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“Xbox should be spun off into a separate business”
One influential financial analyst has been pounding the table for this change for the past year or so, all in the interest of “unlocking shareholder value.”
While it’s true that Xbox had a string of losses in its early years, those are sunk costs. The platform today is at least break-even and probably profitable. It spawns games that can bring in hundreds of millions of dollars in revenue. More important, it is a well-loved Microsoft brand that is widely available in hundreds of millions of living rooms, where it has the potential to tie into other Microsoft services and expand Microsoft’s reach into the consumer market. Do you really want to give those all up if you’re a Microsoft shareholder? I didn’t think so.
And finally, there’s the pure technical side. The technology that drives Xbox, both as a gaming platform and as an entertainment hub (that’s a big growth business, by the way), comes straight out of the same groups that build Windows. If you sell the company, how do you expect the Xbox developers to extend their platform?
No, Xbox belongs in Redmond. The only people who would applaud a spinoff are vulture capitalists who skim off profits as they drive a once-proud company into the ground.
Make them go away.
“The ‘One Microsoft’ reorg is just rearranging deck chairs on the Titanic”
Poor Steve Ballmer. Despite leading a fundamental transformation of Microsoft from a software licensing powerhouse to one that has a strong future in cloud-based services, he gets no respect.
So the “One Microsoft” reorganization that he instituted last July is as misunderstood as Rodney Dangerfield. Here’s the key paragraph from Ballmer’s memo:
We are rallying behind a single strategy as one company — not a collection of divisional strategies. Although we will deliver multiple devices and services to execute and monetize the strategy, the single core strategy will drive us to set shared goals for everything we do. We will see our product line holistically, not as a set of islands. We will allocate resources and build devices and services that provide compelling, integrated experiences across the many screens in our lives, with maximum return to shareholders. All parts of the company will share and contribute to the success of core offerings, like Windows, Windows Phone, Xbox, Surface, Office 365 and our EA offer, Bing, Skype, Dynamics, Azure and our servers. All parts of the company will contribute to activating high-value experiences for our customers.
You can already see hints of how radical this new approach is. At Mobile World Congress, the big news about Windows 8.1 Update 1 came from Joe Belfiore, who until recently was exclusively a Windows Phone guy. Inside the company, I am hearing that the reorg has already helped break down some of the silos that led Windows developers to resist cooperation with divisions that didn’t share their lofty operating margins.
This is the kind of reorganization that takes years to fully execute in a company the size of Microsoft. Fortunately, Satya Nadella appears to have embraced and even extended the concepts.
“Windows Phone is a failed experiment”
Pundits have been bombarding new CEO Satya Nadella with advice on how he should "save Microsoft." If you could pick the single piece of misguided advice that has become most popular in recent weeks, it's the recommendation to ditch Windows Phone and go all Android.
Those same voices, plus a veritable backup choir of new players, were vocal this week with the announcement of the new Nokia X line, a low-cost phone for emerging markets powered by (gasp!) a Nokia-forked version of the Android Open Source Project code.
Settle down, people. Windows Phone isn't disappearing.
The current installed base of Windows Phone users numbers approximately 50 million. In the year after Microsoft closes its acquisition of Nokia, that number should blow past 100 million. By any rational standard, that's a market big enough for developers to take seriously. For the sake of comparison, that's more than the entire worldwide population of Apple Macs.
If you think Microsoft is going to turn its back on a growing installed base of 100 million customers, you really need to find a different beat to cover.