Is Microsoft's next $1 billion dollar business the Kinect? |
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Is Microsoft's next $1 billion dollar business the Kinect?
Last week, Microsoft communications chief Frank Shaw pointed out that the software giant has expanded its line-up of billion-dollar businesses from three to eleven in the past decade. Now, an analyst is predicting that another Microsoft product may join that club. And the amazing thing about it is that the product hasn't even been released yet.
Microsoft's Kinect video game controlling system -- set to be released this fall for $149.99 -- could generate $900 million in revenue in the first year, according to a research note from Caris & Co. analyst Sandeep Aggarwal. Aggarwal anticipates that 15 to 25 percent of the 40 million Xbox 360 users will buy a Kinect in the first year, according to the note, which Barron's Tech Trader Daily blog covered this morning.
At 15 percent adoption, that equates to $900 million in hardware sales. At 25 percent, it would be $1.5 billion in new revenue.
Kinect's revenue will most likely get combined with the Xbox group. So, in that regard, it may not be broken out as a separate Microsoft unit to give the company an even dozen $1 billion businesses. Nonetheless, hitting $1 billion in revenue in the first year would be a huge milestone for Microsoft.
Aggarwal also notes that Kinect could drive up to $2 billion in overall consumer spending on video games, with Microsoft collecting some 50 to 60 percent of that in the first year. That could mean additional sales of the Xbox gaming console, with Aggarwal saying that Microsoft could sell an additional one million new consoles.
Aggarwal also offers six reasons why investors should be bullish about Microsoft shares, from Bing market share gains to strong sales of Windows 7, according to the Barron's post.
Related: 'Kinect' first take: What it is like to play games without a controller
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