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Washington post: Investors want MS to kill Xbox

SwiftDeath

Member
May 31, 2013
23,628
0
0
Well they've wanted to kill those 3 divisions for a while now. bing should be dead already, surface maybe, not sure on Xbox tbh

Article excerpts:

Two influential Microsoft shareholders have been pushing the Redmond software giant to abandon what they view as non-essential product lines so that Microsoft can focus on its core strength: selling enterprise software to businesses. Nadella has spent the last seven months running Microsoft's $20 billion server and tools division, so he could be ideally suited to manage that transition.
Ballmer envisioned Microsoft as a "device and services" company and reorganized the company last year to better execute that vision. But now Ballmer is out — though still on the board — and with a new CEO come fresh questions about the fate of consumer tech at Microsoft.

Microsoft's Windows division has been facing shrinking profits; last year, the unit pulled in a net $9.5 billion, down from $11.6 billion in 2012 and $12.3 billion in 2011. Company filings suggest that the drop is largely attributable to declining demand for Windows among consumers, even as sales of Windows to businesses remain strong. The same division also reported a $900 million loss on unsold Surface tablets. The online services division, which oversees search engine Bing, reported a loss of $1.3 billion in 2013 — less than the previous year but still in the red.

Some investors have suggested that Microsoft spin off its money-losing consumer products and focus solely on the enterprise. Even the Xbox deserves to go, Paul Ghaffari, the wealth manager for Microsoft co-founder Paul Allen, said last year.

But Robert Bontempo, a management professor at Columbia Business School, is skeptical that Nadella will be able to chart his own course on the matter. "You're asking for Nadella to walk into a board meeting and look Ballmer and Gates in the eye and say, 'The decisions you've made over the past two decades are a mistake,'" said Bontempo. "That's going to take some serious strength of character."
ValueAct [holds 0.8% shares of MS] has been a critic of Microsoft's strategy and — like Ghaffari — wants the company to consider shedding some of its investments in consumer technology. ValueAct also reportedly wants the company to unbundle its offerings, such as Microsoft Office, so that they can be used on other platforms besides Windows.

"Microsoft has historically had a supportive board," said Bontempo. But with the addition of Morfit [representative of ValueAct], Bontempo said, "this is going to be an extremely toxic environment ... There's going to be a lot of tension."

That tension could come in handy for Nadella, who will need political cover to pursue broader changes at the company.

But there are some early signs that Nadella is interested in continuity with his predecessors rather than a radically new strategy. The Indian-born engineer asked — and got — Gates to step away as chairman of the board so that Gates could advise him on products and devices. Whatever Gates's qualifications for this job, it's clear Nadella recognizes his own weaknesses when it comes to consumers. It's also suggestive of Nadella's faith in the "device" part of Microsoft's "device and services" mantra.

Though no longer chairman, Gates will remain on the board of directors. Analysts say the programmer-turned-philanthropist has exerted a strong influence at Microsoft behind the scenes, even as he's kept a low public profile at the company.
 

Mr. RPG

Member
Sep 10, 2013
3,201
0
0
Why kill Xbox? Is it really not profitable at all?

Bing and Surface I can understand (well not Surface Pro, that thing is great)
 

sn00zer

Member
Mar 31, 2009
24,358
3
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twitter.com
I wonder who they could sell the brand to.....Amazon?

Why kill Xbox? Is it really not profitable at all?

Bing and Surface I can understand (well not Surface Pro, that thing is great)
It is surprisingly incredibly unprofitable......and they threw billions at RandD for X1 so it will take years before costs are made up
 

BY2K

Membero Americo
Sep 12, 2010
37,302
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0
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Canada
I can understand Bing and maybe Surface, but Xbox?

What's the profit/loss of the Xbox Division?
 

DedValve

Banned
May 18, 2013
9,964
1
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NYC
Sell it to Sega. Sega can bring back the xcast and finally make Shenmue 3 in conjuction with Valve for a double release of Half life 3 on a single box, the blue box.
 

Sydle

Member
Oct 13, 2006
11,662
0
0
lmao, not happening. MS is not going to give up consumers. To do so would be writing a death warrant for Windows due within the next 10 years.
 

F0rneus

Tears in the rain
May 28, 2013
11,810
404
770
Isn't the Xbox division one of the few making profit at MS? They'd be insane to kill/sell it.
 

Guevara

Member
Jul 27, 2009
24,816
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0
The Xbox strategy doesn't even make sense anymore. Spend a bunch of money every 5-6 years in the hopes of making it back over a generation, to do what? Stymie Sony?
 

Mikey Jr.

Member
Dec 5, 2008
17,553
103
935
Toronto
Why kill Xbox? Is it really not profitable at all?

Bing and Surface I can understand (well not Surface Pro, that thing is great)
I think the reasoning for Xbox is that for overall profit compared to everything else, it is insignificant. Like, if ms lost Xbox, virtually nothing would change. So investors want to cut the fat so to say.

At least that's what I think.

Correct me if I'm wrong.
 

enanogrande

Member
Nov 1, 2013
1,793
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I don't see Nadella being too sold on the idea. Not only has Gates always been a proponent of it (and he's going to be more involved at MS going forward), things like that Xbox Reader app that was mentioned today point us towards MS being more invested in the Xbox brand, not less. Rouge investors will always want things (especially things they see as producing short-term gains), but if the board & Gates/Nadella still believe in the vision of the Xbox, it's not gong anywhere for a while.
 

SPDIF

Member
Nov 25, 2011
2,420
0
0
This isn't really anything new. It's the same two shareholders that have been wanting this for a while; it's just suddenly news again because Nadella's been announced as the new CEO. Nadella's already said he's keen on carrying on with the devices and services approach so I can't see anything coming from this. At least not for many years anyway.
 

Dragonborn

Member
Sep 11, 2011
7,401
0
0
Texas
Depending on how the X1 does in the coming months, who knows what will happen. For now I'll definitely be steering clear for a year or two, last thing I want to do is buy it and the have MS drop it
 

mdubs

Banned
Nov 23, 2013
7,754
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Whether you like Microsoft/Xbox or not, this would be bad for the industry as a whole just as if Nintendo or Sony collapsed.
 

level44

Member
Aug 15, 2013
2,865
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Personally I would like xbox to be killed off. Hopefully it would lead to another company stepping up to the big three.
 

injurai

Banned
Oct 18, 2011
35,311
0
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Milky Way
www.youtube.com
right now the unprofitable xbox division is denying market share needed for another potential 1st party to break into the core industry.

Though I feel nobody is going to move in with Xbox gone other than maybe Nintendo. Microsoft blew away fortunes just to break in, something that Amazon/Google/Apple aren't going to do when their platforms push a difference philosophy all together.

I hope MS stays in because they increase the over all competition that forces companies to play to integrity instead of shareholder pockets. I would almost guess a lot of the Xbox Ones policies were intentionally trying to kill it from it's current market position and turn it into a living room cash box.
 

Prine

Banned
Jun 7, 2004
13,817
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Who are these obnoxous shareolders? Nadella should send some "friends" to speak to them.

Whiny bastards.
 

MrCompletely

Member
May 10, 2007
3,472
0
0
New York, NY
investors, idiots with no vision except for the immediate bottom line
Shocking News: Investors invest to get a return on their investment

They are right, though. All the resources MS throws at Xbox would likely be a significantly stronger ROI strengthening the enterprise product line. Xbox is out in left field compared to where MS is making money these days.
 

Sydle

Member
Oct 13, 2006
11,662
0
0
Isn't the Xbox division one of the few making profit at MS? They'd be insane to kill/sell it.
On the Devices side, it's one of the stronger revenue generators (billions). I don't think Surface and Windows Phone are anywhere close yet.

With Nadella at the helm, and Gates at his side, there is just no chance of this happening. Both of them believe that productivity and entertainment are key to Microsoft's future, with devices that enable innovative experiences (premium hardware), and Xbox is their only entertainment brand.

If MS gives into business only then Amazon, Google, and Apple will eat away at everything Microsoft does that much easier. I get why investors want it, but it's a really fucking stupid idea for the longevity of Microsoft.
 

Killroyskbg

Member
Jun 7, 2013
1,254
0
0
Sweden
I can understand Bing and maybe Surface, but Xbox?

What's the profit/loss of the Xbox Division?
It is not about profit it's about return on investment. The thing they argue is that while still perhaps profitable the cost of investment in the xbox division (hardware, software, marketing etc.) which is a pretty large sum instead should be handed to other divisions where the money would produce further income.
 

ironcreed

Banned
Jun 4, 2011
30,337
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Phil Spencer said that Nadella has been a big supporter of Xbox and Microsoft Studios, so I am kinda doubting he will give it the axe.
 

TMNT

Banned
Oct 28, 2013
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Xbox is actually an established brand with an entire ecosystem built around it. Not sure about the Surface as I've only handled it in-store.

Bing is okay but it's difficult to unseat Google after all this time. That dream will never come to fruition, similar to their insistence on continuing IE as a legitimate competitor in the browser space.

Will be interesting to watch this chapter of Microsoft unfold. If I was CEO, it'd be hard not to cut areas of little value regardless of the investment. Sunk cost is sunk cost.
 

Nightengale

Member
Jun 12, 2013
21,443
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440
lmao, not happening. MS is not going to give up consumers. To do so would be writing a death warrant for Windows due within the next 10 years.
No investor is asking MS to give up consumers.

Investors want MS to reach consumers through what they're best at, aka software. Not hardware.

They want MS to put Office, Outlook into everything. They want MS's services to be pervasive into every inch of the technology, regardless whether or not it's Android or iOS.

Once upon a time, they could leverage the fact that they owned a large part of the technology space to push exclusivity of hardware ( PC with Windows ) + software (Office, etc), but investors are seeing that it's impossible for MS to overthrow Android/iOS, so they want MS to get in bed with them instead of trying to switch customers over to Surface.
 

ANDS

Member
Jan 18, 2012
2,851
13
480
That's a pretty loaded title with only marginal support for getting rid of the gaming division in the article. Bing and Surface make sense as - once again - MS late entry into a crowded field has flopped. The gaming division - without any financial information not mired in rumor - seems healthy when not shuffled into MS's other losing non-windows ventures.
 
Oct 11, 2009
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What's the profit/loss of the Xbox Division?
Only the last few years of the xbox360 have been profitable for MS the rest was ALL loses entire xbox OG gen, and first few 360 years (inlc rrod).

I can understand it from a investor standpoint but for a gamer this would be terrible, and problem is the xbox devision could not live on its own they need MS money to survive in the future.
 

GillianSeed79

Member
Jan 8, 2009
8,636
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Surface? Sure. MS was way too late to the tablet market. I don't anyone expects them to be as profitable as Apple in that space. Same thing with Windows Phones and the Zune.
Bing? Maybe? I've used it before when I'm lazy, but it's really not a good search engine. Everyone I know uses Google as default. They have to make some advertising revenue from Bing though right?

Out of those three, Xbox seems like the most somewhat stable brand. Even thought it's probably not selling as well as they had hoped, it seems like the revenue from Xbox Live subs and dashboard ads would be free money for MS.