Microsoft Kinect Sells 1 Million Units in First 10 Days

Microsoft (NASDAQ: MSFT ) has been a bit cocky in regards to its Xbox 360 video game console this year. More specifically, they have boasted high expectations for their new hands-free controller device Kinect. Microsoft has been so confident in the device that they predicted the device would sell 3 million units by the end of 2011. Xbox product director Aaron Greenberg made the confident claim that Kinect would move that large quantity at the Tokyo Game Show last September. On Nov. 3, just one day before Kinect hit the market, Microsoft upped the ante, saying it expected to sell 5 million Kinect peripherals before the end of 2010. According to a press release distributed by the company today, they’re well on their way to that goal. The Kinect has reportedly sold 1 million units in its first 10 days on the market. The camera and microphone array add-on for the Xbox 360 was first announced at the Electronics Entertainment Expo in June of 2009 and Microsoft has spent the past eighteen months promoting the device (formerly called Project Natal) to the American public. With major promotions for the device coming from as diverse a variety of outlets as Oprah Winfrey’s talk show, Microsoft has certainly laid the groundwork for convincing the public to upgrade their motion controlled video game system of choice from Nintendo ‘s (PINK: NTDOY ) Wii to the Xbox 360 and Kinect. Following four years of major Wii sales each month, both Microsoft and Sony (NYSE: SNE )—the other major home gaming console manufacturers—have both brought their own motion control products to market. Sony’s Playstation Move controller for the Playstation 3, released in September, has not seen the same raw success as the Kinect but its sales are also more difficult to track. While the Kinect is a single product available on its own or packaged with the Xbox 360 console itself, the Move is sold as a standalone item, in a package that includes the PlaystationEye camera device necessary to use the controller, and in a package with the Playstation 3 console as well. While Sony announced that 1 million Move controllers were shipped in September, Wedbush Morgan analyst Michael Pachter believes the company only sold approximately 300,000 units during that month. Microsoft has more to be proud of this fall than just the success of the Kinect. The company is also riding a major surge in Xbox 360 sales since the release of a redesigned model of the console last June. Xbox 360 console sales have been up +37% on average each month since. While the company has had some missteps in software releases this year—last spring’s Alan Wake performed poorly, selling less than 200,000 units in its first month— Halo: Reach , the latest entry in the company’s record breaking series, sold 3.3 million copies in its first day of sales last September. It is possible that Microsoft will win the video game market during the holiday 2010 season. Nintendo has dominated in recent years thanks to software like Wii Fit and New Super Mario Bros. and the popularity of their Wii and Nintendo DS consoles, but declines in both DS and Wii sales seem to suggest that the markets for both devices have become saturated. The Xbox 360, however, has shown great momentum that should only be intensified by Kinect sales and the release of Activision Blizzard ‘s (NASDAQ: ATVI ) Call of Duty: Black Ops . While the Call of Duty games are available on all consoles, entries in the series have traditionally sold better on Microsoft’s platform. When Call of Duty: Modern Warfare 2 debuted in November 2009, it sold 4.2 million copies on the Xbox 360, compared to 1.87 million copies on the Playstation 3. Microsoft shares dropped to $25.88 in the past 24 hours, down -2% after a brief scuffle between shareholders, company founder Bill Gates, and CEO Steve Ballmer. Shareholders expressed discontent over a lack of growth in the company as both Gates and Ballmer prepare to sell off large portions of their mutually significant stakes in the company. Some investors and analysts have suggested that Microsoft split up the company, particularly separating the now-lucrative Xbox division into its own company. Given the success of Microsoft’s entertainment division, and the flatness of the business overall, this doesn’t seem like a terrible idea. Investors curious as to whether or not the Xbox 360′s success this fall makes Microsoft a good buy, the answer is no. But the time is right to start preparing for a possible Xbox company to invest in the future. As of this writing, Anthony Agnello did not own a position in any of the stocks named here.
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