Is an Xbox Portable in the works?

[Wayde]

Microsoft has been waiting on the sidelines until its gaming console and software business reaches sustainability…" says Thomas Wolf of The Diffusion Group, a media analyst think tank. The Diffusion Group believes Microsoft is only waiting to see the Xbox console and software titles further embedded into the public conscious. Meanwhile they're studying what's working and what's not among the existing players.

The Diffusion Group believes Microsoft will make its move sometime in the next two years with the kind of vigor they employed when entering the console games market back in 2001. Do Microsoft original titles like Halo have the strength to convert to portable system sales? Microsoft will gauge its chances to compete on the success of upcoming games like Halo 3 and Gears of War. Selling a few smash hit exclusive titles for their own hardware will make an Xbox Portable a real success.

There are differences between the handheld console market and the home console. Namely technology and features aren't as important. To this day no portable game system has been more popular than Nintendo's original Gameboy with over 120 million units sold. Modest pricing and recognized game franchises seem to be what equate to success. Sony's PSP is making waves with the same brute force marketing the company is using with PlayStation 3. The Japanese giant branded a whole new disk format in Universal Movie Disk (UMD) and then cut the cost of the PlayStation Portable to compete with Nintendo's DS at a loss. The jury is still out on whether or not Sony has been effective in overturning Nintendo as the incumbent in this generation of portable game consoles. The UMD was off to a great start but now - word is they're collecting dust on store shelves. Studios will now begin to release fewer UMD titles.

TDG's report suggests Microsoft may not produce the hardware themselves. Instead Microsoft could go with a business model that is very familiar to them by producing the operating system that runs on other people's hardware.

The Diffusion Group is a market research firm dedicated to digital media. Their website is full of insights on the consumer electronics market place. Full reports are a bit costly though so if you're interested in the intimate details of the console games market it'll run you $1495. If you thought game consoles were kid's stuff, it's serious business.

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