A new way of Kinect-ing

There has been a report circulating the internet, that Microsoft has squirreled away a sanity stripping $500 million for marketing its newest Xbox 360 accessory: the Kinect. At first glance this doesn’t seem all that unlikely: Kinect ads seem to have inundated the airwaves, the promised appearance on the Oprah show has already taken place and Microsoft has already sold over 1 million of their fancy little motion capture devices. Despite all this, if it seems mind boggling to you how Microsoft might be able to blow half a billion dollars in the course of a month and a half, then you are not the only one. True, Microsoft has a lot of new hardware to push. A completely redesigned Xbox 360, along with the Kinect, means the company hopes to cajole Xbox owners to take this opportunity to replace their old systems. 2010 has also been a year of strong apps, both in terms of  box titles and over their Xbox Live Arcade virtual store. (A more complete and professional verdict on the Games Industry in 2010 in general and Microsoft in particular can be found here.) So Microsoft Xbox division have had a good year and they are trying boost their 4th quarter numbers, but does that justify spending the GDP of Samoa to achieve this goal?

The answer, can be gleamed from the adverts themselves:

The first 2 seconds of the above advert tell you that Microsoft is trying to market more than just a games console accessory. They are selling a whole new way of interacting with your entertainment system. You can now use verbal commands to switch your system on and off, play a movie, start up a game, sort through apps, use hand waves to flip through your friends list, even video chat with your friends from your couch (the video chat function connects to computers as well as other Xboxs). No remote control, no stupid keyboard peripheral, nothing more than a wire to attach the Kinect to your Xbox (with the newest version at least). Microsoft has willingly killed its accessory business and consumers are thanking them in droves.

However, the advert only showcases a fraction of what the system is capable of. Games industry analysts, in their reviews of the system are quick to point out that the system is far from perfect, but I think they are limited by the specialization. Microsoft, should take some of that 500 million USD and push it on Tech schools world wide. Here’s why:

That video has been viewed over 1.6 million times. According to an article in The Gray Lady, hackers and MIT students have been falling all over themselves to think up new uses for the Kinect. Microsoft’s initial reaction was typical hostility, but someone must have kicked that in the head the moment they realized that the potential upside of having the name “Kinect” connected (oy vey) with the words “tool of amazing technological progress”. This is the type of lightening in a bottle scenario (read: viral marketing) that most CMOs would give their right arm for. It gives Microsoft the stamp of approval from the scientific community without the company having had to do anything for it other than stifle their litigious nature. It provides the company with a whole host of developers they don’t have to pay to create programs they can market and capitalize on once said apps have been refined. Additionally, it allows Microsoft to market the Kinect (along with their new Xbox) to multiple customer demographics without fracturing their brand identity.

This is not the first time a company has tried to couple their entertainment system with the scientific method. Sony tried to use science as a marketing tool when the Playstation 3 console was launched in 2006. The Fold@home program was meant to use extra, unused processing power of all the PS3’s hooked up to the Playstation Network (PSN) to create a distributed computing network and calculate how proteins folded. In terms of marketing power, the idea carried a great deal of weight, telling consumers they could be part of the scientific discovery. However, it carried a significant entry barrier, as the launch price of $499 was staggering. At $150, the Kinect seems like a hell of a bargain in comparison.

For now, most of the benefits come from YouTube videos that show MIT students using the Kinect to control Windows 7, or how they slapped it on a Roomba to make it dance. in the future, however, this could cause the market for the Kinect to expand beyond it’s entertainment based roots and become a truly multifunctional tool. That is if Microsoft allocates that $500 million correctly.

*Update* - Kinect sales are up to 2.5 million. Still 23 days to go til Christmas.