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Microsoft (MSFT) Xbox One X to Hit the Market in November


Microsoft Corp. MSFT recently announced the launch of its new gaming console called Xbox One X. The product, which was first talked about at the Electronic Entertainment Expo (E3) last year, will be available in the market from Nov 7, 2017. It was referred to as Project Scorpio back then.

Unique Features to Boost Competitiveness

The console’s unique selling point (USP) is the fact that it will be able to run the previous versions of Xbox games. Another impressive attribute is its 4K feature, which offers a high screen resolution and hence enhanced visual aspects. Thus, Xbox One X will be backward compatible with Xbox One and Xbox One S titles, playing those at native 4K at full 60 frames-per-second. This is likely to make it even more attractive.

Also, Xbox One X has 6 teraflops of graphical power compared with 4.2 teraflops of Sony’s SNE PlayStation 4 (PS4). The new version of Xbox will have a bandwidth of 326 GB/second, beating the 218 GB/second of PS4.

It will contain a vapor chamber for liquid cooling, meant for high graded PC graphics cards or server computers. Apart from this, the other improved features include 1TB of storage space, 12 GB of GDRR5 RAM and eight custom x86 cores clocked at 2.3GHz CPU.

These specifications are anticipated to give Xbox One X a competitive edge against Sony’s PS4 Pro, which will further boost the performance of Microsoft, which has outperformed the S&P 500 on a year-to-date basis. While the index gained 10%, the stock returned 14.5% over the same time frame.

Microsoft’s Performance in the Gaming Market

Microsoft’s performance in the gaming segment wasn’t quite impressive in 2016. Per a recent report by Venturebeat, Sony’s market share in the console hardware market almost doubled that of Microsoft’s 26% at the end of 2016.

In the third quarter of fiscal 2017, the scenario improved a bit. Gaming revenues for Microsoft increased 6% year-on-year at constant currency. Xbox Live monthly active users were up 13% to 52 million active users. We expect gaming revenues to improve further in fiscal 2018, post the shipment of the console.

Microsoft Corporation Revenue (TTM)

Microsoft Corporation Revenue (TTM) | Microsoft Corporation Quote

The new console will also help the company gain momentum against Sony as well as other industry peers like Nintendo NTDOY. The improved technical features, which will eventually lead to higher resolution and faster loading of the games, are likely to add to its customer base.

Zacks Rank and Key Pick

Microsoft currently carries a Zacks Rank #3 (Hold).

A better-ranked stock in the broader technology space is Applied Optoelectronics, Inc. AAOI, sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate of Applied Optoelectronics is projected to be 20%.

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