Now, it's officially a console war.
Microsoft's $499 Xbox One, which hit stores at midnight , is expected to sell as briskly as the Sony PlayStation 4, which sold more than 1 million in the first 24 hours after its debut last Friday.
But Microsoft has a more ambitious battle plan. Sony just wants the $399 PlayStation 4 in your living room; Microsoft wants to control it with Xbox One. "There is nothing subtle about the Xbox One," says P.J. McNealy of Digital World Research. "Microsoft is hijacking the (pay TV) stream with the intent of a win-win for Microsoft and the consumer."
The Xbox One has a sophisticated home-entertainment interface that, when you connect your pay TV set-top box, folds in broadcast programming. Then you can explore everything with your voice using the system's improved Kinect motion and voice controller.
"The strategy is really to do two things, to build a best-in-class device for gaming (and) the first really all-in-one entertainment system," says Yusuf Mehdi, Microsoft senior vice president of interactive entertainment.
Review: Xbox One makes strong play for living room
The Xbox Oneis similar to the PlayStation 4 in that it has 22 games available -- and will be extremely hard to procure even though Microsoft says it is making available twice as many units as for the Xbox 360 launch. Most of the inventory that retailers such as Best Buy, GameStop, Target and Walmart will begin selling the Xbox One at midnight at stores have been pre-sold to consumers months ago. But many stores plan to have at least a few unspoken-for units available.
Customers began lining up as early as Wednesday at some stores including the Best Buy in Times Square where a special Xbox One launch event will include a concert by Macklemore and Ryan Lewis. "Customer demand has been incredible," says Chris Koller, vice president of gaming at Best Buy.
Analysts think that Sony's release of the PlayStation 4 at about the same time as the Xbox One gives it a chance at U.S. dominance in this cycle. However, loyalty to Xbox Live, Microsoft's online gaming network, will benefit Microsoft. Also aiding Microsoft: its backtracking on early plans to prohibit used games and require the Xbox One to always be connected to the Internet.
Xbox One's OneGuide will organize your TV listings in a guide that can be perused with a game controller or your voice.(Photo: Microsoft)
But opinions differ on Microsoft's Xbox One home entertainment strategy. "The concept of running your television programming through your Xbox One is an exciting feature," says EEDAR analyst Jesse Divnich. But consumers will balk if the experience requires any sacrifice in quality, he says.
At The Diffusion Group, senior analyst Joel Espelien expects viewing of regular pay TV on the Xbox One to be relatively low. "We expect smart TVs and (internet TV devices such as Roku) and Google Chromecast to play a bigger role going forward," he says.
A stickler is that consumers with high-end DVRs lose some functionality -- recording and access to old recordings -- within the Xbox One framework, says McNealy, in a just-released report Xbox One—Goal Of Living Room Domination Through Input One.
However, Microsoft could negotiate with pay TV providers to improve functionality. "Microsoft deserves full credit for being the best of an emerging market," he says, "smarter boxes that use voice, gesture, and button mashing for an improved entertainment experience."
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