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Microsoft Unveils Xbox Controller for Specially-Abled Gamers

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Microsoft Corp (MSFT - Free Report) recently unveiled a new gamepad, Xbox Adaptive Controller, which is aimed to ensure “gaming for everyone”. The controller, priced at $99.99, can be personalized as per the requirements of the gamer.

The controller comprises two big programmable buttons and 19 3.5 mm ports round the back connecting to blow tubes, pedals, and other accessories.

Per Microsoft’s blog, development story dates back to almost 2014. The feature, Copilot (released in 2017) for Xbox One witnessed creative use beyond the company’s imagination and inspired the developers.

Bringing inclusivity will boost engagement, consequently bolstering its user base going forward.

Notably, Microsoft shares have gained 14.1%, substantially outperforming S&P market's rally of 2.4%.




Gaining Competitive Edge

In the gaming console market, XBox can gain a competitive edge with the new Adaptive Controller over Nintendo, which doesn’t have significant improvement in features tailor-made for differently-abled gamers.

Meanwhile, Sony’s PlayStation 4 has controllers which make gaming comparatively easier for differently-abled over Play Station 3, thanks to its reorganized operating system as well as user interface (“UI”) and tighter controls.

Per an IDC study, total spending in home game console market for the years 2018 and 2019 is projected to be more than $45 billion each.

Per Statista, PlayStation 4, dominated the console market generating 19.64 million unit sales in 2017, Nintendo Switch posted 11.85 million units coming second, while Microsoft’s XBox One sales came in at 8.21 million units.

Per Statista, PwC projects console games industry revenues to grow by 2.43% per year between 2015 and 2020.

Gaming Segment Performance

In the recently reported third quarter, Microsoft’s gaming revenues increased 18% (16% at constant currency) to $2.25 billion, driven by robust performance from Xbox software and services (up 21% at cc). Xbox Live monthly active users were up 13% to 59 million active users.

During the quarter, Sea of Thieves was launched, which recently crossed 2 million unique players. Per a statement blog from Rare studio head Craig Duncan, “The worldwide excitement for Sea of Thieves has made it the fastest-selling first-party new IP of this generation.”

For the fourth quarter of fiscal 2018, Microsoft anticipates Gaming revenues to grow at a higher rate due to benefits from third-party game title performance and improving user engagement.

Zacks Rank & Key Picks

Microsoft currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the broader technology sector worth considering are Western Digital Corporation (WDC - Free Report) , Mellanox Technologies, Ltd. and Micron Technology, Inc. (MU - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Western Digital, Mellanox and Micron are projected at 19%, 15% and 10%, respectively.

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