There has always been competition between gaming companies to produce the next big gaming console, and another war between them has begun. In November 2012 Nintendo released the next generation Wii U console, which then led Sony to announce the next PlayStation system that would be released in February for the 2013 holiday season. With all this hype about new products from Sony and Nintendo there are also rumors that Microsoft will be next in releasing a statement about a new Xbox, and on May 21 they will reveal their next move. The question is who will come up on top of the competition? Since the hype is currently around Xbox because their new product is unknown the question is how will they differentiate themselves from the competition so that they have the competitive advantage over Nintendo and Sony. The rumors are that this “new” Xbox will be compatible with Blu-ray, social-media integration, revamped motion control that builds on the Xbox 360’s wildly successful Kinect add-on. The system will also probably have Skype video chat, which is also owned by Microsoft. The most interesting feature is that the device will require internet access to function meaning that users will need a stable Internet connection to access both gaming and non-gaming content. This internet feature is most likely necessary because users are constantly wired to the internet so therefore a gaming console should take advantage of that consumer need. Not only would there be a new console but Microsoft is also looking to create a Xbox TV, which is probably being designed to compete with the Apple TV. With all this said it appears that Microsoft is competing with a differentiation strategy, which states that their product will be better and different than what Sony and Nintendo are currently releasing. Where Microsoft will have to do more work on is cost leadership because currently Sony is the leader in low cost gaming systems. The last time that Xbox had the price advantage was when they released the Xbox 360, but this occurred because they released their console a whole year before the Wii or Playstation 3 came on the market. This time Microsoft is late to the new console game so this could affect their pricing when it comes time to release their new product. Since they were late in the game this year this shows that their response was slow, but even though they were not timely could they be spending the time to create a more flexible product that is compatible with more systems like cable and Netflix. In the end which strategy for competitive advantage is most efficient in this console war? Is a quick response best even though the product is not different from the others or is cheaper and vice-versa? In the end we will not know until all of the new consoles are released and we can debate which is doing better in the market.