Microsoft CEO candidate Stephen Elop said to consider selling Xbox business, killing Bing

[spudtrooper]

Bing is a continuation from Live Search which was a continuation from MSN Search - it isn't a fundamentally new service. The userbase from previous iterations were migrated onwards, hence why MSNSearch.com redirects to Bing and Live.com did as well (before becoming a portral for Outlook.com). You can't pretend it's an entirely new service. The reality is that Microsoft has been trying to compete in search for 15 years now with limited success and huge losses.

 

 

 

That's a huge stretch to make.  Bing was an entirely new index/search algorithm and far surpassed live.com in functionality.. live search was a disaster and everyone knows that, bing search was a new index incorporating new features from microsoft research. Overall bing is more to microsoft than what you give credit for and it isn't merely sold as a competitor to google.  Bing is the infrastructure and decision making engine driving much of the interactive content across microsoft's ecosystem and like i said earlier, because of the restructure it is now in a profitable vertical and being that microsoft makes billions a year, having an investment heavy write off to offset income taxes isn't a bad thing either especially when it has continually showed growth and the technologies learned in implementing it have transferred down to all products - including profitable server and azure services.

 

again, if we want to play analyst game, shouldn't google abandon its loss leader Motorola?

[MFH]

I can't provide evidence for his state of mind, though I think the evidence speaks for itself. He used to work in a senior position at Microsoft, then he went to Nokia and made the controversial decision to make the company Windows Phone exclusive and then he negotiated the sale of the company to Microsoft. I do not state it as fact, though it strikes me as highly probable.

 

1. He was chosen by the Nokia board as a CEO

2. Even before he was CEO the board decided to go with WP

3. Several board members were working on the sale

 

So how is he a "Trojan horse" again?

 

 

Steven Sinofsky would make a great CEO. Hes was at Microsoft since 1989 and he headed the Windows 7 and Window's 8 development! It was stupid they fired him because he got Windows back in the right direction.

 

No! It was Sinofsky who introduced that stupid no-information & no-feedback policy.

[theyarecomingforyou]

That's a huge stretch to make.  Bing was an entirely new index/search algorithm and far surpassed live.com in functionality.. live search was a disaster and everyone knows that, bing search was a new index incorporating new features from microsoft research

And Google keeps improving its indexing and algorithms yet that doesn't make it an entirely new service. Do you think the Google search engine launched back in 1997 has much in common with the current version? I'm not disputing that Bing introduced some major changes and was a considerably improvement from Live Search but the userbase from Live Search was migrated onto Bing and the same employees were working on it - it was a rebrand.

 

1. He was chosen by the Nokia board as a CEO

2. Even before he was CEO the board decided to go with WP

3. Several board members were working on the sale

1) I never suggested otherwise

2) The Windows Phone announcement was made after appointing Elop

3) Yes, because the company was going to go bankrupt otherwise

[Anthony Tosie Veteran]

It's on Forbes, which is a respected publication.

 

 

Xbox hasn't been profitable on a long term basis. Certainly in recent years the division has posted profits but those are negated by the losses published prior to that, whether you're talking about the development costs, the subsidised price the consoles were sold at or the write-off related to hardware issues.

Respected publications can still have terrible writers. See David Pogue, formerly of The New York Times and now at Yahoo, for a perfect example of that. Hartung's article was incorrect in its phrasing, and he was called out in the comments and across various websites for it.

 

Xbox is making hundreds of millions of dollars a year, which is offset by the billions the RROD cost and the original Xbox. You seem to be operating under the impression that if Microsoft spins off Xbox, it will stop losing money from the division. The problem is it is not currently losing money from the division. Spinning off Xbox loses Microsoft profit, not the other way around.

[Dot Matrix]

I can't provide evidence for his state of mind, though I think the evidence speaks for itself. He used to work in a senior position at Microsoft, then he went to Nokia and made the controversial decision to make the company Windows Phone exclusive and then he negotiated the sale of the company to Microsoft. I do not state it as fact, though it strikes me as highly probable.

You talk like he just hired himself for CEO. He was hired *by Nokia*, without any help from Microsoft. The decision to go with Windows Phone was a no brainer, it is the only mobile OS that had any room to grow. 

[theyarecomingforyou]

Respected publications can still have terrible writers. See David Pogue, formerly of The New York Times and now at Yahoo, for a perfect example of that. Hartung's article was incorrect in its phrasing, and he was called out in the comments and across various websites for it.

 

Xbox is making hundreds of millions of dollars a year, which is offset by the billions the RROD cost and the original Xbox. You seem to be operating under the impression that if Microsoft spins off Xbox, it will stop losing money from the division. The problem is it is not currently losing money from the division. Spinning off Xbox loses Microsoft profit, not the other way around.

But if it's as clear cut as you say then why is it being recommended / considered by analysts, shareholders and one of the frontrunners for CEO? As I said, I acknowledge that the Xbox division has been posting a profit recently but even Neowin has reported on how it has made a loss overall. It's an incredibly risky market that offers little in the way of profit.

[theyarecomingforyou]

You talk like he just hired himself for CEO. He was hired *by Nokia*, without any help from Microsoft. The decision to go with Windows Phone was a no brainer, it is the only mobile OS that had any room to grow. 

Nobody can hire themselves as CEO, so that's a ridiculous assertion to make. As I said, I think the evidence speaks for itself but you're perfectly entitled to disagree.

[Athernar]

Makes sense honestly, Microsoft is traditionally an ecosystem company - they provide the foundations and tooling, 3rd parties build the house. It's that approach that has made Windows so strong in the past.

 

The new closed ecosystem + 1st party device model (aka the Apple model) doesn't mesh with Microsoft's roots, nor even it's "one" vision. (And takes more resources/effort) They'd be better off in the long run opening up and going back to pushing ecosystems with the help of partners.

[Anthony Tosie Veteran]

But if it's as clear cut as you say then why is it being recommended / considered by analysts, shareholders and one of the frontrunners for CEO?

Analysts and investors are the last people in the world I would expect to make a good judgment call regarding the long-term prospects of a product or service, especially if that product or service also has aspects that aren't as visible to the immediate public.

 

As for the frontrunners: Because analysts and shareholders say so.

[Vykranth]

At some point, we are going to miss Steve Balmmer

[theyarecomingforyou]

Analysts and investors are the last people in the world I would expect to make a good judgment call regarding the long-term prospects of a product or service, especially if that product or service also has aspects that aren't as visible to the immediate public.

 

As for the frontrunners: Because analysts and shareholders say so.

Yet analysts and shareholders determine the value of a company and influence the direction in which it proceeds. You speak as if analysts and shareholders are irrelevant, yet that couldn't be further from the truth. When a brand fails to make a return on investment after more than a decade it is only reasonable to question whether it is worth pursuing.

 

I'd rather see Microsoft focus on its strengths than play the multi-billion dollar lottery that is console gaming.

[neufuse Veteran]

Time for MS to start buying it's stock back and moving towards being private.... too many hands in the kitchen to get anything done...

[Dot Matrix]

If Microsoft wants to be a Devices and Services company, they need XBox and Bing. Case closed. Not sure what these "analysts" mean when they say Microsoft should get back to "being focused."

[fusi0n]

Time for MS to start buying it's stock back and moving towards being private.... too many hands in the kitchen to get anything done...

Fully Agreed.. 

[theyarecomingforyou]

If Microsoft wants to be a Devices and Services company, they need XBox and Bing. Case closed.

But Microsoft traditionally hasn't been a devices company and the few times it ventured into hardware in a significant way have been a disaster (i.e. Zune, Kin, Surface). As for services, Microsoft has no need for Bing if it is going to continue being a sinkhole for money. It already has a variety of successful services (Office 365, Outlook.com, SkyDrive) that are completely independent of Bing and other services that it can develop (Skype), whereas Microsoft has spent $11bn getting Bing to a market share of just 18%.

 

The whole point is that a new CEO will decide which direction to take the company in and Elop has indicated that his vision might include dropping Xbox and Bing.

[Anthony Tosie Veteran]

Yet analysts and shareholders determine the value of a company and influence the direction in which it proceeds. You speak as if analysts and shareholders are irrelevant, yet that couldn't be further from the truth. When a brand fails to make a return on investment after more than a decade it is only reasonable to question whether it is worth pursuing.

 

I'd rather see Microsoft focus on its strengths than play the multi-billion dollar lottery that is console gaming.

I never said they are irrelevant, nor did I imply as much. I said they work for their own interests, which is different than what's good for me, you, the average consumer or the long-term of the company.

 

I'm not sure I'm following you: You want Microsoft to get rid of it now that it's profitable, because the past said it wouldn't be profitable?

[chrisj1968]

MS like I said a year or two ago, was trying to be everything to everyone. When you do that, you end up being nothing to everyone. It is terribly difficult to try and get everything right.

[theyarecomingforyou]

I never said they are irrelevant, nor did I imply as much. I said they work for their own interests, which is different than what's good for me, you, the average consumer or the long-term of the company.

Let's be clear, businesses rarely work in the best interests of consumers - they exist to make money, which is what shareholders want and what analysts help investors with. Also, if a decision is in the long-term interests of a company then it is likely also in the interests of shareholders. Microsoft has made plenty of high profile mistakes (Kin, Surface, etc) and considering how Sony and Nintendo are struggling it's understandable that analysts and shareholders are concerned.

 

I'm not sure I'm following you: You want Microsoft to get rid of it now that it's profitable, because the past said it wouldn't be profitable?

Yes, as that's when it will have its best value. That's because we simply don't know what's going to happen. The PS4 is significantly cheaper than the XB1 and looks to have better performance, meaning that Microsoft could get dragged into a price war with Sony. Further, Valve is preparing their open platform Steam Machines (which probably isn't a serious threat but could be later in the console lifecycles) and it's quite possible we'll see competing gaming platforms from Google and Apple. If the next generation cycle is cut short by increased competition then that will hurt any chance Microsoft has of making a profit.

 

The Xbox division hasn't made money and is a huge potential liability.

[trooper11]

All this talk about getting rid of Xbox is fairly sad I must say.

 

If we go back to a single high end console maker, what a loss that is in my eyes to competition driving improvements.  I've actually enjoyed their products over the years, so it would be disappointing to just see it all go away. 

 

Overall, if MS were to turn the way these rumors suggest that Elop would turn it, they will basically move away from being a consumer focused company.  They will focus less on Windows and more on getting Office everywhere, while their software focus will be on the enterprise market.

 

Basically, MS will become IBM.  That just seems like a lot of wasted potential. It also means less competition in a few areas.

[Anthony Tosie Veteran]

Let's be clear, businesses rarely work in the best interests of consumers - they exist to make money, which is what shareholders want and what analysts help investors with. Also, if a decision is in the long-term interests of a company then it is likely also in the interests of shareholders. Microsoft has made plenty of high profile mistakes (Kin, Surface, etc) and considering how Sony and Nintendo are struggling it's understandable that analysts and shareholders are concerned.

 

Yes, as that's when it will have its best value. That's because we simply don't know what's going to happen. The PS4 is significantly cheaper than the XB1 and looks to have better performance, meaning that Microsoft could get dragged into a price war with Sony. Further, Valve is preparing their open platform Steam Machines (which probably isn't a serious threat but could be later in the console lifecycles) and it's quite possible we'll see competing gaming platforms from Google and Apple. If the next generation cycle is cut short by increased competition then that will hurt any chance Microsoft has of making a profit.

 

The Xbox division hasn't made money and is a huge potential liability.

Microsoft likely wouldn't sell Xbox, it'd spin it off. Except it's not a good candidate to be spun off because it still requires specialized investment from Microsoft (see: using the Windows kernel, using Hyper-V, shifting the Windows OS teams to the Xbox OS to get it done in time to ship, etc.). There's not much long-term logic to the idea of spinning off Xbox. And, let's just say Microsoft would sell it (which seems incredibly unlikely): Who's going to buy? Who has experience in the necessary areas to make a buyout effective?

 

As far as shareholders caring about the long-term benefits of something: I'll believe that when I see it, in regards to an established company.

 

Shareholders aren't concerned. Activists groups are concerned because they want to essentially do the modern-day pump and dump scheme: Get rid of what people think is a drain but has long-term prospects to inflate the stock price, then sell.

[trooper11]

The other thing that comes to mind is that lets say all of this talk is just baseless rumors, or Elop isn't named the next CEO.

 

Think of the unfair turmoil this is kicking up in the market.  I've even seen some people on the internet say they are nervous about buying any MS consumer products at the moment thanks to these rumors.  That's just the ridiculous power of the internet to take rumors and go to the extreme with them.

 

I'm glad MS plans to have this done before the end of the year, so that the rumors can end and we can move on without the craziness.

[theyarecomingforyou]

All this talk about getting rid of Xbox is fairly sad I must say.

 

If we go back to a single high end console maker, what a loss that is in my eyes to competition driving improvements.  I've actually enjoyed their products over the years, so it would be disappointing to just see it all go away. 

Separating the Xbox division from Microsoft wouldn't mean it would disappear entirely, just that it wouldn't be part of Microsoft any more. Everybody wants to see competition in the marketplace as that is better for consumers.

 

Microsoft likely wouldn't sell Xbox, it'd spin it off. Except it's not a good candidate to be spun off because it still requires specialized investment from Microsoft (see: using the Windows kernel, using Hyper-V, shifting the Windows OS teams to the Xbox OS to get it done in time to ship, etc.). There's not much long-term logic to the idea of spinning off Xbox. And, let's just say Microsoft would sell it (which seems incredibly unlikely): Who's going to buy? Who has experience in the necessary areas to make a buyout effective?

The difference between selling it off and spinning it off isn't really important, as either way it would be a separate entity from Microsoft. Any spin-off would likely include licensing rights to make such a venture viable, including any necessary support from Microsoft. As for a sell-off, there are several viable candidates - Google and Apple spring to mind. However, it would be far more likely that it would be taken on by one or more private equity firms and that could include high profile Microsoft executives.

 

Such things are quite common in the business world. Again, this is something we've seen shareholders and analysts calling for - this isn't just a random idea I made up on the spot.

 

I don't see any future in traditional consoles with eight year life cycles, no backwards compatibility and closed ecosystems. At the moment people can choose from a variety of smartphones and tablets at various different price points and which are updated every year yet consoles remain stuck on eight-year life cycles and are positively antiquated by the end. It won't be long until 4KTVs are commonplace yet the XB1 and PS4 are stuck at 1080p (and not even managing that consistently). I see an open platform gaming system, whether it's based on SteamOS, Android or iOS, being the way forward.

 

The other thing that comes to mind is that lets say all of this talk is just baseless rumors, or Elop isn't named the next CEO.

 

Think of the unfair turmoil this is kicking up in the market.  I've even seen some people on the internet say they are nervous about buying any MS consumer products at the moment thanks to these rumors.  That's just the ridiculous power of the internet to take rumors and go to the extreme with them.

Yes, but that's how the markets operate. Investors determine which rumours are credible and react accordingly.

[Anthony Tosie Veteran]

The difference between selling it off and spinning it off isn't really important, as either way it would be a separate entity from Microsoft. Any spin-off would likely include licensing rights to make such a venture viable, including any necessary support from Microsoft. As for a sell-off, there are several viable candidates - Google and Apple spring to mind. However, it would be far more likely that it would be taken on by one or more private equity firms and that could include high profile Microsoft executives.

No, it's actually very important. Companies typically retain some portion of ownership in an entity they spin off. If it were to be spun off, of course they'd get some support, but they're not going to get what I described above -- it's simply not a good arrangement for either entity in that case. I can't see Microsoft selling a portion of its business as substantial as Xbox to one of its two leading competitors -- the press and investors would have a field day, and it would have the possibility to go down as one of the biggest blunders in business, if the competitor were successful. No company wants that.

 

You're right in that it's more likely to go private, but that still puts both Microsoft and Xbox in bad positions.

[trooper11]

 

I don't see any future in traditional consoles with eight year life cycles, no backwards compatibility and closed ecosystems. At the moment people can choose from a variety of smartphones and tablets at various different price points and which are updated every year yet consoles remain stuck on eight-year life cycles and are positively antiquated by the end. It won't be long until 4KTVs are commonplace yet the XB1 and PS4 are stuck at 1080p (and not even managing that consistently). I see an open platform gaming system, whether it's based on SteamOS, Android or iOS, being the way forward.

 

Honestly, I think MS agrees with your assessment about the future of gaming.

 

That's why I'm not sold on the value of trying to spin this off as its own business. MS seem to be hinting at a future where they don't release new console hardware like we have now every 7 or 8 years.

 

The whole push for cloud usage, the push to unify all devices under one windows core, the demos of game streaming tech, etc.  I think MS could be working towards a future where Xbox services are offered on the PC via windows and devices such as a cheap stand alone box. MS may want to turn gaming into a service just like all of their other software products.  Not tied to a single device. They can still offer hardware features like Kinect as they see fit.

 

I think that we could be looking at the last serious console generation, where you have completely closed hardware that is static for 8 years. 

[Lord Method Man]

All this talk about getting rid of Xbox is fairly sad I must say.

 

 

Who's talking about "getting rid of Xbox?"

 

Spinning off the Xbox division doesn't mean it goes away.