With the next Xbox, Microsoft is done competing with PlayStation: 'We see Amazon and Google as the main competitors going forward'

• This holiday season, both Microsoft and Sony are planning to launch next-generation game consoles: the Xbox Series X and the PlayStation 5, respectively.
• Though the two consoles compete directly, Microsoft is intentionally moving its Xbox business away from direct competition with Sony.
• "When you talk about Nintendo and Sony, we have a ton of respect for them, but we see Amazon and Google as the main competitors going forward," Xbox leader Phil Spencer said in a recent interview with Protocol.
• Spencer said as much because of Microsoft's ambitious push into video game streaming, which is backed by Microsoft's Azure datacenters all over the world. The service is aimed at the billions of people who don't buy game consoles, and directly competes with Google and Amazon's gaming initiatives.
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This holiday season, both Sony and Microsoft plan to launch new, so-called next-generation versions of the PlayStation and the Xbox game consoles.

Goodbye, PlayStation 4 and Xbox One! Hello, PlayStation 5 and Xbox Series X!

It marks the fourth game console "generation" in which Microsoft and Sony have gone head-to-head, starting with the PlayStation 2 and the original Xbox around the turn of the century. Nintendo moved away from competing directly with Sony and Microsoft's consoles years ago, choosing instead to create consoles geared to a different audience with the launch of the wildly successful Nintendo Wii in 2006.

These days, the "console wars" are a head-to-head between Sony's PlayStation and Microsoft's Xbox. But in 2020, Microsoft is shifting its business strategy in a way that could end them for good.

"When you talk about Nintendo and Sony, we have a ton of respect for them," Xbox leader Phil Spencer told Protocol in an interview published this week. "But we see Amazon and Google as the main competitors going forward."

But why would Microsoft's Xbox division, which makes the Xbox game console line, be focused on Google and Amazon?

One word: streaming.

In the case of Google, the service is named Stadia - a Netflix-like game service that streams games to a variety of devices, no game console required. In the case of Amazon, there's no service just yet - but Amazon has a robust cloud infrastructure in Amazon Web Services (AWS) to compete with Microsoft's similarly robust Azure cloud infrastructure.

Neither Google nor Amazon has publicly announced plans to launch a game console, but both are positioned to compete directly with Microsoft's Xbox when it comes to what Spencer sees as the next great expansion in gaming.

"Amazon and Google are focusing on how to get gaming to 7 billion people around the world," Spencer told Protocol. "Ultimately, that's the goal."

Though game consoles like Xbox One and PlayStation 4 sell in the tens or, in the case of PS4, hundreds of millions, the real potential market for gaming, Spencer believes, is in the billions of people on Earth who don't - or can't - own a game console.

"There are 2 billion people who play video games on the planet today. We're not gonna sell 2 billion consoles," Spencer told me in an interview in June 2018. "Many of those people don't own a television, many have never owned a PC. For many people on the planet, the phone is their compute device. It's really about reaching a customer wherever they are, on the devices that they have."

Sound familiar?

Do you want to play games on an Xbox? A PC? Your phone? Microsoft wants to reach you there - ideally across all three.

It's a similar approach to the Netflixes and Spotifys of the world - reach people on whatever device they have, wherever they are, with the media they want to consume.

To that end, Xbox has major initiatives across all three platforms: a new game console (Xbox Series X), a cloud gaming service (Project xCloud), and a Netflix-like gaming service (Game Pass).

"That remains core to what we're trying to do," Spencer told me in a more recent interview this past June. "To allow creators to reach the customers that they want, allow players to play the games that they want with the people they want to play with, anywhere they want. And it fits right into the opportunity ahead."

It's part of a broader effort at Microsoft to bring Xbox games to as many people as possible - even if those people don't buy a new Xbox console.

And it could mean the end of the console wars as we know them.