From the late '80s through 2010, Nintendo (OTC:
) all but owned the handheld video game market. Sony (NYSE:
) emerged as a second-place contender when it introduced the
PlayStation Portable in 2005. Meanwhile, Apple (NASDAQ:
) is the new kid on the block -- the threat that no one saw
coming. Microsoft (NASDAQ:
), on the other hand, is a sleeping giant. The company has been
quietly sitting on a number of successful franchises, including
Halo, Forza, Fable and Gears of War. Those and other key
properties have appeared on Xbox and Xbox 360. Some of them have
also come to the Windows platform. But Microsoft has yet to
develop or publish a true handheld version of these games.
By developing its own handheld game system (or tablet,
depending on how Microsoft chooses to market the device), the
company would finally be given a portable outlet for these and
other major franchises.
, "Multiple sources familiar with plans within Redmond have
confirmed" that Microsoft is planning an Xbox version of the
"The Xbox Surface will likely include a custom ARM processor
and high-bandwidth RAM designed specifically for gaming tasks,"
The Verge speculates. "We're told these specifications could be
altered to accommodate an unannounced Intel (NASDAQ:
) SoC and that the Xbox Surface is being developed independent of
specific hardware architecture. Microsoft's Xbox Surface won't
run a full version of Windows, rather this 7-inch tablet will run
a custom Windows kernel. Messaging and other tablet functions may
be supported, but the focus is on gaming."
Microsoft expressed its interest in the tablet space last June
when it unveiled
. The new interface allows Xbox 360 users to interact with the
console using a smartphone or tablet from virtually any
Two weeks later Microsoft announced its plans for a major
press event. No one knew exactly what the company had in store,
but rumors indicated that Microsoft was building an
. Other rumors suggested that the tablet may be developed in
conjunction with Barnes & Noble (NYSE:
), but those rumors were
The resulting tablet, Surface, did not contain the Xbox name.
In fact, gaming has been mysteriously absent from the Surface
marketing blitz, which focuses on videos, Web surfing, the unique
user interface and the ability to turn an image into a
This might be part of Microsoft's long-term strategy -- to
sell Surface to students, business users and regular Joes, and to
sell its unconfirmed Xbox tablet to gamers.
By building a tablet specifically for gaming, Microsoft has
the opportunity to reach an audience that goes well beyond its
existing customer base. According to
, Microsoft has sold roughly 70 million Xbox 360 units worldwide.
This is in addition to the 97 million Wii systems and the 67
million PlayStation 3 consoles that have already been sold.
During the last generation of game consoles, the Xbox 360 was
the first new machine to arrive. It shipped a full 12 months
ahead of Wii and PlayStation 3, but they still managed to take
more than 2/3 of the global market.
The handheld space is much different. As of this writing, 21
million people have purchased the Nintendo 3DS. Sony's new
handheld, PS Vita, has sold a little more than three million
During the last generation, the Nintendo DS sold a whopping
152 million units. PlayStation Portable sold more than 75 million
This suggests that the global handheld gaming market includes
more than 200 million consumers. While some would argue that
Apple and Google (NASDAQ:
) have reduced that market by redirecting consumers to
smartphones, the proof will be in the pudding. Thus far,
consumers have not liked what Sony and Nintendo have offered.
They balked at the
weak game selection
At the same time, Android and iOS gamers remain underserved.
iPhone users may be able to play a thousand versions of Angry
Birds, but that does not make up for the fact that iOS devices
lack the capacity to power a full gaming experience. The same can
be said for Android smartphones and tablets. Microsoft has an
opportunity to change that by building a handheld device that is
on par with the current Xbox.
Raw horsepower is not enough to sell a device, however. PS
Vita is proof of that. It contains a gorgeous, five-inch screen
and one of the most powerful graphics processors available, but
its game lineup has yet to justify the $249 price tag. That may
change in 2013, but by then it could be too late for Sony.
Microsoft must be careful in how it chooses to price its
portable gaming device. If the price falls somewhere in the $200
to $300 range, it will need to launch with
popular franchises. Halo alone could move mountains, but it is
At seven inches, Microsoft cannot get away with charging $500.
But if it has enough popular games, the company could match the
iPad Mini's MSRP of $329. Content --
content -- is key.
Buttons are another important and differentiating factor.
Without them, games will be limited by what developers can do
with a touch screen. When developers are creative, the touch
screen can be an effective control option. But for most advanced
games (particularly those that sell well on Xbox 360), buttons
are a must.
Nintendo has the right idea with its
, Wii U. The Wii U gamepad includes both a touch screen and a
series of buttons, just like the Nintendo DS and 3DS. But unlike
Nintendo's handheld systems, the Wii U gamepad is more like a
tablet. The screen is wider and includes a stylus. It is tethered
to the Wii U console, however, so consumers cannot use it as a
Aside from that last tidbit (which may confuse consumers),
Microsoft has a lot to learn from Nintendo's creation.
(c) 2012 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.