Sony Corp (ADR) (NYSE: SNE)’s Dominance Over Microsoft (NASDAQ: MSFT)

The Xbox One

Sony Corp (ADR) (NYSE: SNE)’s gaming console, the PlayStation 4, has sold more units than Microsoft Corporation (NASDAQ: MSFT)’s Xbox One for the sixth month in a row.

In order to compete against the Japanese company’s sales, Microsoft recently announced a slash in prices on its Xbox One gaming console. However, Microsoft will need to do more than cut prices to stay afloat in the gaming industry. According to Jeremy Rosenberg, Head of Digital at Allison & Partners, the company is falling behind on multiple fronts in the gaming sector.

He criticizes Microsoft’s marketing for the Xbox One for not targeting the broader market. The company had pitched the product as an all in one gaming console that users could put all their entertainment through, and that concept simply didn’t resonate with consumers.

Rosenberg also notes the line up of appealing games that Microsoft will launch that could boost sales by the end of the year. For example, Destiny, a science fiction massive multiplayer role playing game that comes from the creators of HALO, has already receive a lot of buzz and hype, and is sure to be a huge hit.

In addition to the price cut of the Xbox to $399, Microsoft has made some other moves to actively boost sales. The company is made the Kinect feature optional for the console, so that the company can target a new customer market.

The company has also launched a special discount program, where users can bring their old consoles to the store and trade it in for a new one.

However, console compatibility still remains an issue for any consumers of the Xbox One. Users of the Xbox one will not be able to play any Xbox 360 games on the device. Rosenberg insists that Microsoft must develop and integrate a backwards compatibility feature in its devices in order to entice to customers to buy and thus increase sales.

Sony’s ‘Selfie’ Boom

Sony, on the other hand, is looking to more contemporary trends on where to take its products. Jumping on the ‘selfie’ hype, Sony Corp (ADR) (NYSE: SNE) recently announced that it would focus on the production of image sensors for smartphones and tablets. The company has been pursuing handset makers to gain more orders for front facing cameras that are used to take selfies.

According to a spokesperson from the company, Sony will invest ¥35 billion, roughly $345 million, to increase the production of image sensors. The investment focuses on stacked CMOS sensors at two Japanese factories – one located on Kyushu in the south, and one that the company purchased from Renasas Electronics Corp for ¥35 billion.

Sony is currently the supplier of image sensors for the main camera in Apple Inc (NASDAQ: AAPL)’s iPhone. The investment will enable the company to increase production by 13% to 68,000 units a month by August of 2015. It’s mid term goal is 75,000 units.

Image sensors are Sony’s forte, which gives them the lead in the market over Omnivision Technologies Inc (NASDAQ: OVTI), whose sensors are mostly used for the front facing cameras on smartphones, which typically have lesser specifications than the rear facing camera.