THE ECONOMIST'S "Special Report" last week talked about Microsoft's move "way beyond the PC". Xbox 360 "highlights Microsoft's march into new markets".... "It is all a far cry from Microsoft's typical fare. There was no mention of installers, security patches, service packs, server protocols, operating-system monopolies or consent decrees. And that is precisely the point. The Xbox 360, which will be launched in Europe and Asia next month with an enormous marketing campaign, is the most visible example to date of Microsoft's march into new markets beyond its traditional business of making software for desktop and server computers."
Xbox 360 fits into Microsoft's über-strategy under "what's happening in the home" and slots into strategies for gaming, mobiles and TV. "All these other electronic devices increasingly resemble computers," says Robbie Bach, Microsoft's chief Xbox officer. The Economist knows these digital lifestyle devices "offer Microsoft new opportunities to sell software. Just as importantly, they offer new avenues for growth: sales of non-PC devices are growing much faster than sales of PCs." If Microsoft is to clone its Office revenue trajectory, it must find a new vein in the consumer market. In Europe, mobile phones are the silicon handsets that have become universal remote controls for living. The Economist says:
Moving into non-PC markets also provides a hedge against any future decline in Microsoft's core Windows and Office franchises--though, despite years of speculation, neither seems to be in any danger of being undermined by open-source alternatives. And in the case of gaming in particular, notes Paul Jackson of Forrester, a consultancy. "It's hedging, it's diversification, it's branding, it's getting off the desktop and into pockets and on to TVs," he says.
The Economist Special Report -- "Way beyond the PC", November 26, 2005.