Bill Gates would support a spinoff of Xbox if Nadella proposed it [Update]

Microsoft co-founder and former CEO Bill Gates has said he would support the spinoff of the Xbox division if current CEO Satya Nadella proposed it, though he implied such a scenario seems unlikely.

The statement came during an interview Fox Business conducted with Gates and Berkshire Hathaway CEO Warren Buffett, with several questions posed to the Microsoft co-founder about his current role in the company. While Gates no longer spends the majority of his time at Microsoft, he advises Nadella on product-related issues.

On that front, Gates says he wouldn’t inhibit Nadella’s decision-making process, as some speculated it would be hard for the new CEO to garner authority with Microsoft’s co-founder now spending more time at the company. According to Gates, however, Nadella has done well making decisions his own way.

“He’s off to a great start,” Gates said. “He has used more of my time than was the case before, and I’m enjoying going and giving some advice, but he’s reexamining all the things. He’s already made some really good changes. It’s exciting to have some young blood – new thinking.”

Some of the reexamining Microsoft investors have clamored for includes spinning off the company’s Bing and Xbox divisions. According to Gates, Microsoft is always evaluating its businesses, though Bing is “very fundamental” to the company. Bing could be used in a wide range of Microsoft products, Gates said, and is instrumental to its large-scale data centers. On the Xbox front, however, he was less committal.

When pressed about why Microsoft hasn’t spun the Xbox division off, Gates said it integrates well with PC gaming, though he said the ultimate decision will be up to Nadella.

“Well, we’re taking PC gaming – Windows gaming – and Xbox gaming and bringing those a lot closer together. The power of the PC graphics chip means you can do great games there, so I’m sure Satya and the team will look at that – and it’s up to them. We’re going to have an overall gaming strategy, so it’s not as obvious as you might think.”

Gates was pressed further by the Fox Business host, who asked if he would support a hypothetical Nadella decision to spin the Xbox division off. Gates didn’t mince words, saying simply, “Absolutely.”

While Gates’ comment was likely just support for Nadella’s decision-making authority, it comes after more than a year of investor requests that Microsoft spin off its Bing and Xbox divisions. Microsoft executive Stephen Elop was even widely rumored to consider spinning off both divisions had he been named chief executive instead of Nadella.

Update: Frank X. Shaw, Microsoft's head of communications, has confirmed Gates was simply showing support for Nadella's authority.

Source: Fox Business | Image via Microsoft

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34 Comments

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wow, pretty much nothing quoted gives the headline any traction at all. At most hes saying that he'll stand by Nadelas decisions and that Bing shouldn't be spun off (but simply deluding that he was less committed to the xbox side as opposed to the Bing side is a stretch at best!)

john.smith_2084 said,
Lets give someone's else the Chicken that produces the golden egg for 10 golden eggs.

But investors don't care, because they effectively get 2 chickens laying golden eggs where before they only had 1.

Click bait crap spreading around like wild fire to apease Sony fans

Here is the key quote that is missing from the click bait crap, Just more out of context crap being spread by sony fans who long for the day we have a one console world with no choice.


"Gates, the founder and former CEO of Microsoft, said he's been helping new CEO Satya Nadella transition into his new leadership role and that he would support Nadella if the new CEO proposed a spinoff of one of Microsoft's units. But Gates said he didn't foresee either Bing, the company's search engine division, or Xbox, its gaming division, as potential stand-alone companies because they are part of Microsoft's long-term strategy."

swanlee said,
Click bait crap spreading around like wild fire to apease Sony fans

Here is the key quote that is missing from the click bait crap, Just more out of context crap being spread by sony fans who long for the day we have a one console world with no choice.


"Gates, the founder and former CEO of Microsoft, said he's been helping new CEO Satya Nadella transition into his new leadership role and that he would support Nadella if the new CEO proposed a spinoff of one of Microsoft's units. But Gates said he didn't foresee either Bing, the company's search engine division, or Xbox, its gaming division, as potential stand-alone companies because they are part of Microsoft's long-term strategy."

He also differentiated between the importance of Bing "Very fundamental" vice the Xbox one.

Not sure if you read the entire article, but that was included. I said in the lede that he implied a scenario is unlikely. Then the context of quote was used to illustrate that, and at the end I said it was "likely just support for Nadella's decision-making authority."

Anthony Tosie said,
Not sure if you read the entire article, but that was included. I said in the lede that he implied a scenario is unlikely. Then the context of quote was used to illustrate that, and at the end I said it was "likely just support for Nadella's decision-making authority."

Yeah you did but most other sites who posted this which is just about every tech site left it out and only put stuff that makes it sound like something sony fans can laugh at or us as ammo

I wouldn't have bought an Xbox One if it wasn't of supported by Microsoft.

It makes no sense to me to own the device but not have the benefits of the whole ecosystem (which probably occur over time).

On the other hand, I was just wondering today if Xbox exclusives are needed in Today's world given the shift to multi-platform.
Perhaps a spin off (if you consider the general direction of travel) could bring those benefits further afield... may actually make more sense, although I suspect at the next iteration.

_dandy_ said,

Citation needed.

I got it wrong, it was only $2 billion. Still what's a billion when you're losing 2.5 every year on devices :/ Which is funny when you consider that Microsoft is positioning itself as a devices and services company. Let's hope the services part does a little better.

Sherlund says that if you back out the Android profits, Microsoft is probably losing $2.5 billion on Skype, Xbox, and Windows Phone. Of that, $2 billion in losses are attributable to the Xbox platform.

http://www.businessinsider.com...id-patent-royalties-2013-11

It is well known that the Xbox lost money for 7 to 8 years. Bing too.

Sony too sold its systems at a loss hoping to gain more with game royalties. This is why they have ATOM level cpus in their newer systems. To cut losses to gain revenue from both.

So it is in the blank now, but if I were the CEO I would put a deadline by Thanksgiving to make the black = or exceed the red or it gets sold off to pay the shareholders.

Who cares about enhancing a brand if I am a shareholder I WANT MY MONEY. That is all that matters in the end. Money talks, sh*t walks. It is how the world works unfortunately but it is the truth.

I don't think it makes sense in my opinion. Xbox strengthens the Microsoft brand, and in order to keep with the 'One Microsoft' consolidation, this would break that. Skype operates separately, and look how much of a mess that turned out to be. It's only now they're finally starting to get better integrated.

If you read between the line he believes it's going in the right direction to have it within Microsoft, a spinoff could make things harder to the one microsoft ideas. But I am sure he is just saying that based on the fact that Nadella would come up with a ingenious plan for a spinoff to work.

It means operating as a separate company, but it would still be under the Microsoft umbrella. Kinda like how you see lots of different restaurant chains, but they have the same parent company.

Dot Matrix said,
No, don't do it. >_<

I don't think he would, he's just showing that he supports Nadella, as I stated in the final paragraph. But the Xbox division is nowhere near as vital for Microsoft as the Bing division is, to be blunt (I say that as a gamer who owns and enjoys his Xbox One).

Anthony Tosie said,

...But the Xbox division is nowhere near as vital for Microsoft as the Bing division is...

I would say both are vital to Microsoft, Bing obviously more since it powers a lot of their data services, but Xbox is vital for the living room and entertainment experiences which is a huge industry which they have an upperhand in already. Also, it extends the Windows ecosystem further to the 3-screen scenario.

Anthony Tosie said,

I don't think he would, he's just showing that he supports Nadella, as I stated in the final paragraph. But the Xbox division is nowhere near as vital for Microsoft as the Bing division is, to be blunt (I say that as a gamer who owns and enjoys his Xbox One).

Isn't the Xbox Division the only profitable part of the Microsoft Entertainment wing? Last I saw Bing was single-handedly bringing the Entertainment part of Microsoft into the red.

McKay said,

Isn't the Xbox Division the only profitable part of the Microsoft Entertainment wing? Last I saw Bing was single-handedly bringing the Entertainment part of Microsoft into the red.


It's an extremely long topic to discuss in the comments, so I'll link to a great article by Peter Bright that explains why Bing is important: http://arstechnica.com/informa...ants-to-kill-bing-and-xbox/

Note that I'm not saying Microsoft should spin off Xbox. I'm saying it would make more sense, as it currently stands, than spinning off Bing.

Im not advocating spinning off Xbox, I worry what would happen to it if it didn't have Microsofts vast pools of cash behind it.

j2006 said,

I would say both are vital to Microsoft, Bing obviously more since it powers a lot of their data services, but Xbox is vital for the living room and entertainment experiences which is a huge industry which they have an upperhand in already. Also, it extends the Windows ecosystem further to the 3-screen scenario.

A Game console is not vital for the living room; a Media Center would be instead.

Cosmocronos said,

A Game console is not vital for the living room; a Media Center would be instead.

Well they sold their IPTV platform to Ericsson, so I guess they disagree with you.
Unless you mean the product that is now end of life because usage data shows < 1% of windows users actually use the software.
Heck I'd like to see the percentage of Windows 8 early upgraders who actually got the free mediacenter key. Another interesting number would be those who actually paid for it being a late adopter. And how many switched to *Nix based media options.

[quote=deadonthefloor said,]
Well they sold their IPTV platform to Ericsson, so I guess they disagree with you.
Unless you mean the product that is now end of life because usage data shows < 1% of windows users actually use the software.
Heck I'd like to see the percentage of Windows 8 early upgraders who actually got the free mediacenter key. Another interesting number would be those who actually paid for it being a late adopter. And how many switched to *Nix based media options.[/quote
] There are no doubts that they disagree with me. MS had the tool to own the living room way before anybody else, it was MediaCenter and they butchered in its infancy....

Typical case of shareholders looking for short-term gains trying to put pressure on a company which is looking at a long-term perspective.

Bing and Xbox shouldn't be spun off

pratnala said,
Typical case of shareholders looking for short-term gains trying to put pressure on a company which is looking at a long-term perspective.

Bing and Xbox shouldn't be spun off

Nobody force you to take your company public. Companies go public because they want the advantages of it; as in everything there are disadvantages as well....

"Gates, the founder and former CEO of Microsoft, said he's been helping new CEO Satya Nadella transition into his new leadership role and that he would support Nadella if the new CEO proposed a spinoff of one of Microsoft's units.

But Gates said he didn't foresee either Bing, the company's search engine division, or Xbox, its gaming division, as potential stand-alone companies because they are part of Microsoft's long-term strategy."

Yeah, nothing more than clickbait, AGAIN. Bill Gates is just showing that he supports whatever Mr.Nadella decides in the future, giving him the vote of confidence for choosing the right path for his legacy.
There is no talk about this whatsoever within MS at the moment. I don't blame Mr.Toise for this, just the usual anti-MS morons around the net trying to make an elephant out of a mosquito and spin this for their own pathetic agenda.

pratnala said,
Typical case of shareholders looking for short-term gains trying to put pressure on a company which is looking at a long-term perspective.

Bing and Xbox shouldn't be spun off

Hate to bring it to you but both Bing and Xbox have been in the red (loss) for many many years. If you average the profits does it even cover the losses yet? I ask in a serious question not trollish.

So the question is can it make money now to keep it to ROI or does it make sense to just spin it off? Of cours eit may make a ton of money later but at least you can make some cash for the shareholders temporarily.

There is a reason Sony and MS went for cr*ppy intel atom level cpus. It was because they had losses in selling hardware at a loss. So they dumbed it down like Nintendo did with the WII which was a great hit.

If I were the CEO of Microsoft I would put a timeline. Perhaps Thanksgiving to find out if the profits offset the 5 year cost? If not SELL IT. Otherwise keep it and hold yoru breath. Google is the monopoly MS was 14 years ago. No one survived competing agaisnt' MS excecpt Oracle. today the new kid is Google.