New for Xbox Kinect: Bombastic Ballmer’s $2 Billion Blowout

Published on December 13, 2010
by John Paczkowski

Kinect, Microsoft’s new controllerless controller for the Xbox 360 is shaping up to be a monster hit, one that should give the gaming platform momentum enough to carry it forward for some time to come. Microsoft said last week that it sold 2.5 million Kinects in the device’s first 25 days at market, and feels confident it will sell 5 million by year end. Which should give a nice bump to the company’s top line.

In fact, Caris & Co. analyst Sandeep Aggarwal says he expects Kinect to generate about $2 billion in gross revenue for the Xbox ecosystem. Beyond sales of Kinect itself, the controller is also driving sales of most everything else Xbox related. In Aggarwal’s view, Kinect offers four distinct benefits to Microsoft:

  1. Better material attach rate for the 45 million Xbox installed base
  2. Higher adoption and market share gain for the console itself
  3. An uptick from the sale of new titles
  4. Lower attrition and higher gross new subscriber growth for Xbox Live users

“As expected, the launch of Kinect increased noticeably the overall buzz around Xbox and helped improve the adoption of the console,” he concludes. “Just before the launch, Microsoft increased its forecast for worldwide sales from 3 million to 5 million by the end of the year. This forecast seems conservative now, given the strong reception.”

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