Microsoft CEO Struggle Report: Elop Would Sell Xbox

Karloff

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Microsoft CEO Struggle Report: Elop Would Sell Xbox



Nokia's former boss would like to see Microsoft become a software and services company.

Stephen Elop, one of the contenders [http://www.escapistmagazine.com/news/view/129358-Microsofts-CEO-Search-Narrows-To-Eight-Names] to replace Steve Ballmer as Microsoft's CEO, would sell the Xbox division if appointed, according to unnamed Bloomberg sources. Elop doesn't consider Xbox to be central to Microsoft's policies and goals, and would happily ditch both it and search engine Bing if he took the top spot.

Elop considers Microsoft to be a software and services company, and would like to see its Office and other programs on every device, including Apple's, and anything running Google's Android. At the moment Office is essentially a means of keeping Windows-based devices afloat, and Elop believes that cutting the cord and letting Office go wherever the market wanted it to go is the best way of revitalizing Microsoft.

Elop's not the only one who thinks selling Xbox is a pretty good idea. "The new CEO search could result in a tighter focus on its lines of business," said Nomura analyst Rick Sherlund back in September [http://www.bloomberg.com/news/2013-09-17/microsoft-plans-40-billion-buyback-boosts-dividend.html]. "We have suggested [Bing] search and Xbox lose money and are not essential." Sherlund thinks Microsoft could lift its 2015 profits by as much as 40%, if it sold Xbox and Bing.

When it comes to profits, Office is certainly far more important to the company than its hardware division. The most recent financials [http://www.microsoft.com/investor/EarningsAndFinancials/Earnings/PressReleaseAndWebcast/FY14/Q1/default.aspx] show D&C Licensing make $4.343 billion as opposed to D&C Hardware's $1.485 billion, and at a much better margin. Hardware's revenue is eaten up in costs, whereas Licensing is a license to print money.

Before Elop came to Microsoft he was Nokia's boss, during the phone company's decline, and before Nokia he was a Microsoft manager. After Microsoft bought Nokia earlier this year, Elop accepted a job at Microsoft. Whether or not you think Elop did a good job at Nokia depends on what you think his job was; if it was to revitalize the company, then Elop failed, but if it was to ensure Microsoft bought Nokia at a good price, then he succeeded. Kind of, anyway [http://www.bloomberg.com/news/2013-09-05/microsoft-out-18-billion-on-ballmer-nokia-deal-real-m-a.html]; Nokia's bad news is a gift that keeps on giving, as far as Microsoft's profits are concerned.

Source: Bloomberg [http://www.bloomberg.com/news/2013-11-08/microsoft-ceo-candidate-elop-said-to-mull-windows-shift.html]


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rofltehcat

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I wonder who would actually buy the Xbox division. There can't be many companies with enough cash as well as the required experience/employees/ambition in the video game/console market.
 

Daaaah Whoosh

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Well, this makes it sound like Microsoft isn't doing too good. I wonder what the effects of selling Xbox would do to the always-online policies of the Xbone. I'd imagine there would be at least a few days where no one could play Xbox.
 

Roxas1359

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Yeah, I'll honestly say that I'd rather have Steve Ballmer stay as Microsoft's CEO then have Elop run it. Mainly because this was the person who managed to run Nokia pretty much into the ground, and I'd shutter to think how he could screw up Microsoft even more...>.>
 

Eldritch Warlord

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Last I saw Xbox division was turning a profit. Also, Microsoft Office is on OS X and to a more limited degree iOS and Android. I suppose someone inside MS would probably know better than I, but a lot of what Elop is saying just seems completely wrong.
 

TiberiusEsuriens

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I recently revamped my PC, and even though I put Win7x64 back on my PC for gaming, since I'm no longer a student I saw 0% reason to pay for office again. Now I'm a few hundred bucks richer and get by with the plethora of office freeware just fine.

Turning Office into a service will just piss off everyone that isn't used to re-re-repaying for it, and apparently these guys forget that Office does already exist for Mac. It's never the latest version (I think they just got upgraded to 2011 version) but the point still stands that it wouldn't actually be increasing their install base. What do they want people to do, use Office on their smart phones and chrome books? People typically use those devices to GET AWAY from Windows.

Final ranting point: I know that it states hardware income is often eaten by manufacturing costs, but this guy just turned his nose up at 1.5 BILLION dollars, or about 1/3rd of income. Microsoft has been diversifying its assets to stay afloat these last ~5 years, it's odd that so many want to chop off its legs. Office may be the heart, but you need legs to walk.

 

CardinalPiggles

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If Xbox flops then Valve would have a much better chance of getting into the console space. I'm ok with this honestly.
 

Fox12

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"Oh nooo"

*smiles*

It would probably get bought up by EA so they could infuse it with their evil, making the most diabolical machine in the history of mankind.
 

Karloff

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TiberiusEsuriens said:
Final ranting point: I know that it states hardware income is often eaten by manufacturing costs, but this guy just turned his nose up at 1.5 BILLION dollars, or about 1/3rd of income.
Yes, but it really doesn't pay to ignore those margins. Revenue was 1.5 bill, but of that D&C Hardware only took home a couple hundred million; the rest went to expenses. Meanwhile D&C Licensing made over $3.9 billion even after expenses. Hardware costs; comparatively speaking, software doesn't.
 

Roxas1359

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Kumagawa Misogi said:
Neronium said:
Yeah, I'll honestly say that I'd rather have Steve Ballmer stay as Microsoft's CEO then have Elop run it. Mainly because this was the person who managed to run Nokia pretty much into the ground, and I'd shutter to think how he could screw up Microsoft even more...>.>

Elop ran Nokia into the ground on purpose so that Microsoft could buy it cheap though, So not really the same situation.
I know, but it just feels like Microsoft is in the same situation that Nokia was in back when Elop took over. I mean really with Elop I honestly think he's more incompetent as being as CEO than Steve Ballmer, and I didn't even think that was possible.
 

snekadid

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Fox12 said:
"Oh nooo"

*smiles*

It would probably get bought up by EA so they could infuse it with their evil, making the most diabolical machine in the history of mankind.
You mean they would turn it into a Virtual boy?! Those monsters!!!
 

MCerberus

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I'd actually like to see MSGS throw off the Xbox leash (assuming it isn't bundled with the xbox division). Hopefully it would get the publisher and its studios back to old form.
 

synobal

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Kalezian said:
rofltehcat said:
I wonder who would actually buy the Xbox division. There can't be many companies with enough cash as well as the required experience/employees/ambition in the video game/console market.

Sell it to Sega.

I mean, they know how to make really great consoles that didn't have games that were just Arcade ports, right?


it's a match made in a board of directors meeting!
Don't know if Sega has the assets to buy it honestly.

The bigger question isn't who to sell it to it is who would want to buy it?

Valve? While it would be cool I dunno if Gabe would be interested, maybe if they had sold the division before the launch of a new console generation and he could then implement his own vision then ya, but I don't think anyone would want to buy a the xbox this early into a new console generation and be locked into all/most of microsofts mistakes.

Sure gabe could implement steam on the xbox, and do away with xbox live/gold and generally improve the software side of thing but I think being locked into Microsofts hardware would be a real problem with anyone.

Because honestly this next generation isn't looking good for microsoft, they have a higher price point than sony, have a console with less power behind it, and the xbox is more difficult to develop for this generation.

So ya I really have no idea who would want to buy the xbox division from microsoft.
 

Hawkeye21

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I don't give a flying fuck about XBox, although without xbox playstation would have no competition, and their console would likely turn to shit very fast. That guy sounds like a real sleazebag though.