Forbes Analyst Calls Game Over For Microsoft

[Karloff]

Forbes Analyst Calls Game Over For Microsoft

Xbox could be sold to Barnes & Noble, says Forbes contributor Adam Hartung.

"Sell Microsoft NOW!" is the advice Forbes analyst Adam Hartung [http://blogs.forbes.com/people/adamhartung/] is giving readers of his column. According to Hartung, the Xbox maker's hope had been that the Christmas season would see a slow-down, or even reversal, of the trend towards Apple and Android products; but that didn't happen, so now Hartung's saying it's Game Over for the company.

"Expect enormous layoffs over the next 3 years," Hartung claims. "Something like 50-60%, or more, of employees will go away." But that's not the half of it. Microsoft's entertainment division - the folks who make Xbox and the Kinect - are dead weight, in Hartung's analysis, since whatever cash they rake in is outweighed by the cash spent on keeping them afloat. Dead weight will be the first to be jettisoned when Microsoft starts trying to save itself.

"Unable to make a profit [from entertainment]," says Hartung, "it will increasingly be seen as a distraction to the battle for saving Windows - and Microsoft leadership has long shown they have no idea how to profitably grow this business unit." Hartung expects Xbox to be sold off to some other company, perhaps even Barnes & Noble; if not sold, it will be drastically reduced in size.

It's not a pretty picture Hartung's painting. Microsoft used to dominate the market, but now people buy tablets, not desktops, and Surface didn't make a dent in Christmas sales numbers. Nor do Microsoft's customers upgrade their desktops as often as they used to; 40% of Microsoft's user base is sticking with Windows XP, a heavy blow for a company that just brought out Windows 8.

"The declining sales," Hartung says, talking about the future of Microsoft, "and lack of customer interest will lead to a tailspin at Microsoft not unlike what happened to RIM. Cash will be burned in what Microsoft will consider an 'epic' struggle to save the 'core of the company.'" But, if Hartung is right and momentum has swung irreversibly towards Android and Apple, whatever Microsoft does at this point won't change a thing.

Source: Forbes [http://www.forbes.com/sites/adamhartung/2013/01/20/sell-microsoft-now-game-over-ballmer-loses/]


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[Fasckira]

This seems against all the other reports I've read about Microsoft recently but then I'm not an industry analyst.

 

[Mangue Surfer]

Same manbo jambo of the Windows Vista era. What did they do? Launched Windows 7!
If Windows 8 is not hot enough guess what they will do?

 

[GenGenners]

None of that report makes sense. This is MICROSOFT we're talking about here.

 

[Fappy]

40% of Microsoft users still use XP? Does that exclude businesses or something?

 

[redknightalex]

None of that report makes sense. This is MICROSOFT we're talking about here.

Some of it does make sense, at least from a Windows platform POV. Microsoft hasn't been the same, financially and publicly, since Apple started to become the big contender it never had to fight against but also when Vista came out. Companies didn't upgrade to Vista on the mass scale it was expecting and thus we had Windows 7. Now, and only now, do I see the place I work for transition to Windows 7, a generation (four years) behind the current Windows OS. Even the state's main hospital, a stone's throw away, still has many computers running on Windows XP (three generations behind) with only a few, the newest ones that hold the medical records, running Windows 7.

Corporations have always been the lifeblood of Microsoft, not the Xbox, and they are constantly losing on that front. And it's not really to competition, it's to their own hubris that everyone wants the new Windows OS.

Of course, this opinion article from Forbes isn't talking about Microsoft going bankrupt, only downsizing.

 

[Baresark]

None of that report makes sense. This is MICROSOFT we're talking about here.

Some of it does make sense, at least from a Windows platform POV. Microsoft hasn't been the same, financially and publicly, since Apple started to become the big contender it never had to fight against but also when Vista came out. Companies didn't upgrade to Vista on the mass scale it was expecting and thus we had Windows 7. Now, and only now, do I see the place I work for transition to Windows 7, a generation (four years) behind the current Windows OS. Even the state's main hospital, a stone's throw away, still has many computers running on Windows XP (three generations behind) with only a few, the newest ones that hold the medical records, running Windows 7.

Corporations have always been the lifeblood of Microsoft, not the Xbox, and they are constantly losing on that front. And it's not really to competition, it's to their own hubris that everyone wants the new Windows OS.

Of course, this opinion article from Forbes isn't talking about Microsoft going bankrupt, only downsizing.

I couldn't agree more. As it stand, some of our systems in my company still use XP and we only this year transitioned the entire field over to Windows 7. This brings up an interesting debate I had with another person on these forums actually. I think it had to do with MS had mentioned plans of trying to switch to a yearly OS upgrade model. It was honestly completely ridiculous as so many companies are multiple generations behind. Upgrading infrastructure OS's all the time is almost an impossibility when you have so many core system components that may not be compatible right away.

I think we can all agree that MS needs to be knocked down a few notches. The miss steps they make at this point tend to be pretty substantial. Though some of the analysis on this particular report are pretty damn off, in my opinion. As of right now, it looks like they are going to be announcing a new XBox this year, which most likely means planned losses after release for a few years to come, like the last one. They will either learn from their OS mistakes or not. You don't only have the corporate side not upgrading with new releases, though that should be their primary concern. The only people who tend to get the newest Windows on the homefront seems to be people buying new computers. If you don't do that regularly or build your own, there is no reason to upgrade. You also have these big pushes to other OS's on the gaming side. One being Mac of course. But I don't personally know too many gamers who like Apple products.

The next few years should prove interesting, one way or the other.

 

[The White Hunter]

So what you're saying is, no more Halo? NOOOOOOOOOOOOOO!!!!!
In all seriousness however, I really hope this doesn't happen as I would really like to see the next few Halo games. As well as the fact I have quite a bit of cash invested in my 360.

They'd likely sell off the IP and related studios to generate cash in this situation, so there'd probably still be Halo.

OT: Meh, I don't care for Xbox and I can live with using alternatives to windows.

 

[GenGenners]

None of that report makes sense. This is MICROSOFT we're talking about here.

I don't think he's that far off about Microsoft (they're probably going to follow IBM at some point in the near-to-far off future), but I don't believe hedging on Apple or the "Tablet market" makes sense, since I see both of those going the same way in the coming decades.

This is a rather long and interesting article about how and why "Microsoft lost its Mojo" that's definitely worth reading: http://www.vanityfair.com/business/2012/08/microsoft-lost-mojo-steve-ballmer

Reading the article now. Pretty mind-blowing.

 

[xxBucdieselxx]

I have heard that Microsoft is dying rhetoric for the past 10 years. Yet they are still around.....

 

[CorvusFerreum]

This seems against all the other reports I've read about Microsoft recently but then I'm not an industry analyst.

Be glad about that. Industry and stock analysts as well as consultants are basicle the furuncle onb the arse cheecks of society. A german cabaret artist named Vollker Pispers said the following about them: "Consultants. Eunochs. They know how to do it." I find that rather fitting.

The great thing about them is that someone among them is always right because three analysts have about 12 opinions about one thing. The odds are in their favour.

 

[Xan Krieger]

40% of Microsoft users still use XP? Does that exclude businesses or something?

I know I still use XP though I might get windows 7 later this year.

OT: Personally I don't think it'll die, Apple sucks so hopefully things will turn around.

 

[Domogo]

IF he is right, which for the record I don't think so, I think he is way far in the future I don't think that apple holds enough of the computer market to make a devastating threat and windows phones are relatively new as well. I think that history is just repeating its self and some guy who happens to have a lot of money just knows that launching a new os and a new system will be a big financial wallet punch but in about 2 years they will be making money again and when the next console generation last 12 freaking years this time around I think the developer money will be just fine for holding xbox together.

but what do I know im just a tech savvy consumer who knows what all of his friends buy and know that xbox is the more popular console in my part of the states, vs some guy who probably bouught an apple because it was cool and and just updated his myspace page with his new about me colum listed under his contributor profile.

 

[WashAran]

Too much use of buzzwords!!!

 

[tautologico]

I have heard that Microsoft is dying rhetoric for the past 10 years. Yet they are still around.....

Yes, they're still around, but in a significantly weaker position than they were 10 years ago. It's unlikely Microsoft will "die" altogether.