Microsoft Will Offer Xbox 360 for Five More Years

Microsoft Corp. will continue to offer the Xbox 360 for the next five years, expanding the lifespan of the console to 10 years, said Chris Lewis, vice president for interactive entertainment business in Europe.

The company is trying to lengthen the Xbox 360’s shelf life with new features and services, such as the motion-sensing Kinect device, in a bid to wring more profit from the machine. Consoles are typically unprofitable in their first few years because the cost of materials takes time to drop. The Kinect accessory goes on sale in November.

“Kinect really gives us, I think, a very genuine additional five years,” Lewis said in an interview today at the Gamescom computer-games fair in Cologne, Germany. “What Kinect does is broaden us out to users that we weren’t addressing in the past.”

Microsoft’s decision marks a change in strategy from the first Xbox generation, when Microsoft released a new model after just four years. Rival makers of gaming consoles are adopting a similar approach. Yesterday, Sony Corp. Executive Vice President Kazuo Hirai said he thinks the PlayStation 3 will also have a 10-year life, helped by his company’s own motion-sensing controller. That device, called Move, comes out in September.

Different Technologies

Both companies are playing catch-up with Nintendo Co., whose motion-activated Wii controller helped give it the lead in the market. With Sony and Nintendo’s approach, the user moves the controller to direct the game. Microsoft’s Kinect is a box that sits near the console and tracks the movement of the player’s body several feet away.

Microsoft, based in Redmond, Washington, might release a new console while the Xbox 360 is still on sale, “but we’re not fixated on that right now,” Lewis said.

Nintendo President Satoru Iwata has said the release of his company’s next-generation console hinges on 3-D features. The company may wait until more than 30 percent of televisions in homes have 3-D capability. Microsoft’s Lewis also said it’s too early for 3-D gaming to take off.

“We are two to three years away from that, till the price point comes down, till the experience is sufficiently social, that you don’t sit there with big glasses on and don’t talk to your family,” he said. “That will happen, there’s no doubt.”

Xbox Live

The current Xbox’s popularity is supported by the Live online gaming service, which probably broke the $1 billion revenue mark for the first time in the past fiscal year. Lewis declined to give sales figures for the service.

Xbox Live, which currently has 25 million users, gets one new user every five seconds, Lewis said. The subscription base rose by more than 30 percent in the fiscal year ended in June, he said. “We anticipate to grow by at least the same rate -- if not faster -- this year,” Lewis said.

At Gamescom, Microsoft announced that the service will be available in an additional nine countries, including Russia, Poland and the Czech Republic. That brings the total to 35.

Microsoft’s entertainment and devices division, mostly made up of sales from Xbox and mobile-phone software, had revenue of $8.06 billion in the past fiscal year, or 13 percent of the company’s total. Profit for the unit rose more than sixfold to $678 million.

http://www.businessweek.com/news/201...ore-years.html