The PS4 is still the biggest seller of this console generation, and the Sony Corp (ADR) (NYSE:SNE) (TYO:6758) games console appears to be cementing its lead over rival the Xbox One. The sales numbers confirm what most in the market already knew, Microsoft Corporation (NASDAQ:MSFT) is losing the console race, and the company is going to have to do something drastic in order to solve the discrepancy.
PS4’s victory in North America
The PS4 victory in North America, which is its least convincing market, comes despite a massive price cut for the Xbox One in June. Microsoft Corporation (NASDAQ:MSFT) was forced to unbundle the Kinect and lower the price just months after the console launch because of a lack of demand. That wasn’t enough, however, and Sony is still in comfortable worldwide lead over the Washington based Microsoft.
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Xbox One doubles sales in June
Microsoft Corporation (NASDAQ:MSFT) announced recently that its June sales numbers doubled those in May, but the numbers are a little incomparable on a number of counts. Microsoft’s Xbox division announced that the Xbox would drop in price by $100 dollars on May 13. That means that anybody looking to buy the console in that month was disincentivized.
May sales were lower as a result, and Microsoft used that excuse in order to discount the value of May sales, but now that June has rolled around the company is assuming everybody has forgotten. June sales are double what May sales were, but that’s off of a low base. The company offered no other information on the state of its console business, but it’s likely still underperforming, and that means investors are likely looking to rid themselves of it once again.
According to the NPD report that showed PS4 dominance of the market, video games sales in the month of June hit $736.4 million, up 24% on the same month last year. The change is, in a large part, due to the new hardware, which saw sales of more than $300 million in the period.
Microsoft sees console business slipping away
There seems to be little driving Microsoft Corporation (NASDAQ:MSFT) to control the consumer space as time goes on, and that leaves the Xbox as an ill-fitting part of its business. With sales numbers going against it, the company is probably using its considerable financial resources in order to redress the balance. That’s going to cost the company money that could be used elsewhere, and it’s going to make investors nervous.
Microsoft is still being outsold by the Sony PS4 in North America, but the company’s performance in Europe is considerably worse. The Xbox One has still not shown up in Japan. Those developing for the Xbox One have a smaller audience, and Microsoft has cut out many geographical niches.
Many prominent Microsoft Corporation (NASDAQ:MSFT) investors have signalled a dislike for the Xbox division in the past, and it may become the target of much ire should the company underperform. The Xbox brand is worth a lot, but it may be worth nothing to Microsoft, particularly if its consumer traction doesn’t pick up in the coming year.