Is Microsoft preparing to do more with the Xbox brand?

Is Microsoft preparing to do more with the Xbox brand?

Summary: Could Xbox-branded smartphones, tablets, smartwatches, smartglasses, and home automation devices be Microsoft's "mobile-first world" strategy? Or is Microsoft planning to carve off the brand so it can better focus on enterprise?

TOPICS: Microsoft

While Microsoft has seen many of the brands that it gave birth to come and go — Zune, Kin, MSN, HotMail, and countless others — other brands have withstood the test of time, and along with Windows and Office, one such brand is Xbox. And a recent letter by CEO Satya Nadella suggests the company may be getting ready to do a lot more with this brand.

See alsoWhy Windows 8's usage share is so low, and why it's really not that bad

"I also want to share some additional thoughts on Xbox and its importance to Microsoft," wrote Nadella. "As a large company, I think it’s critical to define the core, but it’s important to make smart choices on other businesses in which we can have fundamental impact and success. The single biggest digital life category, measured in both time and money spent, in a mobile-first world is gaming. We are fortunate to have Xbox in our family to go after this opportunity with unique and bold innovation. Microsoft will continue to vigorously innovate and delight gamers with Xbox. Xbox is one of the most revered consumer brands, with a growing online community and service, and a raving fan base."

There's also a nod of the hat to how gaming technologies have helped productivity:

"We also benefit from many technologies flowing from our gaming efforts into our productivity efforts — core graphics and NUI in Windows, speech recognition in Skype, camera technology in Kinect for Windows, Azure cloud enhancements for GPU simulation and many more. Bottom line, we will continue to innovate and grow our fan base with Xbox while also creating additive business value for Microsoft."

I've seen a lot of pundits point to this paragraph as proof that Microsoft is committed to Xbox, and that the rumors that Microsoft might sell or spin off that division are just crazy talk. But buried in that paragraph is a nuance that's easily overlooked [emphasis added]:

"The single biggest digital life category, measured in both time and money spent, in a mobile-first world is gaming."

This isn't traditional "sit on the couch or bed in front of a TV" console gaming that Nadella is talking about, but mobile gaming, the sort that is currently dominated by iOS and Android devices, along with devices such as Sony's PlayStation Vita.

Don't believe me? Well, in the paragraph immediately following the one with all five mentions of Xbox, Nadella has this to say [emphasis added]:

"While today many people define mobile by devices, Microsoft defines it by experiences. We're really in the infant stages of the mobile-first world. In the next few years we will see many more new categories evolve and experiences emerge that span a variety of devices of all screen sizes. Microsoft will be on the forefront of this innovation with a particular focus on dual users and their needs across work and life."

Think it's coincidence that these two paragraphs are together? I don't.

Is Microsoft getting ready to carry out a rebranding exercise? Well, a rumor is already circulating that the Surface brand could replace the Lumia brand. While there may be come logic to that, if Microsoft really wanted to increase the profile of a consumer-orientated tablet, then a far better way to do that would be to slap the Xbox brand on it.

What better way to leverage that "raving fan base" the Xbox has?

Could Xbox-branded smartphones, tablets, smartwatches, smartglasses, and home automation devices be Microsoft's "mobile-first world" strategy? Putting aside the fact that the "Xbox" word itself sounds — to me at any rate — awkward, a brand born at the same time as Windows XP and when the PC landscape was dominated by boxes, there's no denying that the brand is a strong one. And expanding Xbox out of gaming and into productivity would fulfill that criteria for "focus on dual users."

There's certainly room for Microsoft to expand Xbox into a broad ecosystem, and in many ways this is what then CEO Bill Gates seemed to have in mind for the platform when it was originally released. Somewhere this idea got lost, but it could be getting ready for revival.

Another possibility is that Microsoft is looking to carve off the Xbox brand. Back in 2010, Goldman Sachs wanted Microsoft to consider a "break-up of the consumer businesses" because that "could potentially unlock hidden value, or more discipline on cost could turn the businesses into contributors to profitability and shareholder value." Xbox was what Goldman Sachs had in mind:

"For example, the Xbox products could be an appealing stand-alone entity, given the historical success of the Xbox and the products’ brand strength, and the business could show unlocked value with forced cost discipline compared to as a piece of Microsoft. To date the company’s comments suggest that management still sees significant value in combining the consumer and enterprise efforts, but we view a foot in both camps as preventing a successful focus on one strategy, a la Oracle in the enterprise or Apple for consumers."

That was in 2010, and now in 2014, Nadella's single reference to "consumer" in his missive was in relation to Xbox.

Coincidence? Maybe not.

See also:

Topic: Microsoft

Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.


Log in or register to join the discussion
  • I didn't get the sense of that

    reading his CNet interview. He understands that XBox needs to be a "gaming first" platform. I don't see an XBox watch, unless it can somehow play really cool games.
  • Thinking too much into it.

    Microsoft spinning off or selling the brand would be a mistake. The consumer space is a highly lucrative space, which would be stupid to ignore.

    I don't see any evidence there to suggest they want to let go of the brand.
    The one and only, Cylon Centurion
    • Xbox, Xphone, Xwatch, Xpad, Xglass...

      At least it's consistent and easy to remember.
  • Xbox, the Lunchbox

    Sounds more like a guy on a sinking ship desperately thrashing about trying to learn how to swim at the last minute.
    • Huh?

      Are you implying the Xbox is a sinking ship? That doesn't match anything in reality.
      Buster Friendly
  • The brand that needs to change is "Microsoft"

    For other products that have come and go or didn't matter, Adrian Kingsley-Hughes forgot to mention UltimateTV, SPOT, WebTV/MSN TV, The Microsoft Network, Sync, Windows Mobile,....they were/are all losers for Microsoft. You also have to add Windows Phone, Surface, and I guess also Lumia now.

    The only reason why Xbox has lasted for as long as it has is because the competition has been very low. All there was in this space was Microsoft, Sony, and Nintendo. Now you have Amazon, Google (and all their partners), and other parties vying for the ultimate gaming and social experience.

    If Nadella is really serious about the Microsoft "experience" across all their products, the first thing they need to do is get rid of the Windows Phone UI. The truth is (out on the street) people HATE that experience. After all, doesn't it make sense? People rejected Windows 8 and it's UI, is there any question why Windows Phone's UI has also been rejected by the masses with a mere 3% marketshare. I know Microsoft spins their outlook for Windows Phone by the numbers in the EU, but those numbers are so low, while Android continues to dominate.

    For me, a tech-guy, I don't have any problems with any company's tech products. However, Microsoft will continue to fail as long as they continue to charge high prices to businesses and consumers, because in this terrible American economy, nobody wants to spend anymore money.
    • MS looking to unify which is what they been doing for a few years now.

      A bit off there, on many cases, often times MS just rebrands a product to get a stigma off of it. Windows 7 was really just vista with a service pack for driver compatibility. Sync grew into activeSync and eventually into a Azure Sync, windows mobile ran billions of devices, just not as a phone, but more as devices with call home capabilities, etc. MS was trying to do what hulu and Netflix is doing now but they tried it 10 years ago before the web could really support it with all their TV options. Hotmail / outlook (rebranding again) is like the 3rd most used webmail out there.
      Beyond belief people love windows 8 phones since nokia became the device maker, they are high end quality phones, The OS has never been the issue with windows phones it's been finding a vendor to make the devices, now that issue is out of the loop, windows phones are taking off. Even in my company where people have had Iphones for almost 10 years, they are leaving ship by the masses for windows phones. As a company we love the control we can natively provide over the devices.

      Now what nadella was mentioning mostly is more about having a single platform or unified core that drives all of their devices. So windows desktop, tablet, mobile, handheld, would all be coded with the same backend core. So as a game coder I write it once and it works across the board on all of the devices. So if I have my phone on the bus I can play Halo with my friends, when I get to the café I pull out the tablet and play on it, when I get home I sit down and take off with my xbox. All the same code for the developers. Something no other device is really close to doing yet. Nor will I see any real competition on that front for a while. Only one close to that would be Apple with their iOS getting pushed to their desktops / laptops. But high end gaming has been void from Apple for a long time and it's not going to come back any time soon. MS however is well lined up, to allow you to play even MMO's on any of your devices and I'm not talking 2d MMO's in since you play with lots of others in text based games with pretty GUI. I'm talking about the WoW, Final Fantasy's, Diablo 3, and RTS games all with the one code base for the developer. When you are playing titan fall on all of your devices, with no problem. You will be happy, and more importantly if the developers can just make it happen without having to recode for each, they will have gaming locked in. Not on the level of candy crush, but on the level of AAA titles.

      Then add on the fact they want to put Kinect into windows OS, so your laptop becomes more voice driven, with motion options / feedback etc. Tie lync into the Kinect system for added experiences, and motion tracking. Put in their real time Skype translations system they have, and you suddenly have a whole set of devices, that makes for a beast of system integrations.

      Also if you look at MS they are changing their business model, in regards to pricing and being overly competitive. Right now all of their products are better and cheaper then their competition, now it's just a matter of dusting off some of the misconceptions that are present.
    • Dorky phone games don't count

      I don't know why people want to mix those dorky phone games with PC and console games. Completely and totally different market. The windows phone UI completely blows away the ancient iPhone and android UI that still looks like my old palm pilot. There's always resistance to change but better ideas eventually catch on. Your "continue to fail" is nonsense as they are the most successful software company in the world.
      Buster Friendly
      • It's the marketing/branding...

        The Windows Phone hardware and software are first rate, and in many cases better than iOS and Android. The thing that Microsoft has always struggled with is branding and marketing. The stakes are just too high for them to fail this time, however, they just have to keep trying until the public catches on.
    • Can't count out Lumia just yet

      It's also an android.
    • I don't follow this line of assumption either.

      Nadella used the term "experience" rather in place of "devices and services" which is a Steve Ballmer phrase. Nadella is replacing the Ballmer era Microsoft with a new focus on the consumer and is redefining the consumer as someone that works AND plays with Microsoft devices and services (experiences). The branding Nadella is talking about is the Xbox name itself not the box sitting in a person's living room. Oddly there are valid business uses for the Xbox and its tech in the business world already, it is even used in a hospital surgical suite. These uses have been experimental and not official but the fact they exist shows that the system has enormous potential beyond gaming. I can already play games on my Windows Phone or Surface that are loaded onto my Xbox, I can use these devices to control my Xbox. It is that type of branding experience that Nadella is referring to IMHO. His intent is therefore to add similar capabiililty across iOS and Android would be my take from these two paragraphs.
      The Heretic
  • Wow...

    That silhouette of Ballmer on the main page looks like Monty Burns.
    Hallowed are the Ori
    • More like

      More like Gru from Despicable Me.
      Buster Friendly
  • MS Needs to Complete the Consumer Ecosystem

    They need to do the following:

    * iTouch competitor.
    * Xbox Video, Music, and Games across all Windows devices and Computers (obviously the high end graphics games will not work on the low end devices, but a lot of the games will).
    * Xbox One controller should work for Windows Computers and Windows Phones.
    * Xbox Live, Windows Store, Windows Phone Store need to be combined/integrated.
    * Family Safety, Microsoft Accounts, Xbox Live Accounts, and Windows Phone all need to be integrated better. My kids have computers in there rooms and we have a Microsoft tablet, why when they login under the same Microsoft Account are they not able to use the Microsoft account dollar's on both computers? I can, but they cannot.

    Microsoft needs to get much more consumer orientated so that the accounts, stores, family safety, and devices can be managed from the same website and apps/games shared across them. That is what Windows 9 needs more than anything.
  • Xbox

    To be honest, I might be being a little naive, but my guess would be that they will push and leverage the Xbox brand and as many franchises as they can onto mobile platforms, a bit like the idea Nokia had with N-gage.
    Kids might pester parents for windows phones at christmas if they are bundled with some Xbox tie-in software.
    Try to muscle in to the space as a replacement for Nintendo, and maybe capture the cool factor.
    My son also now wants an Xbox One since he got his Lumia, so presumably cross-selling is part of the big idea.
  • I never understood how..

    the company that brought us the XBox never jumped into the mobile handheld gaming space. Instead they've sat back and watch smart phone companies like Apple swoop in and dominate this space with iPhones, iPod Touches and iPads.
  • Think you may be onto something

    Not sure I would keep Surface or Lumia for the "enterprise" or "work" brand, but for the "consumer" side XBOX would be perfect. Especially since virtually EVERY consumer-oriented device eventually ends up being aimed at social, entertainment, and GAMING. So take the current Windows RT Surface tablets, the lower end Lumia and non-Lumia phones (like the oft-mentioned Android phone), unify their interfaces with the XBOX ONE/360, price and market accordingly and in a unified fashion, and there would be the "play" division. And it would neatly fill some holes (like mobile gaming) and also provide a link via services to the "work" side. There you would be all-Windows and all-services, because that side would care. On the consumer side, not so much. I would guess most people really don't know (or care) that s customized version of Windows is running XBOX. So if it evolves away from that, as long as it runs Microsoft's services, no harm, no foul.
  • TV

    Xbox Live, Xbox Music, Xbox Video. See the connection: Xbox TV. Original content. The key to the consumer space.
  • Video conferencing

    The Xbox One would make a nice budget business video conferencing system with the ability to track the position of the speaker like the expensive ones. I don't think the Xbox Brand would appeal though. Who wants a game machine in their conference room? That's a case were rebranded version would work well.
    Buster Friendly
    • Lie Detector

      Maybe they can use the IR camera to measure heat in the body and help determine if the person you're talking to is telling lies.

      Just a thought :)