Elop could sell off Xbox if made Microsoft CEO, claims report

Elop could sell off Xbox if made Microsoft CEO, claims report

Summary: The question that the future Microsoft CEO will need to answer is this; is Xbox important to Microsoft, or is it, along with projects such as Bing, merely a distraction from Microsoft's core operations?

TOPICS: Hardware, Microsoft

As Steve Ballmer prepares to step down as CEO, Microsoft is searching for a replacement, and one name that's been rumored to take the helm of the Redmond giant is former Nokia CEO Stephen Elop.

See alsoMicrosoft and Apple unleash thermonuclear war on Google and Android

But if Elop does get the top job at Microsoft, Bloomberg is reporting that he could be ready to radically refocus the company. According to "three people with knowledge of his thinking," Elop would not only consider shuttering the Bing search engine but also selling off the Xbox business "if he determined they weren’t critical to the company’s strategy."

Elop left Nokia in September, having sold the company to Microsoft for $7.2 billion, and reported that he would become head of a new Microsoft devices unit responsible for hardware such as the Surface tablet and Xbox console.

This might seem somewhat rash, considering that the Xbox business is quite buoyant (last quarter hardware revenue was down, but services revenue was up), and that Microsoft is getting ready to roll out the new Xbox One later this month.

Selling the Xbox brand could be a double-edged sword. On the one side it would mean that Microsoft would lose ground in the war for the living room, but on the other it would mean the company could better focus on more profitable revenue streams.

Also, while the Xbox 360 has been a success, that's no guarantee that the Xbox One will be a success. Analysts are predicting that the next-generation consoles will all have a tough row to hoe, and profits may be a long way off. The Xbox 360 has sold almost 80 million units since its debut in November 2005, and even with the best reception, the Xbox One will take a long time to achieve that level of dominance. It's going to take a lot of marketing dollars, not to mention sweeteners to games companies to secure exclusive titles, to make the new console a success.

The question that the future Microsoft CEO will need to answer is this; is Xbox important to Microsoft, or is it, along with projects such as Bing, merely a distraction from Microsoft's core operations?

See also:

Topics: Hardware, Microsoft

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  • It makes no sense.

    Bing has been integrated into Windows Phone and Windows 8. I know many who have switched from Google to use Bing now, and it's even our default where I work. Killing it off makes no sense.

    Also, XBox is a HUGE brand name and image for Microsoft, selling it off makes no sense either, even if it is financially unstable.
    The one and only, Cylon Centurion
    • Agreed. They throw the word "concentrate" around alot with companies

      but the fact that it is a small percentage of their overall business, I think they can easily afford enough people to concentrate on Xbox and other prodjects at the same time.

      This isn't something like GE that has large jet engine facilities, locomotive and appliences divisions which CAN become a concern should one be underperforming or troublesome.
    • It makes sense to MS competitors and enemies

      If you are a competitor or MS enemy, trying to influence the direction of the company through shareholder unrest, it makes sense to sell of Bing and Xbox. The above would cripple MS in the consumer market, lead to the eventual complete collapse of Windows and Windows Phone in the consumer market (since key supporting services would be eliminated), and make MS become dependent on Google and Apple, for the survival of its services. Does anyone seriously believe that Google would help out MS services on its Android platform? All the proposals that are being put forward benefit MS' competitors. They do not benefit MS, and they certainly do not benefit MS shareholders.
      P. Douglas
      • Makes Perfect Sense To Investors

        Sell off the loss making divisions or those giving a poor return on capital.

        "Microsoft is probably losing $2.5 billion on Skype, Xbox, and Windows Phone. Of that, $2 billion in losses are attributable to the Xbox platform."

        businessinsider.com Nov. 6, 2013
        Alan Smithie
        • You are just spouting double standard rubbish

          So why is it okay for Salesforce.com, Amazon, and others to make 'continuous investments' in their companies, while making virtually no profit, but it is not okay for MS to do the same within a division? All indications are that MS is investing significantly to increase the quality of Skype, and to deploy it across many platforms. We know MS is heavily investing in Xbox Live, such as putting together TV programs, etc.. We know that MS has to do all it can to have Windows Phone catch up with the capabilities of iOS and Android. So again, why is okay for other companies to sacrifice profits in the interest of long term investment, but it is not reasonable for MS to do the same within a division, while being one of the most profitable companies on the planet?
          P. Douglas
          • Because any idea to make MS fail

            is a good enough reason to them.

            Logic doesn't fit into it at all.
          • Is paranoia contagious?

            Just wondering.
            John L. Ries
          • A $2bn loss on Xbox

            That's a lot off the bottom line. I'd rather them sell off the loss making Xbox division and cut the license prices for Windows.

            As for Bezos, he's a very clever business man who is forgoing profit for market share. Amazon will collect in the near future. Over the last 5 years Amazon's stock price has risen 600%.
            Alan Smithie
        • Silly little troll...

          Did you notice that one important word in what you quoted? No? Well, the word is "probably", which means that, somebody is either guessing, or reporting without the real facts to back up the report.

          Also, though investors are important to a company, they don't necessarily have a say in the direction of a company. That's what management is about. In addition, an investor that is unhappy with the direction a company is going, or that is unhappy with management, or that is unhappy with the products and services a company offers, is completely free to sell his shares and move his money elsewhere. It's what the free-market system is about. But, that would be way above your capacity to understand, so, trolling is the only thing you can do.
      • It doesn't benefit MS to abandon money-losing businesses?

        Bing has never, as far as I'm aware, ever made a dime. It's sole reason for existing is to take advertising revenue away from Google. MS' share in it should probably be sold to Yahoo! Whether or not to keep XBox should be a financial decision, not a matter of "winning" the "war for the living room". I don't know if it's a big distraction (though the effort to prevent owners from modifying them probably is), but if the division can be profitably sold, I think it should be.

        I think the focus of MS should be on writing great software and selling it for what it's worth (and I think MS can be very profitable by doing so). The Gates/Ballmer focus on positioning, monopoly maintenance, and monopoly leveraging worked in the 1990s well enough to make money hand over fist even though it alienated malcontents like myself. It doesn't work now (witness the flat stock price). It is a distraction and should be abandoned. The effort to delegitimize Linux and open source has failed. It is a distraction, makes no money, and should be abandoned. As far as I can tell, the "War on Google" has lost MS money and hasn't even come close to achieving Steve Ballmer's goal of "f*ing kill Google". It should be abandoned. The siege mentality MS has been laboring under for over a decade has to be bad for morale. It should be abandoned. I'm sure an insider could come up with an even longer list, but this will do for now.

        MS shouldn't listen to its "enemies", unless what they say makes sense, but your post appears to be a symptom of the paranoid culture that has taken root inside of MS. MS under Ballmer obsesses too much about the competition. Healthy companies pay attention to the competition, but worry more about themselves and how they make money by selling things people want to buy at prices they're willing to pay. I think that's the attitude MS should have. I don't like MS and I avoid using their products because of the predatory practices MS has been using for the past quarter century, but I've never suggested (seriously) that it do anything that I think is contrary to its own interest. You probably would consider me an enemy of MS, but it's not that I hate MS, but rather I favor preservation of the free market over the interests of MS or any other vendor.
        John L. Ries
        • Shareholders listening to their company's enemies, is never a good idea

          The biggest problem with of all this, is that shareholders are listening to enemies of the company they own. Shareholders are listening to parties who have a vested interest in misleading them; and they seem to more trust the word of the company's enemies, instead of those who run the company, who have delivered massive profits to their benefit, increasingly over the years. In fact the root of MS stock problem, is the fact that investors have been listening to MS enemies, and have estimated the company's future growth, based on their misleading statements.

          All of this is insane! It is not MS allies and partners who want the company to be broken up, it is MS' enemies, and it is to the latter shareholders seem to be listening. The bottom line is that MS cannot afford to rid itself of Bing and Xbox, because it would all but destroy the company's opportunity to do well in the consumer market. If MS tries to exit the consumer market, it will be placed into a continuously defensive position, trying to keep iOS and Android at bay out of the enterprise, as consumers put pressure on businesses to adopt these devices. So even if MS made no improvements to Bing and Xbox / Xbox Live, just the way they are, they are vital to the health of the overall company. But MS is improving these portions of the company by refocusing Bing on the enterprise, while having it also support new profitable services. Also Xbox Live has the potential on the PC and Windows Phone, to service hundreds of millions of users with paid subscription services, instead to tens of millions on Xbox alone. So being penny wise and pound foolish with Bing and Xbox will serve no ones interest, but MS' enemies.
          P. Douglas
          • Maybe...

            ...stockholders should be required to sign a loyalty agreement promising not to invest in, listen to, patronize, work for, or speak on behalf of MS' competitors. Failure to abide by the agreement would result in the forfeiture of the stock.

            Would that satisfy you?
            John L. Ries
          • MS could...

            ...publish a list of MS' competitors and "enemies" quarterly. Stockholders would then be required to either terminate all connection with such entities within 30 days or sell their stock.

            This would probably depress the price of MS' stock, but at least P. Douglas won't have to worry about MS' "enemies" having inordinate influence over the decisions of the stockholders or board.

            I wonder if Google and Apple have this problem.
            John L. Ries
          • "MS could... "

            You don't exactly address the issue logically, do you? It's pretty clear from your comments here that you'd have no problem at all with Microsoft just vanishing from your world. Sorry, John, it ain't gonna happen...
          • Re: no problem at all with Microsoft just vanishing from your world

            Microsoft vanished from my world as viable supplier of (whatever) solutions some decades ago. Despite my desire to give them chance from time to time, they still cannot make any come back.

            For some weird reason you guys believe Microsoft matters in this world. It does not.

            Microsoft's fate is in their own hand and only them and their shareholders do care.
            As with any other company.
          • It wouldn't bother me if it simply disappeared...

            ...except it would cause a lot more short term pain for MS-employees and Windows users than is good for the economy.

            I'd much rather see a reformed MS than no MS.
            John L. Ries
          • Shareholders should just be clever

            Shareholders should simply ask the questions, "Does the originator of this advice have a vested interest in seeing MS fail? Will the advice the person is giving me more benefit MS enemies, than MS its shareholders - particularly in the long run?" If the answers to the questions are is yes, then at the very least do not take what they say at face value. Try to determine what they are after, and assess the landscape around MS.
            P. Douglas
          • Re: Shareholders should just be clever

            What makes you think they are not?

            Or, should shareholders learn from Microsoft how to hold shares, via various Knowledge Base articles and Microsoft technology evangelization?

            Don't you fanboys think all of this is ridiculous?
          • Microsoft can easily afford to get rid of Bing

            that's the thing about capitalism. When you're in business to make money, the things in your portfolio that lose money, and don't have a future trendline that leads to making money, are the ones you tend to cut loose. The things that make you money, you invest more in.

            XBox makes money, and has had innovations that have crossed the food chain to other products (like Windows.) Bing, on the other hand, loses money, and other than a Windows 8 applet, doesn't usefully cross-pollinate the product line.

            I understand there's an issue of pride - but ultimately pride don't make you money. Only revenues greater than costs do that, and Bing does not have that on offer to Microsoft.
          • Huh?

            I checked the quote from Alan Smithie above and it's valid. So Business Insider says Microsoft is losing money ($2 billion USD) with their XBox division and you say they are making money. While I respect your opinions on here, I'll go with the Business Insider statement.