Initial application: Microsoft's entry into the video game industry exemplifies the firm's implementation of robust adaptive strategies. They expended the business venture. They entered into the industry with it's Xbox. They took this risk because they thought that with established financial base Microsoft has plenty of room to experiment.
Creating Competitive advantages:
- Product implementation: To differentiate themselves from the competitors they came up with Xbox 360. The new system effectively doubled the bandwidth, added eight times the memory of the original Xbox, created a service Xbox live and enhanced the graphics playing power.
- System implementation: Microsoft has somewhat locked in customers. Once a customer has purchased a console, they will most likely purchase games for that specific console in order to get their money's worth.
- Sale of Xbox one: Last quarter Microsoft reported 2 million total console sales. This includes 1.2 million of Xbox One and 800,000 of Xbox 360s. This quarter Microsoft announced a grand total of 1.1 million console sales and if we take those numbers and assume 360 is stilling selling similarly then we arrive at only 300,000 Xbox One sold for the quarter ending in may which is very poor compared to their competitors. You may have heard reports that sales of the console have more than doubled but this is just a clever marketing spin to paint the Xbox One in a more favorable light.
Reason for being failure: Though Microsoft did some big PR events for launching this brand and at the same time developed and implemented some strategies their sales of Xbox One is falling day by day. Even though they have used and improved some competitive advantages to compete the other competitors they have failed to do so. Adding insult to injury, Microsoft's competitor Sony, launched the Play Station 4 and from tweets and Facebook posts, Sony effectively accommodated disgruntled fans who felt betrayed by Microsoft decision. There are some other reasons for failing this brand. They are-
1) They failed to build proper brand resonance. Brand resonance means creating intense and active loyalty relationship with customers by highlighting how brand positioning affects what customers think, feel and do. Some initial missteps of Xbox One include lack of physical drive, the console's "always on" connectivity requirements, draconian digital right management (DRM) and a focus on live TV simply did not resonate as the company had hoped.
2) They also did not create a firm meaning of the brand. Lack of a defined vision for the Xbox One has clearly hurt its sales numbers.
3) Microsoft has been slow to approve new services in order to ensure quality.
4) Microsoft is hoping that a wide variety of video apps and windows PC apps will convince the non-gamers to buy into $449 Xbox One experience for their living room instead of a $99 Apple TV. In this case Microsoft has to prove that - what it is offering is better than just a smart TV or set-top box.
Recommendation: If they want a U-turn in their position they need to achieve the consumer trust. Through a proper communication with their consumers they will have to build the proper bilateral relation. Good news is that Xbox quickly sought to make amends by admitting its mistakes and seeking to make the appropriate changes by restating the physical drive, eliminating "always on" feature, amending DRM policies and by focusing the games and gamers. They have realized that companies do not own brands, consumers do.
