Will Microsoft Sell Off Its Entertainment Division?

An anonymous reader writes "Forbes analyst Adam Hartung has predicted that Microsoft will sell off its entertainment division, which includes Xbox, in the coming years. He even goes so far as to list Sony or Barnes & Noble as potential buyers. Lets forget how crazy this sounds for a moment and focus on the reasons why Hartung believes such a sale will happen. It basically comes down to Windows 8, and how poorly it is selling. Combine that with falling sales of PCs, the Surface RT tablet not doing so great, the era of more than one PC in the home disappearing, and Microsoft has a big problem. The problem not only stems from the PC market not growing, but because Microsoft relies so heavily on Windows and Office for revenue. With that in mind, Hartung believes Steve Ballmer will do anything and everything to save Windows, including ditching entertainment and therefore Xbox."

Comments

This article is bullshit!

[theRunicBard]

I cannot believe this is getting posted here. I know Slashdot hates Microsoft but this is the equivalent of me saying that Apple will sell off the iPad because the iPhone didn't sell as well as they wanted it to. Or something like that.

Re:This article is bullshit!

[Anonymous Coward]

Forbes has already taken the story down. I get an "Oops!" with a picture of an old typewriter when I click the link.

Agree the story does not make sense. MS is sitting on a bigger pile of cash than Smaug the Dragon. They can easily afford to be in four, six, fifteen different businesses at once.

Re:This article is bullshit!

[Jeremiah Cornelius]

"When machines and computers, profit motives and property rights, are considered more important than people, the giant triplets of racism, materialism and militarism are incapable of being conquered."

-- Martin Luther King, Jr., April 4, 1967

Re:This article is bullshit!

[SJHillman]

Probably not the best example... Linux can be pretty rude at times. Just the other day, it told me to go fsck myself.

Re:This article is bullshit!

[GodfatherofSoul]

Microsoft has being playing this insane whack-a-mole strategy of jumping into any industry they see a potential new tech giant emerging. I wouldn't consider it a terrible strategy except for the way they make it so obvious that all they want to do is contest every layup; and when they've vanquished an opponent they all but quit (see how Window Mobile imploded).

Of course, that strategy only works so long as you're so flush with cash you can throw billions at all kinds of ventures and not need to worry about the outcome.

Re:This article is bullshit!

[Daniel Dvorkin]

Isn't there some law or other about headlines that end in a question mark?

No.

Re:This article is bullshit!

[hairyfeet]

Oh not only is it THAT retarded but it makes one of the oldest. fucking. mistakes. on Slashdot, the kind of shit we expect from noobs NOT from TFA. Say it with my boys and girls, correlation does NOT equal causation!

And who in the fuck is listening to those fucking retards in the press that think we are going back to one PC? because as a retailer that sells PCs and services I'd like to bitchslap him/her for being so fucking stupid. that is NOT why sales are down, its the exact opposite in that everybody has too many computers with even the poorest people i know having 2 or 3 of the things!

For those that want the actual FACTS from somebody down in the trenches its REALLY fucking simple, the mid 90s through mid 00s? THAT was a bubble, that was NOT the natural state of the market. Look at the sales from before as well as the sales after and you have a perfect bell curve. The reason WHY you saw a bubble blown in PC sales is because you had AMD and Intel dueling in the MHz wars and thanks to how incredibly easy it is to take advantage of a faster single core a PC you bought 2 years previously would struggle to run the latest stuff and by 3 years it couldn't run shit that had been released. I went from a 300MHz to 733MHz, 1100MHz, and finally 2200MHz, all in less than 4 years. That's a more than 7 fold increase in speed folks.

But then a funny thing happened that ironically we are seeing play out all over again in ARM and that is both AMD and Intel ran headfirst into a thermal and power wall, chips were hitting close to 140w TDP and were requiring bigger and bigger coolers, with Intel it was a big enough problem that they had to keep the P3 in mobile because between the power sucking and all the fans it took to keep the damned things from melting you could count the battery life of a P4 laptop in fricking minutes....so what to do? Simple instead of constantly ramping up the MHz ramp up the cores and sell multicores to the masses! Brilliant!

But it turned out for the chip makers and companies like MSFT that had gotten fat and lazy and had convinced themselves and Wall Street that like the real estate bubble the PC sales bubble would continue that it turned out this plan was TOO brilliant because we PC retailers noticed a curious little fact, once you got to dual cores, which gave you one core for foreground and one for background processing? With the vast majority you saw diminishing returns REAL fucking quickly, with the average user not able to tell the difference between a dual, triple, or quad, much less a hexa or octo by the way they acted, why? Because they just couldn't come up with enough useful work to feed the chips. Hell myself and my two boys are fricking PC gamers which traditionally required pretty damned quick PC turnover, during the bubble I was building a new PC every year and a half and building the boys new ones every 2 years, now? Me and the oldest have nearly 3 year old hexacores that have more cores idle than being used a good 90% of the time and the youngest who is the MMO player in the family is so happy with the fast Athlon triple that I loaned him while his quad was waiting for a part he told me just keep the quad, the triple was more than he needed.

So it is NOT that "the PC is dying" or that anybody is trading their fricking laptops or desktops for some dinky ass smartphone, its the simple fact that for nearly 6 years PCs have been insanely overpowered so people see no need to buy a new one when they can't stress the old. Most of my business and home users simply had me install Win 7 when it came out rather than buy a new Win 7 PC, why? Because what I was selling on the LOW end 5 years ago, we are talking the cheapest new builds I had, were fricking Phenom I triples and quads with 4GB of RAM and 500GB HDDs! What normal user is gonna be able to max out a Phenom I triple? Heck I have an engineer customer that runs the latest Solidworks with extremely complex robot models on a Phenom I triple and he's quite happy with the performance.

Re:This article is bullshit!

[lennier]

Generally I am repulsed by those repulsed by the profit motive

And I'm repulsed by those repulsed by those repulsed by the profit motive. It's repulsors all the way down.

They didn't owe me a job in the first place so if I'm let go, so be it.

Hear, hear! Good clean social Darwinism. There shouldn't be any kind of "social contract" at all. Our corporations should be sleek, vicious, beautiful monsters, utterly amoral, streamlined of every impulse except a ravening urge to destroy the competition and feast on the juices of sweet, sweet captive markets, the blood and ichor of consumer franchises trickling down their fangs.

We don't need none of this Commie socialist "empathy" or "compassion" or "rational planning" or "thinking about the issues". That's for sissies.

Re:This article is bullshit!

[Safety Cap]

who was devolving deeply into socialism toward the end of his life

Welcome to 2013, Mr. Fossil, where the word "Socialism" doesn't make red-blooded Americans wet their pants the way it did back in the '50s.

Of course, I'll have to ask you to stop using our Socialist services, including: roads, Fire/Police protection, public parks, water/sewer lines, power grid, internets, national defense, FDA-approved foods/drugs, labor laws, radio/broadcast spectrum, currency and education systems.

Thank you.

Xbox is finally making money

[alen]

Last i read

The online part is the money loser along with mobile

And why would Sony buy it? They already have a console

Re:Won't happen

[oodaloop]

What, did you just start reading today?

MS's gaming strategy has been weird for years

[RogueyWon]

I've not understood MS's strategy around gaming for years now. Don't get me wrong, I owned an original Xbox and liked it, I own a 360 now and like it a lot - but I've never understood why MS would choose to move into the console market.

I'd have thought that there's much more of an incentive for them to make Windows work as a gaming platform. After all, what's one of the biggest reasons that people shy away from switching OSes? The games. Running modern commercial games consistently and in a relatively hassle-free manner is - and has for quite a long time - been one of the things you can do on Windows that you just can't do on other OSes.

So they launch the original Xbox which is basically - at launch at least - the console that runs games you'd otherwise have expected to be focussed on the PC (Halo and Knights of the Old Republic were both from genres that the PC utterly dominated at the time). Then the 360 comes along and - for quite a long time - if the only reason you stick with Windows is gaming... then why not just buy a 360?

And then as we get to the late-cycle point where PC gaming really starts to outstrip what the consoles can do (even on a bargain-bucket PC), they go and foul it all up with Windows 8.

It's like MS is determined to take one of its biggest advantages in the OS market and hammer it into oblivion.

They make periodic efforts to "get serious" about the PC as a gaming platform, but these tend to be inconsistent, badly thought through and horribly unsuccessful. Games for Windows Live, anybody? With Valve looking at the PC gaming market in a distinctly predatory manner, MS should be seriously worried.

And while it's not such a major matter, they've also made some really odd choices with their internally developed games. First they shut down the Flight Simulator series - a brand with immense loyalty from its enthusiast following - abandoning the market to competitors. Then they try to come back with Flight - a free-to-play-pay-to-actually-do-anything monstrosity that discards the series's historic strengths.

Selling off their entertainment division? At the point where they're finally making a profit from console gaming? It would fit...

Re:MS's gaming strategy has been weird for years

[alen]

a console is $199 to $399 compared to a lot more for a gaming PC

i used to build PC's for fun and don't want to do it anymore. along with millions of other people who don't care about specs or whatever. you can buy a $199 box with a library of hundreds of games that mostly just work and play on a big TV. the fact that a $1000 PC may have better graphics is a non-issue for most people

Re:MS's gaming strategy has been weird for years

[Dishwasha]

but I've never understood why MS would choose to move into the console market

It was always Microsoft's goal to have a computer in every home. The Xbox has allowed Microsoft to continue in that vein.

Re:MS's gaming strategy has been weird for years

[CastrTroy]

Games is one of the serious reasons why people won't upgrade their OS though. Because you never know which games are going to stop working when you upgrade your operating system. A lot of games stopped working when you went from DOS to Win95, from Win98 to Win XP/2K and From XP to Vista/7. Games tend to use all kinds of tricks to run at the highest speed possible, as well as for DRM, and often those tricks don't work on the next version of the operating system. Removing games from Windows actually gives people a lot more freedom to upgrade their system when a new OS comes out.

Re:MS's gaming strategy has been weird for years

[TheNinjaroach]

$500 gaming rigs do just fine, really. And you can use them for so much more than just games.

I Dunno

[MightyMartian]

If Windows is in trouble because of market shrinkage (and that's most certainly the case at the consumer level, not really at the business level), then how does decreasing Microsoft's diversification (which is what I always assumed the XBox division was all about) help things? Sure, it might make some quick cash, but then Redmond is still stuck with the same problems.

I think Microsoft has got an uphill climb with Surface, but while it may not be winnable in traditional Redmond terms (90% for MS, 10% for everyone else), I don't see why in the medium term it couldn't at least grab some modest market share. Beyond that, we already know they're preparing a version of Office for the iPhone, so Microsoft always has a few cards like porting major software packages to competing environments, up its sleeve.

I don't buy this. Not yet. Maybe in five years when Microsoft is in some sort of severe structural decline, then maybe they start selling off divisions, but while the situation is hardly in their favor right now, it's hardly desperation mode at Redmond.

Steve Ballmer

[ClaraBow]

I'm just a lowly user, but I predict that the next big move that MS makes is to get rid of Steve Ballmer. And the second big move that MS is going to make is release Windows 8 Pro Classic -- which will simply be Windows 8 without Metro bolted on! They have no choice if they want to keep their business customers happy!

Frankly, dear Microsoft...

[faragon]

... I don't give a damn. Instead of selling Windows 7 and 8 at reasonable prices, you're turning Windows 8 into 200$, after some time in the 30-40$ (source. You'll die, slowly, because of being greedy and short-sighted. In my opinion.

Backwards

[MobyDisk]

Microsoft is more likely to sell off the Windows Os side and keep the entertainment division. XBOX exists because they knew that the future of Windows depends on it being in your living room. They are supposed to be using the xbox to sell Windows in the same way Apple uses the iPad and iPhone OS to sell Macs.

With that said, Microsoft is doing a terrible job at this, but the strategy depends on tying entertainment to OS so selling it off would be illogical.

UPDATE THE LINK!

[David Gerard]

Forbes has vanished the article. Here's a copy on the author's blog.

Re:404

[David Gerard]

http://www.thephoenixprinciple.com/blog/2013/01/sell-microsoft-now-game-over-ballmer-loses.html

No.

[Megane]

Betteridge's law of headlines

The best part is that Forbes (apparently) pulled the article because (apparently) it was just too much wild speculation.

Xbox is a foothold in the living room

[Stone316]

Why on earth would they sell that off? Makes absolutely no sense. This type of reporting is totally and utterly a pile of crap. Must be a slow news day and this guy has an article quota to keep.

The Idea Is Actually Not Complete Bullshit

[eldavojohn]

I cannot believe this is getting posted here. I know Slashdot hates Microsoft but this is the equivalent of me saying that Apple will sell off the iPad because the iPhone didn't sell as well as they wanted it to. Or something like that.

No, I see distinct differences between your comparison. I wasn't able to read the article before it was pulled but let me address your bad analogy. While you're right that this "analyst" needs to pull his head out of his anal cyst, your comparison is quite laughable and let me tell you why. Traditionally Microsoft's software has been a cash cow. You want the latest Office? You want the latest Windows? Pay up. Everyone. For each computer. Now. And while that's faltered before, Windows 8 has been subjected to a lot of bad PR (both warranted and unwarranted) as well as actually having poor sales.

Now, let's look at their entertainment division. With the initial Xbox release, that division was a sinkhole of money. Like, literally a burn pile for billions of dollars. But Microsoft was patient because they had other stupid insane routes of income with which to fill the tire fire that was the Xbox. Even when they launched the second incarnation -- they fared much better but still they took a loss on the console assuming publishing royalties would pay and later on they did. Now, you know, after the bomb of the Zune has run its course and now that Wii U is out Microsoft could be looking at their entertainment division as a potential sale. Why? Because in the past it has been a very risky venture for them and recently profits and revenues of that division have been dropping faster each quarter. Basically I see their sales stagnating until they release another console to drum up more money -- and even then they'll probably take the strategy of letting later publishing sales subsidize the initial unit to compete with Nintendo and Sony.

So, now that their cash cows are looking pretty thin will they be in a position to take another gamble in the console market? Will it be painful like Xbox one or will it be great like Xbox 360? And I'm not in this area of management but I imagine they are looking at their revenues and if committing to the next console is a make or break move for Microsoft as a whole (which would be totally f*cking insane if they are looking that bad) then maybe they'd try to sell it to someone else with huge cash reserves. I don't know why Sony would buy and I don't see B&N having a ton of cash after their brick and mortar stores are a fond pastime.

So, to wrap it up, no this is nothing like Apple selling off the iPad because the iPhone didn't sell as well as they wanted it to. I don't think the iPad ever lost them money and the market still looks good for tablets.

Re:The Idea Is Actually Not Complete Bullshit

[llZENll]

Windows is dying, office is dead, quit trying to force them! Zune is dead, and windows phone is in the ICU, Microsoft's only somewhat healthy division with a possible future is entertainment, why in the hell would they sell it?

If I were Microsoft, I would launch a new console immediately, featuring kick ass hardware with no dvd/bluray drive and all software is downloaded with a 30% royalty rate, good bye publisher distribution! The current xbox live gold would become free, and a new tier of xbox live would add a free video streaming library like netflix, AND HERE IS THE BIG ONE, a free video GAME library that works like netflix, you can only check out a certain number of games at a time and their save state is wiped when the game is returned. The only games in the this library are older and lower tier ones, much like the netflix movie library.

Re:The Idea Is Actually Not Complete Bullshit

[rogueippacket]

Dear Sir/Ma'am,
I am pleased to offer you the position of CEO, Microsoft Corporation, effectively immediately upon your acceptance. Your vision for our company, relatively low Slashdot ID, and ability to forge ahead during difficult times have made you a prime candidate for this position. Your salary is negotiable at time of signing, and in keeping with the spirit of our company, you will be provided with a warehouse full of office chairs of varying weight and size, such that you may throw them at your subordinates should the need arise. Human Resources has already agreed to waive any complaints from these incidents up to ten (10) times per calendar year.
Welcome to the Microsoft family!
Signed, S. Ballmer

A far more Microsoft-ie approach to this would be

[Shemmie]

Well, as I understand it, the 360 did well in the 'longer haul' of this generation. While the clear winner was the Wii, it has effectively been dead for a couple of years, with the 360 making leads over the PS3 in Europe and I believe, the US?

So... if Microsoft see the 720 as being 'potentially a success' on its own two legs, what would MS do? Given recent history, they'd find a way of jamming Metro into it, somehow. I can see the 720 as being some Windows RT inspired device, aimed at being to your living room what your WP8 is when you're mobile, your Windows Surface device when you're semi-mobile, and your Windows 8 desktop when you're at a desk.

The fact that WP8, Surface and Windows 8 are clearly failing (miserably, in the case of WP8 and Surface) is unlikely to deter MS - Ballmer has been one of the most stubborn CEO's in recent history. His strategy to keep doing the wrong thing, no matter what sales, user feedback, OEM feedback might say is quite remarkable. Zune will succeed! Oh. Well, WP7 will succeed! Oh... er... XNA is doing well in the indie market, let's scrap it! .Net's entrenched in business and enterprise, let's suggest it's second class now! Let's buy Skype and just screw it in to everything we do! Let's do the Surface hardware on our own, our OEM partners will be fully supportive!

I seriously believe a Magic 8 Ball running Microsoft would do a better job, as decisions made entirely by random would have a better chance of sometimes being successful.

If Ballmer continues on this route, either MS will win massively in the long run (by being such an incredible visionary that he blind-sided the entire technology market, and all his ideas thus far have been part of some master plan), or (seemingly more likely) he will run them into the ground, until there's nothing left but a software company looking for a buy out.

And I'm fairly pro-Microsoft. For /., I'd actually be a fan boi.