blu-ray. Now Sony is a smaller company and the PlayStation brand is its most successful product line. PlayStation is now the tail that wags the dog and former games head Kaz Hirai now runs all of Sony. On the other hand, with Microsoft, the game business is the ugly step-child that somehow must integrate with the company’s operating system strategy.”

“The overall question now seems to be not if Microsoft will exit the game business, but when and how. Of course, that leads to many other questions such as how is exiting the game business handled? Is Xbox spun off? Does Microsoft find a buyer? Or does the company just shut Xbox down? DFC feels the latter option will most likely not occur but it is clear something must be done.”

“Unfortunately the value of the Xbox brand is in serious flux with much of its advantage tied to the Microsoft Windows 10 operating system.”

Personally, I think these comments are very reactionary and use hyperbolic language for dramatic effect. Even if you dislike Microsoft’s move towards treating Windows 10 gaming and the Xbox brand as equals, it’s rather silly to think they’ll ditch the Xbox division rather soon. Microsoft is adapting the today’s market and acknowledges the rapid growth of the PC platform.

Thank you MCV for providing us with this information.

John Williamson

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