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Xbox: The SWOT Analysis

The market of the computer and other innovative technologies expands every day. The computer and Internet became an essential part of people’s lives not only in their working places but also at homes. Microsoft, one of the most powerful companies in the computer field, has launched Xbox, a new video game console, which entered the market in 2001 and continues its existence till now. Xbox innovation had both its rises and falls, and to consider its position on the market now, a SWOT analysis should be provided.

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Summarizing some information about the Xbox (Xbox 2009), it should be mentioned that being invented by Microsoft Company, the item was expected to reach success. The main peculiarity of the item is that it was a game, but access to the Internet was provided with the ability to show DVD. The introduction of the new product to the market cost the company about $500 million, which covered marketing costs, advertising campaigns, and support to retailers and software makers. The company development may be divided into several periods, which have some different characteristic features in the product behavior.

Analyzing the development of the Xbox product on the world market, five main periods may be provided. 2001 was the year of the product launching and its first appearance on the market. The significant feature of the period is that Sony’s PlayStation 2 and Sega’s Dreamcast were present on the market for a year already had managed to take up their own customers’ segments on the market. But still, the appearance of the new product with new possibilities from the Microsoft Company was impossible to avoid. 2002-2004 were the years of the growing of the Internet market and the further understanding of the advantages of the Xbox product. The market of the console games was left by Sega Dreamcast that allowed for Xbox to increase its customers in the count of Sega Dreamcast’s one. 2004 was the year of Sony domination under Xbox. The reduction of Sony’s prices made it possible for them to increase their sales dramatically. Moreover, Xbox faced the problem that its customers are more oriented in the USA, while Europe and Asia markets provide weak demand on Xbox. In addition, there was the suggestion that Microsoft Company loses $100 on every XBox item, which is sold, which provides huge harm to the company’s business in general. In 2007 the shift of attention to the new product took place, the Wii gaming console by Nintendo, which reduced the customers’ attention from Microsoft and Sony products in the current sphere. The sharp competition continues till now as every company wants to receive the biggest amount of customers and to have the bigger segment in the market.

Before analyzing internal and external factors, which influence the Xbox product and the Microsoft Company as the manufacture of the product, the understanding of the essential peculiarities of these factors should be provided. Internal factors are factors which “take a close look at the organization, laying out core competencies and areas in which a business has a competitive advantage” (Pinson 2008, p.33). Moreover, the internal factors also characterize the area, where the discussed business has some weaknesses. In other words, internal factors provide the inner analysis of the company, its peculiarities inside, without referencing the market and other outside factors.

There are two main categories of internal factors, organizational and technological factors, which should be analyzed (Gingrich 2003, p.104). The internal factors of the Xbox product by Microsoft Company are that the company is structured and organized and this strict hierarchical organization influences the high rate and quality production of the company. Microsoft is a company which is specialized in innovative technologies and the level of the technological infrastructure of the company is high. The combination of organizational and technological factors provides the effective business conduct of the company.

The external factors are factors, which focus on the marketplace of the company in the world, help to search for the new areas, where the company may conduct with the current product and increase the purchase ability of it, which will lead to the successful outcome for the company in general. Moreover, the external factors also analyze the place of other similar products on the market, their place there, and development. The external factors of the Microsoft Company and Xbox product, in particular, take a look at Sony and Sega products, analyze their place in the world market, the market segment, which they occupy, and identify the ways, according to which the company may provide the successful competition with them. Moreover, the main disadvantage of the marketplace of Xbox is that it is not on the world market and continues its main functioning on the USA market, while the world market may offer new opportunities for business development.

Turning to the SWOT analysis of the Microsoft company and its Xbox product, it should be mentioned that “SWOT analysis draws the critical strengths, weaknesses, opportunities, and threats from the strategic unit” (Kotler et al 2008, p.134). The opportunities and threats of the company may be characterized in the following units, economic climate, demographic changes, market, and technologies (Kotler et al 2008, 134).

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Strengths: coming out of the discussed case study, the Xbox product has a lot of opportunities. Being a highly developed company with a developed brand name, the Microsoft Corporation stimulates customers to use the Xbox instead of other company products.

Weaknesses: the weakness of the Xbox product is that its segmentation is not developed worldwide. Being the world brand, the Xbox product developed its marketplace in the USA, but it could not take its place in the European and Asia markets, which reduces its popularity and income.

Opportunities: the main opportunity of the Xbox product is to use the abilities of the Microsoft Corporation, to provide the advertising campaigns, connected with the Microsoft name, and to develop the product worldwide.

Threats: The main threat of the Xbox product from 2007 remains the Wii gaming console by Nintendo, which occupies its leading position on the console game market and tries to become the only company in the current sphere.

In conclusion, being the product of Microsoft Corporation, Xbox remains on the market of console games and continues its development. Different computer games are a considerable part of people’s entertainment, and companies do all they can to meet the customers’ demand in the computer and console game sphere. The SWOT analysis provides the opportunity to have a look at the negative parts of the situation with Xbox and using its advantages to increase its sales on the market.


Gingrich, G 2003, Managing IT in government, business & communities, Idea Group Inc (IGI), Hershey.

Kotler, P, Armstrong, G, Wong, V, & Saunders, J 2008, Principles of marketing, Pearson Education, Oxford.

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Pinson, L 2008, Anatomy of a business plan: the step-by-step guide to building your business and securing your company’s future, aka associates, Chicago.

Xbox, 2009, Official site. Web.

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