The Xbox One. Image: Microsoft.
Microsoft will no longer regularly report Xbox unit sales, according to Game Informer. Instead, the Redmond tech giant will use Xbox Live engagement to illustrate the success of its gaming business. The shift in disclosure may obscure disappointing hardware demand, but it fits within the context of Microsoft's evolving strategy.
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Shifting disclosure standardsSince Microsoft entered the video game console business in 2001, it has been fairly transparent when it comes to the Xbox, breaking out consoles sales regularly each quarter. The same initially held true for the Xbox One, but Microsoft has slowly shifted its disclosure standards, making it difficult to determine just how many next-generation consoles the company is actually selling.
The Xbox One made its debut in November 2013, during Microsoft's fiscal second quarter. In that earnings report, and the earnings report that followed, Microsoft broke out the number of Xbox One consoles it had sold (3.9 million and 1.2 million, respectively) and the number of older Xbox 360s it had sold (3.5 million and 0.8 million). But in its fiscal fourth quarter, it combined the two, reporting only that it had sold 1.1 million consoles. Given the trends in the video game industry, the majority of those consoles were probably Xbox Ones, but it's impossible to say for sure. In recent quarters, Microsoft has held to that, giving out only combined figures in its quarterly earnings.
But now, investors won't even get that. Last month, when Microsoft reported earnings, it did not break out its Xbox unit sales. Instead, Microsoft's management divulged the number of Xbox Live monthly active users -- 39 million, up 28% on an annual basis. That figure includes the number of users that have logged in to Microsoft's service at least once within the past month.
Xbox Live is the digital network that underpins Microsoft's Xbox consoles, allowing gamers to interact with each other and play together. But it powers both the Xbox One and the Xbox 360, which has sold more than 80 million consoles globally over the last decade. A significant percentage of those active Xbox Live users, then, could be coming to the service from Microsoft's older console.
Some of them could even be coming from Windows. Microsoft's latest operating system, Windows 10, integrates with Xbox Live, allowing PC gamers to contact their friends. Eventually, they'll be able to play with them. Microsoft's upcoming Fable Legends will make its debut on both the Xbox One and Windows 10 PCs, and gamers on one platform will -- through Xbox Live -- be able to play with their friends on another.
It's all WindowsThe Xbox One's chief rival, the PlayStation 4, has notably outsold it in the past -- in some months, by a ratio of 2-to-1. Dropping the disclosure of unit sales may be Microsoft's attempt to hide the relative failure of one of its iconic products.
But it's bigger than that. Microsoft's Xbox is now included in its More Personal Computing segment, along with Windows, Bing, and the Surface. Later this month, Microsoft will issue a software patch for its Xbox One console, updating its operating system to Windows 10. The Xbox One will maintain a distinct interface, and be able to run exclusive games, but will, in effect, become a Windows PC designed for the living room. It will integrate with Microsoft's digital personal assistant, Cortana, and by extension Bing, and exist as another outlet within the Windows ecosystem.
Meanwhile, Microsoft is pushing gaming more heavily from the PC side. During the company's earnings call in July, Microsoft CEO Satya Nadella explained that the company was hoping to use gaming to monetize Windows 10, which is currently offered as a free update for consumers. "Windows 10 creates monetization opportunities with ... gaming," he explained.
While Xbox One unit sales would provide another interesting data point each quarter, it won't be necessary. With Windows 10 coming to Xbox, and Xbox Live on Windows 10, Microsoft's gaming business is no longer about individual consoles and more about the broader Windows platform. In that sense, the number of active Xbox Live users will probably provide a better sense of Microsoft's gaming business in the quarters to come.
The article Microsoft Corporation Doesn't Care About Xbox One Sales originally appeared on Fool.com.
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