The following is an article posted on forbes.com today.<\/p>\n
The battle between the new generation of gaming consoles from\u00a0Microsoft<\/a>\u00a0MSFT\u00a0-1.13%<\/a>\u00a0(MSFT) and\u00a0Sony<\/a>\u00a0(SNE) is on.\u00a0 Sony won round one when Microsoft tried to impose its highly unpopular restrictions on used game sales and internet connectivity on Xbox One. \u00a0Microsoft has tried to neutralize Sony\u2019s advantage by rescinding the restrictions.<\/p>\n Microsoft is counting on what it\u2019s calling \u201cProject Mountain\u201d to help Xbox One beat PS4 from Sony.\u00a0 Project Mountain is a massive data center to be based in West Des Moines, Iowa. \u00a0The\u00a0Des Moines Register<\/a>\u00a0\u00a0reports that the Iowa Economic Development Authority Board has approved $20 million in tax credits for Project Mountain.\u00a0 Microsoft will initially invest $700 million in Project Mountain and later on push it to $1 billion. \u00a0Christian Belady of Microsoft said, \u201cThe expansion supports the growing demand for Microsoft\u2019s cloud services.\u201d The project represents \u201cour latest in efficient data center thinking.\u201d<\/p>\n Microsoft had earlier said that Xbox One would be supported by more than 300,000 cloud servers.\u00a0 Now we know that these cloud servers are part of Project Mountain.<\/p>\n Parts of Microsoft\u2019s strategy can be gleaned by an interview with Matt Booty, General Manager of Redmond Game Studios, published in\u00a0Ars Technica<\/a>.\u00a0 Booty said, \u201cThings that I would call latency-sensitive would be reactions to animations in a shooter, reactions to hits and shots in a racing game, reactions to collisions. Those things you need to have happen immediately and on frame and in sync with your controller. There are some things in a video game world, though, that don\u2019t necessarily need to be updated every frame or don\u2019t change that much in reaction to what\u2019s going on.\u201d<\/p>\n There is an obvious question about such heavy dependence on cloud servers in gaming because traditionally cloud servers have produced a lag.\u00a0 Gamers certainly do not want a lag.<\/p>\n Part of the controversy surrounding Xbox One was the requirement for Xbox One to connect to the internet at least once a day.\u00a0 Now Microsoft has rescinded that requirement but the open question is how well will the games work on Xbox One if there is no internet connection in view of the heavy dependence \u00a0of Xbox One on cloud? \u00a0What will happen if the internet connection is slow?\u00a0 Will gamers with a slow connection get a lousy experience?<\/p>\n Sony did a masterful job of attacking Microsoft at E3 Conference in Los Angeles when Microsoft stumbled on digital right management (DRM) requirements for Xbox One. \u00a0It is yet to be seen if Sony PS4 can capitalize on obvious potential issues on Xbox One due to heavy cloud reliance.<\/p>\n Sony has purchased Gaikai, a cloud gaming service, for $380 million. It is not clear how Sony plans to use Gaikai with PS4.<\/p>\n In terms of movement in stocks of Sony and Microsoft, in the medium-term the battle between Xbox One and PS4 will have some impact.\u00a0 In the short-term, Microsoft stock will be driven by the speculation of\u00a0Steve Ballmer<\/a>engineering a restructuring.\u00a0 Short-term movements in Sony stocks will be dictated by the exchange rate between the U. S. dollar and the Japanese yen as well as speculation related to activist investor Dan Loeb\u2019s proposal to restructure Sony.<\/p>\n GameStop<\/a>\u00a0GME\u00a0-1.86%<\/a>\u00a0(GME) stock, the king of used game sales, has benefited by Microsoft giving into the gamers\u2019 demands of mostly unrestricted used game sales. As Xbox One\u2019s heavy reliance on cloud gets highlighted, it will create some conviction on the part of those who are short GameStop stock about holes in the long-term story of GameStop.\u00a0 Traditionally GameStop has driven much of its revenues from its retail stores buying and selling games.\u00a0 As a result, the expected short squeeze in GameStop stock may not materialize. \u00a0As of May 31, 2013, 34.90 million shares of GameStop were sold short; float is only 114.97 million and the short ratio is 8.70.<\/p>\n Source Link<\/a><\/p>\n HFFL:<\/strong><\/span> Hmm, I should hope that 300,000 servers is enough to fill the need of games being played…<\/p>\n","protected":false},"excerpt":{"rendered":" The following is an article posted on forbes.com today. The battle between the new generation of gaming consoles from\u00a0Microsoft\u00a0MSFT\u00a0-1.13%\u00a0(MSFT) and\u00a0Sony\u00a0(SNE) is on.\u00a0 Sony won round one when Microsoft tried to impose its highly unpopular restrictions on used game sales and … Continue reading