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Microsoft's Black Friday: $100 Kinect, free Windows Phone, discounts on Office and games

Microsoft's growing retail footprint, in stores and online, comes with an obligation to participate in the annual Black Friday sales — at least if it wants to keep up with the competition in the madness …

GeekWire Todd Bishop

Context & Ripple Effects

A year ago Microsoft's problem with Kinect was scarcity — an exec publicly warned shoppers to buy one immediately or miss the holidays (Better Buy Kinect This Week). This Black Friday the posture has flipped: the sensor is being discounted to $100, and Microsoft is also giving away a Windows Phone and cutting prices on Office and games.

The shift tracks the company's expanding retail footprint in stores and online, which — as the coverage notes — obligates it to play in the annual discounting madness rather than let Amazon, Best Buy and Walmart set the terms for its own products.

First-order effects

  • Kinect moves from supply-constrained premium accessory to discounted volume driver at $100, directly boosting Xbox 360 attach rates during the make-or-break holiday quarter.
  • The free-Windows-Phone offer puts handsets into consumers' hands at zero marginal cost, an attempt to seed market share for a platform still fighting for shelf presence.

Second-order effects

  • Big-box retailers selling Kinect and Windows Phone face price pressure from the vendor itself, forcing them to match or bundle harder to keep the traffic Microsoft's stores are now competing for.
  • Rival motion-gaming peripherals and Android handset makers get undercut on price at the highest-visibility shopping moment of the year, squeezing their own holiday promotions.

Third-order effects

  • If Microsoft keeps building owned retail, holiday pricing becomes a strategic lever it controls end-to-end rather than something negotiated through channel partners — a structural change in how it reaches consumers.
  • Bundling software (Office) and services with hardware discounts points toward ecosystem-priced products, where individual margins matter less than keeping buyers inside the Microsoft stack.

The trend: Microsoft is shifting from a channel-dependent software vendor to a direct consumer retailer that uses aggressive holiday pricing to defend its hardware and platform franchises.