Following the recent developments in the potential acquisition of Activision Blizzard by Microsoft, the latter has been revealing further insights on how gaming logs itself in the group's strategic growth segments. Confronted with potential market saturation for its primary Office and Windows products, Microsoft sought out alternative avenues for growth for already quite some time. Amid an uncertain economic climate and strong competition, questions abound regarding Microsoft's new console. Can they effectively challenge Nintendo and Playstation, deliver a sufficiently powerful console, offer compelling franchises, and capture market share from the industry leaders? On November 15, 2001, Microsoft made its debut in the gaming market by launching the first Xbox . This marked the company's entry into the industry, and under the leadership of Robbie Bach, Microsoft established its gaming division with the ambition of becoming a significant player and surpass the competition. During this period, the gaming landscape was fiercely competitive, with Sony's PlayStation and Nintendo's consoles dominating the market and making it challenging for newcomers to find growth opportunities. There were many questions surrounding the new console, given the uncertain economic climate and formidable competition. Let's go back to the fall of 2002, just one year after the release of Microsoft's first console. Microsoft was faced with the unusual challenge of entering an unfamiliar market relatively late. The company made the strategic decision that, instead of replicating a PC, it would position the Xbox as a direct competitor to the Sony PlayStation 2. Opting to develop a PC rather than an Xbox could have been a more straightforward choice for Microsoft, given their established proficiency in software and operating systems, primarily through Windows. It would have also facilitated smoother software compatibility, enabling the launch of PC games with minimal adjustments. Creating a PC likely would have entailed less resource-intensive efforts and lower costs in comparison to the development of the Xbox. The fierce rivalry in the gaming console industry, coupled with a strong public interest for the latest game releases, has prompted console suppliers to adopt a "razor-and-blades" business model. Manufacturers are willing to generate minimal or even no profit from the sale of consoles, aiming to rapidly expand their user base and subsequently increase profits through the sale of games. The primary goal for Xbox was to outperform the competition with a high-performance console compared to what was offered by the market leaders, but consumers would assess their equipment purchases based on the quality and popularity of available titles. Indeed, in the past decade, Sony and Nintendo have established a thriving realm of gaming franchises and this would become the primary challenge for Microsoft's gaming division over the years. Microsoft goes on an acquisition binge To establish its...
