) plans to reveal details about its new Xbox video game console
in May, which will be powered by an
Advanced Micro Devices Inc.
) processor according to a report from Bloomberg. Following the
news, AMD shares rose 13.10% as providing chips for game consoles
will lessen the company's dependence on the declining personal
The Xbox will use an AMD system-on-a-chip that will combine
its Jaguar central processing unit with graphics chips. Microsoft
will integrate the Xbox console with computers, its Surface
tablet and its Windows Phone OS by combining aspects of the
Windows 8 platform into all of its devices.
The gaming hardware market is currently reeling under
competitive pressure from emerging social network sites and
competing hardware platforms such as smartphones and tablets.
Video game publishers are now inclined to make games that are
compatible with these devices. Gamers are switching to these
platforms or devices as they also provide free games.
Microsoft's closest competitor in the game console business,
) has already announced its plans to release PlayStation 4 in
time for the Christmas holidays. This makes sense as the holiday
season is usually the time when demand goes up. Another
) new game system, Wii U, was released last November, but the
sales figures have been below management expectations so far.
Looking at the broader landscape, the next Xbox is expected to
boost the lackluster hardware sales performance of the gaming
industry. In the last NPD video game sales report for the month
of Feb 2013, hardware sales fell 36.0% year over year to $244.2
million. This is not a one-off incident as video game hardware
sales have been trending down over the past year.
However, Microsoft's Xbox 360 was again the top-selling
console with 302,000 units sold in February, much better than
281,000 units sold in January. The Xbox 360 is still the
top-selling gaming console, showing its dominance over
competitors like Nintendo's Wii console and Sony's PlayStation
A study conducted by DFC Intelligence suggests that the global
gaming market is expected to increase from $67.0 billion in 2012
to $82.0 billion in 2017. Further, IDC expects that there will be
257 million active consoles worldwide by 2015. These estimates
suggest that there are opportunities for gaming companies to
increase their stakes.
The overall video game market remains highly fragmented with a
large number of companies increasing competitive pressure and
leading to stiff price competition. Despite competition and
ongoing macroeconomic concerns, we believe that companies with a
greater focus on the digital business will do relatively better
even in this sluggish market.
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