Microsoft CEO Struggle Report: Elop Would Sell Xbox

[BloodSquirrel]

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.

Relying solely on Office and OS sales is a great way to ensure that when the market shifts your company has nowhere to go but down the tubes.

Analysts seem to have this fetish for MS dumping everything except it's business software segment, but it isn't a great long-term strategy. The tech industry has a habit of changing, and companies that can't keep up die off. Staying out of the rapidly growing mobile device market could very well be game over in ten years if they take over as the center of the computing world.

Also, from the linked article:

Some investors were eager for his replacement to be an outsider who might make bold moves to reverse a shrinking market value, such as spinning off consumer-centric units like Xbox and shifting its focus back toward software and services for businesses.

The Nokia purchase instead has fueled speculation that Elop, a former Microsoft executive, is being groomed to take the helm and will continue with Ballmer?s strategy of keeping enterprise and consumer products under one roof. The stock has dropped 6.6 percent since announcing the Nokia deal, sending Microsoft?s market value down to $260 billion yesterday.

 

[Psychobabble]

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

Yeah. You know I'm sure they guys that run Sony would like to see that too.

 

[BloodSquirrel]

Elop ran Nokia into the ground on purpose so that Microsoft could buy it cheap though, So not really the same situation.

...which begs the question as to why he would now want to get out of the market that MS is getting into by buying Nokia.

 

[BrotherRool]

He wants to get rid of Bing? It's almost like he's a human being

 

[Pyrian]

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

Eh, I'll bet there are investment groups that would leap on it if the price is right. And some that might take the leap even if it isn't.

 

[BloodSquirrel]

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

Eh, I'll bet there are investment groups that would leap on it if the price is right. And some that might take the leap even if it isn't.

The problem is that, unless the division is as valuable to the buyer than it is to Microsoft, they'll be losing billions of dollars on the sale. Generally companies sell or spin off divisions because there are clear reasons why the division would be more profitable on its own or with somebody else. With D&C Hardware being as integrated into the MS ecosystem as it is, there's no clear reason I can see why anyone else would think they could get more out of it than MS does.

MS would have to sell the division for less than its value to MS, which doesn't make a whole lot of sense to do.

And seriously, who the fuck would buy Bing? The thing only exists so that it can be integrated into MS products so that they don't have to use Google. Bing will just be dropped entirely before they embarrass themselves trying to sell it to somebody.

 

[Pyrian]

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

Eh, I'll bet there are investment groups that would leap on it if the price is right. And some that might take the leap even if it isn't.

...there's no clear reason I can see why anyone else would think they could get more out of it than MS does.

It seems to me that venture capitalists think that all the time, and are rarely discouraged by their own track records.

 

[BloodSquirrel]

It seems to me that venture capitalists think that all the time, and are rarely discouraged by their own track records.

Venture capitalists with bad track records don't stay venture capitalists for long, as a bad track record means losing all of the capital that you're trying to venture with.

 

[Smooth Operator]

Not sure it's a very good idea for MS but it would do wonders for the rest of the market as people wouldn't get stuffed with exclusivity deals and lock-downs that are getting tighter even on PC.

 

[Brockyman]

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

Well, using Valve's current time table on developing games people want, the new SteamBoxes will be available in 2040.

 

[CardinalPiggles]

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

Well, using Valve's current time table on developing games people want, the new SteamBoxes will be available in 2040.

If Left 4 Dead 2 taught us anything, it's that when Valve wants to, they can produce at a fast rate (and that people get just a pissed off).

If Xbox flopped tomorrow then Valve would push their Steambox out ASAP.

(I realise that no one is talking about Xbox going away, rather being bought out, but if they do get bought out then I'm pretty sure it wouldn't be long before the Xbox hardware platform went the way of the Dodo).

 

[Lightknight]

So, the division controlling a console that is a couple weeks from launch is on the chopping block? Yeah, consumer confidence = all time high.

From a synergistic perspective, I think it would be a mistake to drop the XBO. There's a lot of ways they could have made the XBO something interesting for them. For example, imagine a console that can dual-boot if the individual buys an OS designed for it. Something that can word process and web browse via keyboard and mouse. That's one idea and avoiding Steam being used on it would require some controversial steps, but it's one of many options.

The problem is that Microsoft used to provide an environment that empowered clients to do what they wanted to do. With the console, they've closed everything down and that's counter Microsoft.

Frankly, I think they're planning on using the XBO to prop up their cloud computing and showing what it's going to be like. Sony is doing this too with the Gaikai in a way that will allow PS3 games and maybe more to be played on smaller devices with controllers thanks to streamed gaming. That's an entirely new market.

It's a lot of promise but they're just not doing it right. They made the device to sell to marketers and to attract publishers and this has put them in a bad spot. That can be fixed.

 

[Adam Jensen_v1legacy]

He's right about Microsoft Office. It shouldn't be exclusive to Windows. There are already open source alternatives so it's best to spread it to as many devices as possible before people find out about those open source alternatives.

 

[Strazdas]

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.

yes and no. It was turning a profit for the last few years. It was turning a loss beforehand. Whole Xbox program from start to finish is still quite a few billion in the loss, so so far MS did not gain any profits on Xbox.
here is a graph:

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.

Good for you. I couldnt live without Excel and no freeware alternative is capable of doing the things im doing with it. But i may be weird.

 

[Eldritch Warlord]

He's right about Microsoft Office. It shouldn't be exclusive to Windows. There are already open source alternatives so it's best to spread it to as many devices as possible before people find out about those open source alternatives.

Office isn't exclusive to Windows. I have no clue what Elop means when he says he wants to see Office on Apple and Android devices, it's there already. Honestly the more I consider it the more I think he probably has no clue either.

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.

yes and no. It was turning a profit for the last few years. It was turning a loss beforehand. Whole Xbox program from start to finish is still quite a few billion in the loss, so so far MS did not gain any profits on Xbox.

I know that, I just meant that Xbox is currently making money. It just seems like there's really no reason to sell off Xbox, diverse holdings are always good right? Suppose Microsoft sells off their hardware divisions then Red Hat and OpenOffice suddenly started getting really popular, they would be pretty much done for. If they still have hardware holdings then maybe they can come out of that as something like an Apple-Nintendo hybrid.

 

[Saltyk]

While I don't this this guy sounds like the person you want running the company, it really doesn't help rebuild my confidence in the Xbox One when I hear that it's possibly on the chopping block. Seriously, if that happens, I don't think the Xbox One could survive and would probably flop hard. Belly flop from the high dive hard.

Also. What the Hell is Bing?

 

[Ed130 The Vanguard]

While I don't this this guy sounds like the person you want running the company, it really doesn't help rebuild my confidence in the Xbox One when I hear that it's possibly on the chopping block. Seriously, if that happens, I don't think the Xbox One could survive and would probably flop hard. Belly flop from the high dive hard.

Also. What the Hell is Bing?

Its Ms's answer to the Google search engine.

Not bad, but nowhere near as good as Google unless there were some major improvements in the past few months.

 

[Saltyk]

While I don't this this guy sounds like the person you want running the company, it really doesn't help rebuild my confidence in the Xbox One when I hear that it's possibly on the chopping block. Seriously, if that happens, I don't think the Xbox One could survive and would probably flop hard. Belly flop from the high dive hard.

Also. What the Hell is Bing?

Its Ms's answer to the Google search engine.

Not bad, but nowhere near as good as Google unless there were some major improvements in the past few months.

I know. I was making a joke. No one uses Bing. I mean Google is practically a verb at this point.
"Hold up. Let me Google that real fast."

Oh, man. I missed out on a perfect joke.
"What the Hell is Bing? Hold on, let me Google that."

Missed opportunities.

 

[Strazdas]

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.

yes and no. It was turning a profit for the last few years. It was turning a loss beforehand. Whole Xbox program from start to finish is still quite a few billion in the loss, so so far MS did not gain any profits on Xbox.

I know that, I just meant that Xbox is currently making money. It just seems like there's really no reason to sell off Xbox, diverse holdings are always good right? Suppose Microsoft sells off their hardware divisions then Red Hat and OpenOffice suddenly started getting really popular, they would be pretty much done for. If they still have hardware holdings then maybe they can come out of that as something like an Apple-Nintendo hybrid.

We dont... really know that microsoft is currently making money on xbox even. We dont know how much R&D went into XboxOne. And due to the way microsoft shapes its reports (god, i swear americans decided to create accounting system with intention of making it as confusing as possible, sigh), we dont really know where it is accounted for. It could very well be that it is higher than current 360 porfits and would still make a loss.
ALso, for all the stupidity and hate we give micorosft, they may be stupid, but thier not that stupid. they know XboxOne will not win this one no matter how hard they are trying, and this could very well lead to projected loses in the future. Selling off part of company that has been making loss overall, is projected to make loss, and selling it off for couple billion being the only way to get at least some of the money back... yeah i can see how they can get the idea.

Diverse holdings are good, unless such holdings are draining all your money away. besides, diverse holdings rule seems to be forgotten very quikly in big business sadly. Specific business also are much easier to manage, because you need less expertise for other fields. Diverse isnt always better, its great in theory, however in practice it doesnt always work out. Now of course i do think microsoft definitely need some backup plan and dont think they should sell it, but i can understand why they want to.
And Open Office or Red Hat got nothing on micorosoft. OO is kinda workable now.... Maybe for simple tasks such as printing documents and so on. Meanwhile i know that my company will be using excel for a looooooong time as there is no widely known alternative that a new peopl can just pick up and use that could even begin such calculations. while for home use Open Office may become popular, for corpoate use microsoft isnt loosing any time soon. Windows is another thing though, i know no specialist that wants to install 8. in fact, my work computer still runs XP (and 2007 office), though bym atter of forcing me into it (no drivers for XP) i got acostumed to 7 now. I still think XP looks better, but i see some tweaks and features where 7 is beneficial. Office id love to have 2010 at work, as that one i consider the best. Word didnt change much but dont get me started on what they added to excel. 2003 excel compared to 2010 is like a calculator compared to 2003 excel.

 

[prpshrt]

I hope they do sell it off. At least then they can go back to fixing the massive mess that is Windows 8