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Bottom Line - Xbox One Or PS4?

Stocks in this article: AMD MSFT NVDA SNE

Chris Lau, Kapitall:  Microsoft (MSFT) peaked recently at nearly $36 on anticipation that Xbox One would renew consumer interest in games. The company is up 33% this year, but the multiple advantages of Sony’s (SNE) PlayStation 4 announcement could undermine the Xbox. It might be time for investors to take a profit in shares of Microsoft.  [Read more from Chris Lau:  These Suppliers are Set to Benefit from 80 Million Android Sales ]

$499 Mispricing

In the 90 minutes Microsoft spent introducing the Xbox One, the one thing that stuck out to the audience was the price tag. At $499, Microsoft is betting that consumers will strain their wallets by more than $100 – $150. Microsoft believes that bundling the Kinect device is needed so that every buyer will have a better experience with the Xbox. The very next day, Sony announced that the PS4 would be $100 less than the Xbox One. 

Copy Protection

Sony also said that that there would be no restrictions when playing used games, nor will any online connectivity be required to play. Both are advantages over Microsoft’s new Xbox.

Xbox 360 Still matters

Microsoft said that people who did not have online connectivity could still just get the Xbox 360. After the company announced a refreshed design on the Xbox 360, it indicated that the company will still be investing in the older console.

Renewed interest in PC gaming

Consumers who already have a PC could instead update their graphics card. NVIDIA’s (NVDA) GTX-level graphics card sells for around the same price as an Xbox One. This would support games at high settings for 2 or 3 years, and medium graphics settings for even longer. Comparable AMD (AMD) graphics cards are also another option for consumers.

AMD continues to be a favorite for investors as shares are holding their gains for 2013. AMD is up 62.5% this year. Conversely, NVIDIA is up 16% for the year.

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