Firm Asks Microsoft to Stop Dragging Xbox Down

[Tom Goldman]

Firm Asks Microsoft to Stop Dragging Xbox Down

With the Xbox division projected to earn big profits in the near future, investors are recommending it make a clean break from Microsoft.

Microsoft is a giant multinational corporation made up of various divisions that each develop different products in the areas of software and electronics, with the Entertainment and Devices division bringing us merchandise like the Kinect [http://www.amazon.com/Xbox-360-250GB-Console/dp/B003O6JJKY/ref=sr_1_1?ie=UTF8&qid=1286299957&sr=8-1]. Due to the strength of the Xbox console, analysts are actually recommending that the Entertainment and Devices division be separated from the rest of Microsoft so it can reach its full potential.

Whether Kinect will be red ring of death [http://www.escapistmagazine.com/news/view/103571-Kinect-Will-Be-the-Biggest-Platform-Launch-Ever-Says-Microsoft] is largely a thing of the past, there seems to only be room for more profit, especially if Kinect is a success. However, "corporate overhead" is said to "remain the biggest challenge" for the Xbox division.

To remedy this, investment firm Goldman Sachs has recommended that Microsoft "carve off" its Xbox business. A recent Goldman Sachs report reads: "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." The firm seems to think that a split would help Microsoft tighten its focus.

Despite the impending launch of Kinect in November, for which three million sales are predicted by the holiday season's end (by Microsoft [http://www.escapistmagazine.com/news/view/103519-Microsoft-Predicts-3-Million-Kinect-Sales-Over-the-Holidays]), Goldman has lowered their recommendation in Microsoft stock from "buy" to "neutral" due to threats from products like the iPad and services like cloud computing. As far as I can tell, a separate Xbox business would mostly be an easier way to determine if Microsoft's various new portions were worth investment or not, and wouldn't necessarily affect consumers.

Source: Gamasutra [http://www.gamasutra.com/view/news/30779/Goldman_Sachs_Recommends_Microsoft_Split_Off_Xbox_Business.php]

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[the_pleasure_is_mine]

Maybe... maybe... Microsoft has it's good and bad points and a split off is a huge thing to do with something like the Xbox and Microsoft.

We shall see.

 

[The Hairminator]

But...but.. The Xbox IS Microsoft.

 

[Danallighieri]

It'd be a interesting thing to see if it did happen, but I doubt microsoft would ever do something such as that

 

[XT inc]

I dunno maybe they should if it would allow the developers to work better I.e valve no getting to release content because microsoft wants to jerk them and consumers around.

 

[Giest4life]

Yeah, I don't think Goldmansachs shouldn't do the talking......

 

[TsunamiWombat]

Hey guys, this part of your company is making a shit ton of money, you should cut them loose so THEY (and we) can make MORE money! It'll make you feel good about yourself!

 

[vallorn]

Yeah, I don't think Goldmansachs shouldn't do the talking......

they have a lot of experience with this stuff.

 

[Azhrarn-101]

No way this would happen, this would just allow goldman more flexability in manipulating stock prices. Goldman sachs is an evil company so I take anything they say as evil advice.

While you're most likely right, those suits up top tend to trust the demons who work at Goldman, so depending on how greedy the shareholders are, this may well happen. Don't forget that short-term gain is all these people care about, not long term profits.

 

[Rathands]

If they break away from Microsoft, can I still justify screaming 'F*** Bill Gates' when the console breaks again?

 

[VulakAerr]

"What the fuck?", is all I have to say. Do they not read industry blogs or MS news? It has been stated quite plainly by Microsoft that they view their hardware division highly and want to share tech between Windows and Xbox. Kinect WILL be coming for Windows. I'd LOVE to see it coming for Windows. The potential for Kinect interfaces on the desktop PC or for presentations are mammoth. Separation makes absolutely no sense unless all you care about is stock price. Obviously, they do. Fuck them and their empty soulless ways.

Also, zero points whatsoever for spotting the troll at the top of the thread.

 

[Anton P. Nym]

As far as I can tell, a separate Xbox business would mostly be an easier way to determine if Microsoft's various new portions were worth investment or not, and wouldn't necessarily affect consumers.

As far as I can tell, this is the Vampire Squid looking for another place to shove its blood funnel into. I don't see how this actually benefits MSFT at all; they don't need the cash that'd come from a sell-off or spin-off, as they're still sitting on a mountain of cash reserves, but could use the revenues now that Entertainment Division is finally in the black.

I'm not even certain it's in the best interests of the Xbox platform, given its huge start-up debt and sustained operating losses until (finally!) turning profits steadily last year IIRC.

However, if there is a spinoff then Goldman Sachs has another shiny new toy its brokers can hawk to their customers.

(Me, bitter? Nah.)

-- Steve

 

[TLatshaw]

It just seems like to much corporate work for too little gain. If people have been tying the Xbox to Microsoft and still riding with them through the RROD era after all this time, I don't think "carving off" would matter much to anyone.

 

[Tom Goldman]

As far as I can tell, a separate Xbox business would mostly be an easier way to determine if Microsoft's various new portions were worth investment or not, and wouldn't necessarily affect consumers.

As far as I can tell, this is the Vampire Squid looking for another place to shove its blood funnel into.

-- Steve

Well, sure, but I can't exactly say it like that.

 

[AzrealMaximillion]

This would never work unless they could pull Microsoft Game Studios could pull away from Microsoft as well, which will never happen as long as MS owns the rights to Halo.

 

[Orcus The Ultimate]

Yeah, I don't think Goldmansachs shouldn't do the talking......

they have a lot of experience with this stuff.

they also took the US government hostage economically... and provoked the worldwide economy to sink...

 

[Unrulyhandbag]

Well this is the silly-est thing I've seen in awhile. While their at it why don't they ask Sony to push the Playstation loose.*Rolls eyes*

Sony did that on day one. Sony computer entertainment was formed as a separate entity with autonomy responsible for it's own research, development, product and publishing.

It's the same thing being proposed here as it allows the Playstation to operate without corporate oversight (and allow Sony to wash their hands of the whole project if it went wrong). Of course by now SCE is big and bureaucratic in of itself.

 

[GonzoGamer]

Yeah, trust the people who almost singlehandedly turned the US Economy to shit.

Yea. As an investor this is a great idea but as a gamer this is a horrible idea.

The irony is that if Xbox was a separate entity on it's own, the RROD would've bankrupted it. The fact that it was owned by MS is the only reason the 360 didn't go the way of the Dreamcast.... actually the Dreamcast wasn't buried in shame....
Didn't go the way of the Atari.
That was buried in shame, in a secret location in Mexico with the ET game.

 

[Firia]

Now that the red ring of death [http://www.escapistmagazine.com/news/view/101469-No-Red-Ring-of-Death-for-the-New-360] is largely a thing of the past, there seems to only be room for more profit,

Wait, whoa what? really? Is that really true? Or are we just hearing about them less because it's expected? What has Microsoft done to prevent RROD's? Thing of the past he says... I want a sited source on that.

[edit] oh yeah, a link to news on this. I shall investigate further.

 

[samsonguy920]

Considering I am not feeling optimistic that Kinect is the Next Big Thing and add that to the fact that the 360 is starting to show its age, I think this would be a wise idea for Microsoft to do. If the 360 doesn't leapfrog up in sales with Kinect, it is only going to go down, and if Microsoft is still attached it will do a lot of damage with loss of sales, investors, and loss of faith in name placement.
If it does, Microsoft can always keep an investment in the spinoff and still win.

But I don't see Microsoft being that smart anymore. That company is stuck in so deep of a rut they can't see Seattle for the dirt.

Addendum: But then there is also the fact that Goldman Sachs itself makes seriously poor choices based on whatever facts they pull out of children stories. Either case it don't matter as MS ain't going to even consider it.