Can the Xbox with Kinect cannibalize iPad sales?


Microsoft latest gadget, the Kinect controller for the Xbox 360, was unveiled amid great celebration this morning in Times Square, NY city. The event featured music by R&B Singer Ne-yo and hundreds of dancers. There were other launch parties across the country with stores opening at midnight to cater for the early adopters. All in all, Microsoft did a pretty good job creating awareness for the device which also included featuring the products on TV shows like, Oprah, Good Moring America, The Ellen show e.t.c

The reviews for the products are somewhat mixed with some “expert” reviewers hesitant to give it their full confidence while on the other hand, most of the average users seem to be satisfied with the product despite its growing pains.  So what does this have to do with the iPad? There has been a general consensus that the iPad has been cannibalizing netbook sales with MS apparently  admitting to this phenomena. When I look at these two products, even though they seem be worlds apart, they basically cater to the same segment; consumption of media and entertainment.  The iPad has some advantages in that it is mobile and can be used for things other than entertainment but the Kinect has advantages in better multiplayer online gaming, Video Kinect, ability to watch movies with friends over long distances and such. Furthermore the Kinect with  Xbox 360 provides entertainment for the whole family while the iPad is a one person device.

When it comes to price, the Kinect comes out ahead too. Starting from $149.99 for the device only to $399.99 for the most expensive bundle. The price  still ends up being $100 less than the cheapest iPad which then can be used to purchase the Xbox live family pack for up to four people bringing it to parity with the least costly Apple offering. I think Microsoft would be wise to allocate some of their marketing budget to exploit this value proposition. Say a consumer has $500 to spend towards an electronic gadget this holiday season, should they buy an iPad or an Xbox with Kinect?

So to answer my question, yes, I think that Kinect has the potential to cannibalize, if not slow down iPad sales. The only question is whether Microsoft is courageous enough to go for the jugular. As for all the other areas that are not entertainment related, well, that is what Windows Phone 7 is for.

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