Will Microsoft Have A More Aggressive Xbox One Strategy At E3?

Microsoft's (NASDAQ: MSFT) Xbox One has sold five million units worldwide, but that hasn't been enough to keep up with its chief competitor.

Will this force Microsoft to adjust its strategy in promoting Xbox One at this year's Electronic Entertainment Expo?

Robert W. Baird analyst Colin Sebastian thinks that the firm's second-place status will "probably" make the company "more aggressive over time" -- but not necessarily in the near future.

"I don't know how that will ultimately translate to features or pricing," Sebastian told Benzinga. "Five million units in isolation is a good number. It's more than what they sold [during the] last cycle at this time."

"I think it's a good start, but given the fact that the PS4 has sold better, they clearly want more from Xbox One."

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Sony's latest console, PlayStation 4, has sold more than seven million units worldwide.

Sony is currently focused on bringing virtual reality to the console. The company unveiled Project Morpheus -- the first VR headset for PlayStation 4 -- a mere week before Facebook announced that it would acquire indie developer Oculus VR.

Despite these initiatives, Sebastian doesn't think that virtual reality will become a big part of gaming anytime soon.

"I don't think that that will be a platform-driver in the near term," he said. "I think that it's one of these technology initiatives or innovations that is worth exploring. It allows developers and users to use their imaginations about what gaming could look like down the road… But it does tell us that innovation is alive and well in gaming, that's for sure."

As for who will break new ground in VR development, Sebastian suspects that it will be one of the big players.

"I think that there are a lot of companies that are dabbling in development behind the curtains," he said. "Obviously the most public ones would be Facebook and Sony related to acquisitions and announcements. I guess Microsoft to some extent."

"Who actually emerges as the actual leader in the space, I think it's going to be a while before we know. My guess is that it's going to be a platform company with a lot of resources behind it. So I would think Sony, Facebook, Google, Microsoft are the obvious, likely candidates."

Disclosure: At the time of this writing, Louis Bedigian had no position in the equities mentioned in this report.