Phil Spencer, Microsoft’s head of Xbox, hasn’t been worried about the “console wars” for some time. In a recent interview, he made clear whom Microsoft views as its competition.
His words might come as a surprise to people invested in the now-30-year-old narrative of a “console war,” particularly since the Xbox Series X and PlayStation 5 are coming later this year. In particular, fans a little too invested in that narrative might interpret Spencer’s word as a salty diss; the Xbox One didn’t sell as well as the PS4, after all. Moreover, Xbox announced it wouldn’t be releasing any first-party exclusives when it launches the Xbox Series X. By the logic of the console wars narrative, this would put Xbox at a disadvantage.
But if you’ve been following Microsoft’s multibillion-dollar investments into cloud computing, Spencer’s words are not just an inevitability: They’re an acknowledgment of a rapidly changing market.
The article, which gives a good overview of Silicon Valley’s investments into gaming, says Spencer’s nonchalance about Sony and Nintendo stems from Microsoft’s confidence in its global cloud computing infrastructure advantage. Azure, Microsoft’s venture into that realm, has slowly but steadily gained on its competitors, namely Amazon Web Services. Its most notable victory: Last year the Trump administration awarded Microsoft, not Amazon, a $10 billion, decade-long cloud services contract with the Defense Department.
“I guess they could try to re-create Azure, but we’ve invested tens of billions of dollars in cloud over the years,” Spencer added. “I don’t want to be in a fight over format wars with those guys while Amazon and Google are focusing on how to get gaming to 7 billion people around the world. Ultimately, that’s the goal."
Spencer’s quote also shouldn’t surprise folks who have been following the latest dispatches from the console war front. In an earlier interview with the Verge, Spencer said that “the business itself isn’t how many consoles you sell.” Moreover, Nintendo has become progressively less interested in competing with Sony and Microsoft. Nintendo and Microsoft now openly flaunt their collaborative efforts: Xbox Live users can sign in on a Nintendo Switch, for example.
Many will discount Google and point to the timid, shaky launch of its Stadia platform. But Google has made no secret about its intentions to invest further in the gaming space and improve the platform. As Stadia chief Phil Harrison (formerly of PlayStation) says in the same Protocol article, Google is counting on Stadia’s free tier to change the platform’s reputation. Stadia is still currently only available to early-adopting monthly subscribers.
The Xbox brand is still testing out its xCloud service, which would compete with Stadia. Sony has its PSNow streaming service, which stumbled out the gate but reportedly now boasts more than a million subscribers. When it comes to online services, Nintendo is the weakest of the “Big 3,” as the company has historically been extremely conservative in approaching the Internet, and even now the Switch struggles to offer anything close to the online capabilities and user friendliness of other platforms.
But although the “console war” narrative will probably live on, Spencer seems keen to move on from schoolyard arguments over which living room box is best. The stakes are now much higher.