Xbox's Phil Spencer on the PS4: 'They have a huge lead'

Last week Microsoft's head of Xbox Phil Spencer spoke candidly about the competitive landscape of this console generation, admitting that the Xbox One might not be able to beat PlayStation 4 in sheer sales volume. Instead, he says he and his team remain focused on building their customer base.

Spencer took the stage at the GeekWire 2015 summit for a one-on-one interview with GeekWire co-founder Todd Bishop, who pulled no punches when he opened the interview by reaching all the way back to the rocky launch of the Xbox One at E3 in 2013.

"You were skewered by some of your most loyal customers," Bishop said. "They came after you for limiting the ability to play used games... for the always-online features. You reversed course.

"This was the environment that you came into as you came into being head of Xbox? Have you recovered from those early missteps, and what have you learned?"

It took Spencer a while to ease into the question, but eventually he began to share some intimate details of what it's been like for him over the last 18 months to steer the ship at Xbox.

"Sony's having incredible success with PlayStation 4, and they've earned that," Spencer said. "But for me as a leader of my team, and as someone who is interacting with the Xbox community, I can have more impact focusing on the product now. ... You'll hear me talk a lot less about the competition. And people will say, 'Well you're losing, so of course you're not going to bring that up.'

"I think — and maybe we'll test it some day — If I'm winning, maybe I'll stay in the same swim lane. It is really about the product that we have, the features that we add and how we treat the customers of our box. Share is important, but more than share is are we gaining new customers, are they happy, are they buying games, are they using Xbox live, are they engaged in the service?

Bishop, however, was persistent. He came right out and asked it: "Can you beat Sony this generation?"

"I don't know," Spencer said. "They have a huge lead, and they have a good product."

For Spencer, his tenure has been just as much about putting the Xbox brand back together after 2013's disastrous start as it has been about putting the team itself back together.

"One thing that probably I didn't realize as much as I should when I started in this role," Spencer said, "was the impact that the launch had on our team here in Redmond — the Xbox team.

"They have a huge lead, and they have a good product."

"It's easy to read the blogs and the sites and my Twitter feed and see what people — the customers — think of our brand and our product, but the team in Redmond took as much of a hit as the external community did around our launch. And I sit back and I think about an org of thousands of people, you're down in the organization and some words and some actions from some executives just trash all the work that you've done over the last three years. Many weekends and nights. And you start to question, well why am I doing this? Why am I working so hard, when a few crass comments can actually position our product more directly than any work that the team has done.

"I'm talking about our own words and things that we said. Regaining the team was job number one when I started. And being very forthright with them about where we were and our ability to do things like beat Sony was critical."

He pointed to the addition of backwards compatibility, announced at this year's E3 conference to huge applause, as a big step in the right direction and a clear point of differentiation between Xbox One and PlayStation 4. It all stems, Spencer said, from the renewed enthusiasm of the Xbox team.

"Every time I sit down and do a product review, the team comes in with surprise and delight around the momentum that they have more than I'm able to have. And when I see that transformation of a team that's questioning the leadership of the organization to a team that's motivated by the customers that we have and their ability to delight them, I see a team that's making amazing progress."

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