The PS4 Puts the Xbox in a Strategic Position

Posted Thursday February 21, 2013 at 9:27:59 am in Technology

To say that the Sony PlayStation 4 event yesterday was disastrous is putting it lightly. The media is putting Sony through the gauntlet.

But before we speak about why Sony (and the PS4) are being bashed by the media, let's point out the cool features/fucntionality of the next PlayStation:

  • The DualShock 4 controller will have a touchpad and 3d camera tracking built in
  • PS4 games can be downloaded (not to say that they can't be played via disc, more on that later), and while downloading can actually be played. Nice touch.
  • The PlayStation Vita will be able to remote play PS4 games
  • The game streaming functionality of the PS4 uses Gaikai technology.
  • The PS4 can act as a game server. More on this later.
  • Users can watch games remotely
  • Can upload video while you play (goes hand in hand with the watching games remotely)
  • Blizzard now part of a stratetic partnership
  • Can download while "off" (the PS4 is essentially in a standby mode)

But how about the not-so-cool features?

  • The interface. It was briefly shown, but it looks like something like Ubuntu meets Windows 8 meets Steam's Big Picture Mode with UI elements from the early 2000's. This is not good.
  • The PS4 won't play PS3 games natively.
  • Little talk about second screen options a la Smart Glass. There are talks of a PlayStation App second screen viewing experience being worked on for iOS and Android, but very little talk of it...
  • No talk whatsoever for expanding the PlayStation out of its console niche. 
  • Very little actual showing of the various streaming technologies, sharing, etc. in action.

Why You No Show?

This is merely a simple statement. Sony failed to show the PS4 at the event. We have no idea whether or not it will play games from a disc or if streaming/downloading are the only options. Personally, I can't see Sony not allowing games to be played via disc. The Verge has an article outlying the tech specs: PlayStation 4 tech specs revealed: AMD 'Jaguar' CPU, faster Blu-ray, 720p 3D camera.

Faster Blu-ray. I think we'll see disc based games still. The world isn't ready for strictly downloadable games. Yes, the world wants to go that way (me included), but let's not forget that the country may not be as disconnected as it was 7 years ago, but it's not as fast as it should be either. The bandwidth nor the "always connected" world isn't quite there yet.


If I could summarize the PS4 announcement in one word it would be: streaming. The world has been moving in that direction for some time. Put everything "in the cloud". Make it available everywhere. Less and less focus on actual physical media, see: the death of Blockbuster stores around. More and more focus on downloading games, streaming from Netflix, making cellular data connections faster, Google focusing on Chrome OS, etc. etc.

Let me get this straight: streaming is not a bad thing. Unless you're Valve. Gabe Newell really stuck his foot in his mouth when he called Windows 8 a 'catastrophe'. See my articles here: 40 Million Windows 8 Licenses Since Launch and here: Steam Proves Gamers Still Prefer Windows. And he really stuck his foot in his mouth when he said the following:

The biggest challenge, I don't think is from the consoles. I think the biggest challenge is that Apple moves on the living room before the PC industry sort of gets its act together.

See, he's not completely wrong about the Apple part. They will make a move into the living room more so than their hobby the "Apple TV". it's a natural progression. There's talk of an Apple TV SDK. And that should say everything you need to hear about that. In another words: Ouya is in deep, deep trouble. And the lower end of the Steam Box is in big, big trouble.

But back to his quote. If indeed the biggest challenge to the Steam Box is Apple, what of the PS4 (and the next Xbox)? I think the PS4 just shot a huge hole through Valve's plans for the middle tier of the Steam Boxes. And perhaps the biggest shot is the fact that the PS4 is aiming to act as a game server. Yes, this is the same vaporware that Gabe spoke about in regards to the direction of the Steam Box. In another words, Sony beat them to the punch. 

If the lower and middle end of the Steam Box is in danger, what does that leave for the Steam Box? The upper end? Guess what, Gabe. Those users already have one. It's called their desktop. And they're not going to buy your high end Steam Box.

Congratulations, Sony. You just put one of the final daggers in the Steam Box. And you did it without Gabe even thinking that you were a threat.

So, streaming. It's the biggest feature set of the PS4. Download games, play while it's downloading, share screen with your friends, etc. You can also play on your Vita, which finally makes the Vita a useful device. But about the Vita...

Handheld Gaming and the Second Screen

There are all kinds of rumours swirling around Microsoft about the direction of the next Xbox..and even bringing some of the Surface family into the Xbox. But these are just rumours, but let's talk about how this is an opportunity for Microsoft.

Microsoft needs a mobile gaming platform that isn't Windows Phone. Yes, Windows Phone is coming into its own. It's finally gaining marketshare (albeit slowly) instead of losing it. But what I'm speaking about is a device like the iPod Touch, Nexus 7, iPad Mini, the Vita, Nintendo DS, etc.

There was talk not too long ago that Microsoft was working on an Xbox Surface. The talks were that it could be a 7" screen. There are also talks that the next Xbox will be sharing the Windows 8 kernel. Sound familiar? It should. 

If Microsoft does come out with an Xbox Surface, chances are the 7" device will be running some form of the Windows 8 kernel. And since we're talking about later in 2013 for the release of the new Xbox (and possibly the Xbox Surface), the Windows Blue release should be out. What does that mean? Smaller form factor support. Yes,  this leads the way for a Surface Mini as much as a Surface Xbox, but let's focus on the Xbox for a second.

Xbox Surface, the Next Xbox. In addition to Windows Phone. All running the Windows 8 kernel (in some shape or form). Doesn't this sound like that move that Microsoft has been talking about for years? A true move towards a single platform. There are job openings which are aiming to bring Windows Phone and Windows 8 (and RT) more together, i.e. write once, run everywhere. Could we be seeing the possibility of run everywhere including the Xbox family? I hope so.

So. Handheld gaming. Why does Microsoft need it? More importantly, why does Xbox need it? To be quite frank, it's to improve the market penetration of the Xbox name across as many form factors as possible. Windows Phone isn't good enough for mobile as a whole. The Surface is a 10.6" device family currently. There is a huge gaping hole for Microsoft and  Xbox from 5" and up to ~10". And I think Microsoft knows this. We'll hear something about a 7-8" Surface, I'm sure of that. What I'm not sure of is whether that's going to be a Surface Mini, an Xbox Surface, or both. Here's hoping for both.

But what about the second screen?

On to the Second Screen

The Second Screen is merely an auxilary part of the entertainment process. Being that the market has been taking a huge turn into more connectivity of your mobile devices with the various systems in our lives: thermostats, refrigerators, consoles, vehicles, etc. It's natural that the progression continues into the gaming market.

To put it simply, Microsoft really has a leg up on Sony with Second Screen technology. It's been out since last year. And it's called SmartGlass. And it's currently available for: Android, iOS, Windows Phone, Windows 8/RT. It's one of those rare times where Microsoft not only beat someone to the punch, but they really have a leg up on them. 

i fully expect the next Xbox to make SmartGlass a more first class citizen rather than an auxilary input. We're already seeing the direction Microsoft is taking with Kinect input (both gesture and voice). That is going to improve on the next Xbox. Expect the second screen to improve as well. More Play To options, more content (they've created additional Studios/resources to handle this extra content), etc. Xbox is going to get bigger.

Sony has heard this. And it validates Microsoft's position. Microsoft is in a very strategic position here. Sony spoke very briefly about it. You can read more on The Verge here: Sony PlayStation App for iOS and Android Adds Second Screen.

The great feature that this supposedly will add is the ability to trigger downloads to your PS4 from your mobile device. A nice trick, and I'm curious if Microsoft is going in that direction with SmartGlass improvements. 

But we haven't heard anything else of it. It's in development, but it's going to be more than a year behind SmartGlass. Microsoft, if you're listening, this is a huge boon to you.

Oh, and apparently Sony hasn't announced its full support for the PlayStation App. Talks currently say iOS, Android, and tablets. No mention of Windows Phone or Windows 8. 

How Much Is it?

Sony didn't do three things yesterday: show the PS4, announce a true release date, and announce a price. This isn't different than what Microsoft did at its Surface event. But at the very least people were able to see it.

Kotaku released an article on February 19th called PlayStation 4 Price, Release Date Reportedly Outed.

Since we don't have a true price from Sony, we're looking at $429 and $529 price points. This is, indeed, aimed at the premium end of things. But will the market sustain it? The casual game consoles are moving towards lower prices much like the tablet (and netbook) market killed profit margins on PC hardware.

  • The Ouya hits the $99 price mark.
  • The Xbox 360 can be had for $99 on contract, $199 off contract.
  • The PlayStation 3? $270.
  • The Steam Box is apparently going to come in 3 flavours: low, medium, and high. I'm guessing the low is going to target the Ouya market.
  • The Apple TV is $99. Not a gaming console, but it may go in that direction...
  • The Wii U cheapest set is $300.

What's that say? Sony has always had a premium on their hardware, both laptops as well as gaming consoles. When the PlayStation 3 was first released it was ~$500. But it leaves a glaring hole in the casual gaming + entertainment market. Would Sony release a lower end PS4? I doubt it. And if they don't, they're really leaving a wide open market for Microsoft to sweep in and take it. And not just Microsoft, but also Ouya, Apple, and the Steam Box if it ever gets released...

To the point of Microsoft. There are talks that they are going to be releasing 2 Xboxes. And it makes perfect sense. The Xbox TV and the Xbox. This would mean:

  • Xbox TV at $99-$149+ price point with multiple SKU's
  • Xbox at $299-$349+ with multiple SKU's

These prices are just guestimates. But Sony withholding their price is mighty telling. 

If Microsoft can release the Xbox TV in a matter where it doesn't have to have top of the line gaming hardware but can act as an entertainment console whilst being able to play arcade style games...I think it can be a hit. The Xbox would be priced higher, but it would have better hardware, ability to download games to a very large harddrive, stream games (hopefully!), and even play through physical media.

I'd be in the market for both. Right now there's a 360 in my bedroom, living room, and poker room. I only play games (really) in the living room. The bedroom and poker rooms could be replaced by Xbox TV's. 

What would be swell is if the top of the line Xbox could pull a page from the PS4's playbook: act as a game server to Xbox TV's. That would be great. And it is a possibility. Microsoft partnered with Agawi in September 2012. Forbes had an article on September 10th, 2012 about it: Microsoft, Agawi Team Up For Cloud Gaming on Windows 8; Is Xbox 720 Next?

Wrap Up

Sony is bringing streaming gaming to the forefront of the console market. But they're most likely leaving a gaping hole in the casual console/entertainment market by releasing just a premium device. And Sony is going to be a year+ behind with their second screen solutions.

What Microsoft can learn? Streaming as an option on the Xbox. 2 different versions: one cheaper for casual gamers who may just want a set top box, a more expensive one for hardcore gamers who want more. Expand Kinect (voice, gestures). Expand SmartGlass even further. More Play To. Continue down the "shared platform" path. The market wants a write once, run everywhere (or as close to it as possible). Sony left this wide open. Microsoft can take it.

Fun times ahead.

The opinions expressed herein are my own personal opinions and do not represent my employer’s view