Across the board global markets were down; lots of red and lots of gloom. Dow, NASDAQ, FTSE, Nikkei, you name it, it was down.
But we don’t care about the indices. Indices aren’t revolutionary. But technology companies are revolutionary and exciting. And even when markets look sad there’s plenty of technology stocks to get excited about.
Because among all this market craziness a battle is being fought.
However you probably didn’t even realise this battle is happening. There’s a lot at stake in this war. We’re almost certain that there’s been a fair amount of cyber espionage going on between these two (not that you could ever really prove it though).
It’s remarkable when one makes an announcement the other one almost immediately has the chance to rebuke and strike a counter-blow.
It’s a bit like a boxing match. A couple of jabs then a right hook. Then the other has the audacity to throw a lead right.
And these two superpowers come from two sides of the globe. One is in the Asian region and the other is of course from the USA.
You’d be easily mistaken to think we’re simply taking about the US and the Chinese governments. Both are currently embroiled in a cyber-war and there’s cyber espionage carried out daily. Thanks to Edward Snowden (whistle-blower) we now know the US uses Google, Apple, Microsoft, Oracle, Facebook and Twitter (amongst others) to monitor the world’s data.
This latest leak of the PRISM program has sent a shockwave through technology markets. It’s a genuine threat to our privacy. But that’s another story for another time.
Here we’re not talking about the US and the Chinese. When it comes to this unknown battle, we’re not even talking about two countries.
Battle of the Cyber Giants
We are talking about two of the biggest technology giants in the world. One is Microsoft and the other is actually Japanese; it’s Sony.
In the last few days the gloves have come of and these two giants of technology have brought to market (hopeful) game changers.
For the last 23 years the console war has played out in living rooms around the world. The console wars actually started in the 90′s and continue today. But early on where names like Sega, Panasonic and Atari existed, now it’s really down to Microsoft [NASDAQ:MSFT], Sony [NYSE:SNE] and Nintendo [TYO:7974]. Sadly with Nintendo’s latest lacklustre gaming console, the big three is withering down to the big two.
This console war might sound trivial, but to capture market share of the video game industry is market changing.
Consider this to see how significant this is;
Avatar (the movie) was the highest grossing film of all time. It pulled in over $2.4 billion at the box office. World of Warcraft (the video game) has grossed in excess of $10 billion. Call of Duty: Black Ops pulled in over $1.5 billion. These figures dominate Hollywood’s highest earners.
Further to that 67% of the people in the US play video games. That’s over 210 million US citizens. And for anyone that thinks games are ‘just for kids’, half of all gamers are aged between 18 and 49, with the average age being 34.
So right now it’s Sony vs. Microsoft with $70 billion in annual revenues up for grabs.
And overnight Sony let loose its biggest weapon, the new PlayStation 4. This was following the lead of Microsoft who only a few weeks earlier had unleashed their weapon, the Xbox One.
The last iteration of these gaming consoles combined sold over 120 million units worldwide. It spawned gaming revenues in the billions of dollars and over the next five years will create billions more.
But in these battles, although both end up making profit, only one will win the war. And so far Sony is winning.
Microsoft has given a launch price of the Xbox One at $499 USD. Funnily enough, as if they knew this would happen, Sony undercut them and the PS4 will launch at $399 USD.
Microsoft has placed strong restrictions on the sale and sharing of used games. And as though they have a crystal ball, Sony has said there will be no restrictions or restraint on sharing and selling used games.
Intentionally Sony has done everything that the gaming market wants, which happens to be distinctly opposite to what Microsoft have done. Cyber espionage anyone?
The more technical details of the release of the Xbox One and PS4 are also significant as they both use hardware from other big tech players.
Advanced Micro Devices [NYSE:AMD] provides some of the hardware that make the Xbox and PS4 come alive. So it’s not always just the big names on the box that benefit from these battles.
Either way, the game is on (so to speak). And it’s telling that Sony already has the upper hand because in a sea of red amongst global markets, Sony, thanks to their big release just happened to post a gain. And Microsoft? Well for their sake let’s hope the technology speaks for itself.
Sam Volkering
Technology Analyst
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