Technological toys aren’t built to last, either as playthings or as trends. Just look at how Apple (NASDAQ:AAPL) does its business. A new iPhone, new iPod and now a new iPad model every year. Keep it cutting-edge, and you keep the public interested, while also creating a lasting market by lowering prices on older models. That’s the way to do it.
Unless, of course, you’re Microsoft (NASDAQ:MSFT).
The company’s Xbox 360 video game console will turn six years old in November – positively ancient by technology standards, yet the machine is enjoying its best year of sales.
GamesIndustry.biz reprinted details from Microsoft’s second-quarter earnings report on Friday and posted numbers that impress, to say the least. The company shipped almost 14 million Xbox 360s during the second quarter – growth of 45% over the same period in 2010. The game player generated almost $3 billion in revenue from the company, good for year-on-year growth of 48%. Thanks to the success of the Kinect – the hands-free motion control device for the 360 – Microsoft continues to build its presence as an entertainment industry dynamo.
The good times should continue to roll into the back half of 2011, as well. Here’s what Microsoft has up its sleeve to keep the Xbox business bumping.
Big Promotions
What’s most impressive about the Xbox’s ongoing success is that the company never has had to significantly drop the price. While the $299 model of the Xbox 360 comes with more bells and whistles – a larger hard drive, an internal wireless adapter – than it did in 2005, it’s still remarkable that the best-selling model never has dipped below $200, the sweet spot for family shoppers. That doesn’t mean the company is any stranger to aggressive promotions. The company debuted a new Kinect/Xbox 360 package that comes with a new Star Wars game at Comic Con in San Diego. It also is running a promotion through Microsoft.com, offering a free Xbox 360 to any college student buying a Windows 7 PC above $699.
Live Television
The Xbox 360 has been almost as popular as a multimedia player as it has been as a game-playing device. It was one of the first machines to host Netflix‘s (NASDAQ:NFLX) streaming service and has been partly responsible for its proliferation since 2008. While the company hasn’t announced details yet, it will be partnering with Comcast (NASDAQ:CMCSA), Time Warner (NYSE:TWX) and other cable/satellite providers to broadcast live television on the Xbox 360 through its subscription-based online network, Xbox Live.
More Kinect Games
There were concerns earlier this year that Kinect sales would slow because no new games for the motion-controller were being released in the first half of the year. With more than 11 million Kinects sold, those fears were proved unfounded, and the device should have another strong holiday thanks to a strong lineup of software. The aforementioned Star Wars game; a virtual theme park from Disney (NYSE:DIS) called Disneyland Adventures; a sequel to the device’s biggest hit Dance Central 2; even traditional gaming fare from Electronic Arts (NASDAQ:ERTS) like Mass Effect 3 will support the device.
The New Xbox
The Xbox 360 and Kinect are going like gangbusters, but that doesn’t mean that the technology isn’t getting slightly long in the tooth. After six years, it’s unsurprising that Microsoft is gearing up to release a new machine. Eurogamer reported Wednesday that its industry sources have indicated Microsoft likely will debut the Xbox 360’s successor at the E3 expo in June 2012 with plans to release the system sometime in 2013. While there are no concrete details, it’s likely the new machine will play all Kinect software released between now and its release, in addition to sporting fancy new graphics, which are rumored to be on par with the computer animation in James Cameron’s Avatar.
As of this writing, Anthony John Agnello did not own a position in any of the stocks named here. Follow him on Twitter at @ajohnagnello and become a fan of InvestorPlace on Facebook.
