Microsoft (NASDAQ: MSFT ) left out some key details in its next-gen console unveiling this week. For example, Mr. Softy didn't disclose either the price or the actual release date for the Xbox One.
But one thing we do know is that the console is already making new friends -- and creating new enemies.
The Xbox One console. Source: Microsoft.
Left out in the cold
Video-game retailer GameStop (NYSE: GME ) , for one, can't be impressed with what Microsoft just unveiled. The new Xbox console won't accept games made for the current Xbox 360. And considering that console has been the top-selling one in the U.S. for 21 months straight, there will be a mountain of used games that won't have much value to gamers who upgrade this year.
That should make for an especially bumpy console transition for GameStop, which pulls its highest profit margins from selling used games. Last year the company logged a 48% gross profit on those sales, versus just 22% on sales of new video games. GameStop can expect new software sales to jump as the Microsoft and Sony systems hit the market this fall, but its used video-game business will take a painful hit.
#Winning
Activision Blizzard (NASDAQ: ATVI ) , on the other hand, must be all smiles. In a product demonstration that was light on actual gaming features, Activision's new Call of Duty game was the only title that got center-stage attention.
Activision is aiming to keep that profitable franchise on top through the volatile transition to the next generation of consoles. And a close partnership with Mr. Softy at launch will help as it takes on rival Electronic Arts this fall.
And chipmaker Advanced Micro Devices (NYSE: AMD ) got a boost, too, as Microsoft confirmed a switch over to its products. AMD will also be providing chips for the Sony PlayStation 4, giving it a near lock on the game console market.
But probably the biggest benefit from Microsoft's chip switch is that developers can more easily create games for both major systems now. Console makers will need to do everything they can to get developers on board, as their attention is on smartphones and tablets, where the explosive sales growth has been lately.
With game developers happy, that leaves just one group left to please. And it's the most important one, consumers, who will have their say starting in the fall.
Game on
It's been a frustrating path for Microsoft investors, who've watched the company fail to capitalize on the incredible growth in mobile over the past decade. However, with the release of its own tablet, along with the widely anticipated Windows 8 operating system, the company is looking to make a splash in this booming market. In a new premium report on Microsoft, a Motley Fool analyst explains that while the opportunity is huge, so are the challenges. The report includes regular updates as key events occur, so make sure to claim a copy of this report now by clicking here.
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