Why Xbox Lost Market Share

How did Xbox actually lose the console fight, versus Sony?

I think it’s too early to say they’ve lost. They lost market share in the last generation. If you look back at the history of consoles, quite often, market share shifts, not because of one side doing something brilliant, but because of the other side messing up. To some extent, I think that was the case with the last generation. After a troubled PlayStation 3, Sony put in a really solid, consumer-centric, well thought through proposition, for the customer. Xbox went off on a little bit of a tangent. If you recall, they had a good position – not everywhere in the world – but certainly in the US, the UK and Australia. They are still pretty weak in much of Europe and in Japan. Certainly, it wasn’t the case that Xbox was the dominant global player, but it was certainly did really well, compared to PS3.

If you look at what happened after, there were just mistakes in its consumer proposition. For example, the issues around rental and second-hand games. It wasn’t a mistake of technology, but there were periods in time where there seemed to be a distraction from a consumer-centric position. There was also a little bit of a confused position, around where Xbox had gone into its video propositions and tuners and those kind of things, which I think had confused the market. If you recall, they had this ability to plug into your TV and watch TV, using old broadcast technology, at one point. In those steps, there was a little bit of confusion. Whereas, PlayStation and Nintendo had remained hyper focused on their proposition.

They’re very small differences. When the market swings, it swings around those small differences. I wouldn’t say that Xbox has lost, it’s just that the market share has changed; it’s still there.