More analyst support for new Microsoft controller speculation

Colin Sebastian, senior VP of equity research at Lazard Capital Markets, as thrown his hat into the E3 predictions ring by stating his belief that Microsoft could be set to announce some significant new additions to the Xbox 360 family - possibly a new controller.

"Microsoft and Sony will generate many of the early headlines," he said in a note to investors today. "Microsoft's E3 press event will kick off the conference Monday morning, and we believe may produce many of the headlines from the show.

"In addition to a console price cut, we believe Microsoft may also outline a broader Xbox 360 SKU realignment, new peripherals/game controllers, and more extensive multimedia capabilities, perhaps including the long-anticipated partnership with Netflix."

Sebastian's comments echo predictions made earlier in the week by Todd Greenwald, of Signal Hill, who also claimed a USD 50 price cut for the Xbox 360 was likely.

"We think the 360 has lost significant momentum to both the Wii and PlayStation 3, especially in Europe, and is in need of both a price cut and new features to bring in mainstream gamers beyond the Halo, Call of Duty, Grand Theft Auto crowd," he said. "Hopefully, Microsoft will have something else up its sleeve, such as a new motion-enabled controller (to better compete with the Wii)."

Meanwhile Sebastian has highlighted retail giant GameStop as his "conference pick" and that "catalysts for publishers may be limited".

"Since the timing of the conference coincides with earnings 'quiet periods' for a number of the publicly traded companies at the show, we note that information flow directly relevant for investors may be limited.

"As such, while a focus on online and multimedia strategies would not directly benefit GameStop, we note that hardware and software initiatives and better visibility for the H2, 2008, product calendar could serve as a catalyst for shares at current lower valuation levels."