This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Microsoft Skype Deal Boosts Xbox's Game

REDMOND, Wash. ( TheStreet) -- Microsoft (MSFT) buying Skype for $8.5 billion isn't just a savvy move against Apple (AAPL), but a steel-toed kick to Sony (SNE) while its PlayStation products are down and hurting.

Microsoft's recently announced purchase of Skype certainly presents a challenge to Apple's FaceTime video conferencing, but there are bigger gains to be made in the gaming world, where Microsoft and its Xbox 360 are already a market-share monster. According to ComScore (SCOR - Get Report), Microsoft has a 7.5% share of the U.S. smartphone market that's fallen almost a full percentage point since December, while the share for Apple's iPhone is 25.5% and climbing. Though Nokia's (NOK) alliance with Microsoft has Gartner (IT - Get Report) betting that its cut of the global smartphone market will be 19.5% to Apple's 17.2% by 2015, right now the iPhone's iOS is on top with 15.7% of the world's smartphones compared with just 4.2% for the folks in Redmond.

Microsoft's $8.5 billion deal for Skype just gave the Xbox a weapon upgrade in its fight against Sony's PlayStation 3.

The battle Microsoft can win, however, is for dominance in a gaming industry where its Xbox 360's U.S. share is more than 35%, Sony's PlayStation 3 has little more than half that share and the industry's leader -- Nintendo -- just dropped the price of its flagship Wii bundles to $150 and dropped the price of such popular games as Legend of Zelda: Twilight Princess and Animal Crossing: City Folk.

"It has always been Microsoft's goal to make the Xbox 360 the total entertainment packaged," says Jesse Divnich, vice president of capital research for video game market research firm EEDAR. "With Netflix, gaming, music and HD movie playback now available through the Xbox 360, Microsoft's Skype acquisition is likely an attempt to position the Xbox 360 and other Microsoft platforms as a standard communication vehicle, in addition to its entertainment offerings."

The Xbox has gained some ground on Nintendo after introducing a slimmer, less red-ring-of-death-prone Xbox 360 last summer, trimming its base price to $199 and giving its users the camera-based Kinect motion-capture controller to play with, but the biggest boss standing between the Xbox and the next level has been Sony's PlayStation 3. The two consoles are the only two high-definition platforms in the industry and share many of the titles beloved by hard-core gamers -- including Activision's (ATVI - Get Report) Call of Duty series and TakeTwo's (TTWO - Get Report) Red Dead Redemption and Grand Theft Auto franchises. They also both released motion control devices last fall in an attempt to break Nintendo's hold on casual gamers.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
ATVI $34.47 0.00%
GOOG $693.01 0.00%
INTC $30.28 0.00%
IT $87.17 0.00%
SCOR $30.62 0.00%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs