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Microsoft Needs to Prime the Kinect Pump

Momentum looks to be waning with no new games on tap

Microsoft (NASDAQ:MSFT) has sold 10 million Kinect motion control devices for the Xbox 360 game console since its November release. The company has also said that 10 million standalone Kinect games have sold, with popular titles like Dance Central leading the pack.

Guinness World Records named the camera and microphone array the “Fastest Selling Consumer Electronics Device.” That buzz-worthy title should help Microsoft keep buyer interest strong amid a spring full of gadget releases, including Apple’s (NASDAQ:AAPL) iPad 2 and Nintendo’s (PINK:NTDOY) 3-D portable game player, the 3DS.

But even with promising sales so far, Kinect’s staying power isn’t assured.

The first problem Microsoft is going to have to contend with is slowing sales. While 10 million Kinects in less than four months, it’s worth noting that 8 million of those sales came from the holiday season alone, meaning that momentum has slowed significantly.

It’s also worth noting that total Kinect sales include both standalone devices and those bundled with the Xbox 360. With such a significant post-holiday dip, it seems that the bulk of pre-existing Xbox 360 owners who were likely to buy a Kinect have done so, and individual sales should continue to taper off throughout the year.

Microsoft also has yet to announce major new games for Kinect. While the company is likely waiting for the Electronics Entertainment Expo in June to announce marquee titles for next Christmas, the first and second quarters of the year are barren of new releases. This gives room for hits like the aforementioned Dance Central, published by Viacom’s (NYSE:VIA) now-defunct MTV Games, to breathe, but it also means that Microsoft has 10 million worldwide consumers not buying any more games for their new Kinects.

The year’s earlier expos came and went with no major Kinect game announcements, which was very unusual for such a successful machine. Save for THQ’s (NASDAQ:THQI) branded exercise game UFC Trainer, Kinect’s games schedule is barren. No Electronic Arts (NASDAQ:ERTS) titles, no Activison Blizzard (NASDAQ:ATVI) — just nothing.

The Kinect’s early success recalls the release of Nintendo’s Wii back in 2006 and its continued momentum into 2007. Consumers were crazy about Nintendo’s new wand motion controller, and demand for the system only intensified when Nintendo was unable to keep up a steady supply. It took Nintendo twice as long to hit 10 million sales compared to Kinect, but Nintendo also had a clear strategy in place to bolster the Wii with steady software releases. Wii Play, released in the U.S. in February 2007, was a fixture in on monthly sales charts for nearly 24 months. Kinect has yet to see its own Wii Play — a game that will secure its future as a software sales machine and evergreen earner.

As of this writing, Anthony John Agnello did not own a position in any of the stocks named here.

Article printed from InvestorPlace Media,

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