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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."
What, did you just start reading today?
Tic-Tac-Toe, Global Thermonuclear War, and relationships all have the same winning move.
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...
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.
The world's burning. Moped Jesus spotted on I50. Details at 11.
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!
Forbes has vanished the article. Here's a copy on the author's blog.
http://rocknerd.co.uk
Probably not the best example... Linux can be pretty rude at times. Just the other day, it told me to go fsck myself.
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.
My work here is dung.
Isn't there some law or other about headlines that end in a question mark?
No.
The correlation between ignorance of statistics and using "correlation is not causation" as an argument is close to 1.
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.
ACs don't waste your time replying, your posts are never seen by me.