Sunday, August 8, 2010

Microsoft Kinect - some good reasons why a "Kinect app store" could be soon announced

Microsoft could be the Santa Claus of the year thanks to its Kinect - a visual motion detection system combined with XBox360 to replicate Wii gaming experience without any remote control/wimote. A "Kinect app store" could have a huge impact on the overall multimedia and communication market.

Despite the fight between main smartphone manufacturers to federate application developers around their app store in mobile arena, Microsoft still applies the classical game console business model where the top-5 game editors provide a large part of the content. Zune will be the content platform. No signs of app store ... until now.

However, a "Kinect app store" would definitely re-position Microsoft against different kinds of competitors :

Against kings of smartphone apps. This would give Microsoft a first mover advantage against a possible extension of Apple or Google on TV. Both companies federate a large community of developers and already have thousands of apps available. Both Apple and Google could create home devices running their portfolio of apps on TV.

Against game console manufacturers. This would rapidly build the largest portfolio of console games. Of course, Sony & Nintendo could react but both companies don't have any experience with support of large communities of developers. Microsoft support developers for 2 decades. Of course, this would push Microsoft to some compromises in the way they currently deal with developers.

Against telco and SetTopBox vendors in the small IPTV market. Leveraging their leading position in IPTV, Microsoft could propose SetTopBox extensions/migration scenarios for consumers to benefit of these apps. Most of SetTopBox devices hardware setup is today probably too weak to support this kind of local applications, especially if it was not foreseen from day-1. Moreover, Microsoft significantly reduced the price of basic XBox. Simple SetTopBoxes are doomed to disappear.

It's obvious that KIN and KINECT have same roots. There is no coincidence. KIN project on mobile is perhaps delayed, waiting for Microsoft to focus on home during 6-12 months, develop an app position on this market and bring a compatible smartphone afterwards. Microsoft would then be the first player addressing the whole scope of multi-screen.

But even the large Microsoft is too small to develop all applications for this potential. Moreover, leveraging a community of developer largely supports the development of a device during beginning of this 21st century. So Microsoft probably has interest to delegate app development to developer communities. Apple paved the way of developer federation. Google proved that this model can be copied. Microsoft can then smartly activate developer communities, which has been his territory during last two decades, seeding their multimedia app portfolio from TV green field instead of overcrowded mobile arena.

Launching a KIN in June this year did not indeed make sense in this scenario. No obvious reasons for consumers to buy KIN now. If Kinect is a success, rules of the game then change and a complementary mobile phone then fully applies for young consumers and thus solve the issues addressed in this post and in this post.

Another market analysis published these days shows that consumers, when buying a new TV set, more focus on online connectivity than on 3D features. So consumers are demanding an Internet TV model.

Until today, this "Kinect app store" scenario still is an assumption. On the other hand, the fact that TV landscape and ecosystem will drastically evolve in the coming 5 years is a given.
So, game console manufacturers, telco vendors, smartphone vendors, gaming software editors have some time to prepare a battle plan taking the "Kinect app store" scenario into account. Telecom and cable operators would also be well inspired to analyse such a scenario.
Because, for all these players, there are so many things to do to anticipate possible next moves of the dinosaur.

To be continued ...

Benoit Quirynen

Kinect - a first step to reconnect Microsoft with youngsters ?

Microsoft has announced a 240M$ writeoff in their last financial announcement due to KIN mobile phone project cancellation. What appears to be a huge amount for any company is just a drop in the ocean of Microsoft revenues.

This week, Global Equities Research analyst have downgraded the note of Microsoft, not for this writeoff but for what sits behind. Microsoft is losing ground on Office battlefield in education, public and call center sectors (which represent 10%). Moreover, companies more and more give the choice to employees to choose a MAC or a PC.

But the tough statement does not sit in immediate market share or price erosion. As outlined in a previous post, it's much more dangerous long term than short term. Analysts outlines the danger : "Microsoft is unable to connect with the new generation of users. This could cause problems down the road." KIN phone cancellation is just an additional proof point. Microsoft software appears as old-fashioned for youngsters.

But Microsoft is not yet dead. Thanks to huge cash and some current projects, Microsoft certainly can recover if they play the right card. This reconciliation card can be found in 3 packs : mobile, Internet and games.

In the area of game console, a commercial name - Kinect - has been assigned to the "Natal research project". Thanks to Kinect XBox add-on (yes, it works with an existing XBox), you can live a kind of Wii gaming experience without the need of a Wimote. First Kinect Games are announced before Christmas.

On the techno side, even if Kinect could be a huge technological step forward for visual movement detection, it lacks the vibration feedback proposed by game console accessories, Wimote and ... mobile phone games.

On the business side, Kinect still applies the old gaming business model - a game console partnering with top game editors. We address within another post the missed opportunity : a "Kinect app store" linked with a decent "Kinect developer program" for any developer to leverage the assets of this technological breakthrough.

Even if the experience is nice and movement detection accurate enough (still to be proven ...), this project can only be a first step. It will certainly not be sufficient to reconcile Microsoft with a generation. Still a long way to go for Steve Ballmer, much more in terms of mindset than in terms of technology, before Microsoft becomes hype within communities of digital natives.

To be continued ...

Benoit Quirynen