After a win in April, Microsoft is hungry to try to steal the sales lead from Sony

Midway through the eighth generation of the console wars, Microsoft Corp. (MSFT) is hard doing its best to close the gap with Japan's Sony Corp.'s (TYO:6758) Playstation 4 (PS4).  The efforts -- including software bundles and a price drop to $399 USD -- appear to be working.  Now Microsoft and a key retail partner are adding a trade-in discount of up to $175 USD off the Xbox One -- but for this week only.

Sales data indicate that while the Xbox One's sales trail well behind lifetime PlayStation 4 sales, Microsoft has closed the gap somewhat.  Still, in Microsoft's corporate Q3FY2015 earnings report (the first calendar quarter of 2015), it acknowledge that the Xbox unit saw a revenue drop of 21 percent on a constant currency basis, versus the same quarter last year.  Microsoft blamed that partially on ongoing discounting versus the console's launch price, but it also admitted in the earnings release that it saw "lower console units" volume in the Jan.-Mar. 2015 window vs. Jan.-Mar. 2014.

The last couple months have seen the Xbox One once more heat up sales-wise, though.  In April it actually outsold the PS4 for the first time in several months.  And while it came in second place in May, evidence indicated a tight race.

Xbox One console

Citing data from the NPD Group, Microsoft told VentureBeat last Friday:

Xbox One and Xbox Live continue to see strong growth in sales and engagement. Xbox One sales in the U.S. were up 81 percent over May 2014 and active global Xbox Live members, Xbox One and Xbox 360, were up 20 percent.  We are grateful to our fans for choosing Xbox One and for making Xbox Live the fun and vibrant community that is. We can’t wait to share more on the greatest games lineup in Xbox history at E3 next week.

With the gaming industry's largest trade show -- the E3 (Electronic Entertainment Expo) 2015 -- kicking off Sunday and running through Thursday of this week, all eyes are on these rivals as they make their pitch for console hegemony.  While much of that pitch involves software, Microsoft is also looking to sweeten its offerings with slight design tweaks.

Last Tuesday the console-maker announced a new wireless controller with a 3.5 mm headphone jack built-in.  The controller also sports tuned bumper controls and wireless firmware updates.  A USB dongle to plug into the console to receive the wireless signal will retail for $25 USD as a standalone piece of hardware, or $80 USD in a bundle with the controller.

In addition to the new controller, Microsoft also added a 1 terabyte (TB) hard drive SKU priced at $399 USD to complement the existing 512 gigabyte (GB) version, which retails for $349 USD.  The new SKU also comes with a free digital download of Halo: The Master Chief Collection, for a limited time.

Xbox One 1 TB

Microsoft's Australian wing also leaked plans for a developer bundle titled the "Independent Developers Pack" (512 GB) which will retail for approximately $399 USD ($499 AUD).

Xbox One

At its press conference today Microsoft also announced a brand new controller with reprogrammable buttons, targeted at "hardcore gamers".

Xbox Controller

Xbox Controller

WinBeta reported today that Microsoft is also teaming up with Best Buy Comp. Inc. (BBY), one of America's largest brick and mortar retailers, to offer a console trade-in/upgrade incentives program.  Under the deal, any working PlayStation 3 (PS3) or Xbox 360 model will earn you a $75 USD discount off an Xbox One.  And if it's a Xbox 360 250GB or PS3 Slim (the more desirable models), you'll get an addition $100 USD gift card, for a maximum discount of $175 USD.

Best Buy trade in

The deal only lasts through June 20.  Best Buy writes various disclaimers, commenting:

Not available in all locations and some stores may have additional limitations. Console must include AC adapter/power cord, power on, not be damaged or have its warranty seal broken to be considered working. Not compatible with other trade-in offers. You are required to agree to the Terms & Conditions. No Dealers. Limit of 1 trade per person. See a Customer Specialist or for details.

Again, this deal is only through Best Buy, so beware if you shop elsewhere.

On the games front, the Xbox One is getting backwards compatibility -- sort of.  The legacy gameplay will be implemented via a software and firmware effort, not a true hardware compatibility effort.  To that end Microsoft is creating a new legacy library of Xbox 360 titles.

legacy library

Microsoft says that you "won't have to repurchase" titles you already own, so presumably you'' be able to scan your old game's barcode and get a free download of titles you already own.  The library won't be complete overnight; it's expected to launch with 100 of the most popular titles from the last-gen console and grow from there.

Aside from the games themselves, one factor complicating matters for console buyers is the looming release of Windows 10, a highly anticipated cross platform operating system update.  It's unclear when the Xbox One variant of Windows 10 will land in finished form, but Xbox chief Phil Spencer recently promised a beta build for adventurous Xbox One users in the "post-summer" window: For some this may be a deciding factor in the Xbox One vs. PS4 debate, although for Microsoft's critics, the presence of Windows could also be a negative.

Given its healthy sales lead, Sony has kept more conservative with its own discounting.  However, a leaked U.S. Federal Communications Commission (FCC) filing shows that it's prepping a 1 terabyte PS4 SKU to counter Microsoft's new Xbox One SKU.  That product will likely be announced at E3 -- we'll just have to watch and wait to see what else Sony might have in store for its fans.

Sony will give its press conference later this afternoon, at 5:30 p.m. PDT (8:30 p.m. EST).

Sources: Best Buy [press release], Microsoft Xbox [E3 briefing], via Neowin

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