Microsoft CEO Struggle Report: Elop Would Sell Xbox

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Microsoft CEO Struggle Report: Elop Would Sell Xbox

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

Stephen Elop, one of the contenders to replace Steve Ballmer as Microsoft's CEO, would sell the Xbox division if appointed, according to unnamed Bloomberg sources. Elop doesn't consider Xbox to be central to Microsoft's policies and goals, and would happily ditch both it and search engine Bing if he took the top spot.

Elop considers Microsoft to be a software and services company, and would like to see its Office and other programs on every device, including Apple's, and anything running Google's Android. At the moment Office is essentially a means of keeping Windows-based devices afloat, and Elop believes that cutting the cord and letting Office go wherever the market wanted it to go is the best way of revitalizing Microsoft.

Elop's not the only one who thinks selling Xbox is a pretty good idea. "The new CEO search could result in a tighter focus on its lines of business," said Nomura analyst Rick Sherlund back in September. "We have suggested [Bing] search and Xbox lose money and are not essential." Sherlund thinks Microsoft could lift its 2015 profits by as much as 40%, if it sold Xbox and Bing.

When it comes to profits, Office is certainly far more important to the company than its hardware division. The most recent financials 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.

Before Elop came to Microsoft he was Nokia's boss, during the phone company's decline, and before Nokia he was a Microsoft manager. After Microsoft bought Nokia earlier this year, Elop accepted a job at Microsoft. Whether or not you think Elop did a good job at Nokia depends on what you think his job was; if it was to revitalize the company, then Elop failed, but if it was to ensure Microsoft bought Nokia at a good price, then he succeeded. Kind of, anyway; Nokia's bad news is a gift that keeps on giving, as far as Microsoft's profits are concerned.

Source: Bloomberg

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I wonder who would actually buy the Xbox division. There can't be many companies with enough cash as well as the required experience/employees/ambition in the video game/console market.

rofltehcat:
I wonder who would actually buy the Xbox division. There can't be many companies with enough cash as well as the required experience/employees/ambition in the video game/console market.

actually i wonder how valve would do with it. converting xboxes to a steambox hybrid

Being the guy who ran Nokia into the ground, his business propositions better be taken with a grain of salt.

Well, this makes it sound like Microsoft isn't doing too good. I wonder what the effects of selling Xbox would do to the always-online policies of the Xbone. I'd imagine there would be at least a few days where no one could play Xbox.

Yeah, I'll honestly say that I'd rather have Steve Ballmer stay as Microsoft's CEO then have Elop run it. Mainly because this was the person who managed to run Nokia pretty much into the ground, and I'd shutter to think how he could screw up Microsoft even more...>.>

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.

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.

Turning Office into a service will just piss off everyone that isn't used to re-re-repaying for it, and apparently these guys forget that Office does already exist for Mac. It's never the latest version (I think they just got upgraded to 2011 version) but the point still stands that it wouldn't actually be increasing their install base. What do they want people to do, use Office on their smart phones and chrome books? People typically use those devices to GET AWAY from Windows.

Final ranting point: I know that it states hardware income is often eaten by manufacturing costs, but this guy just turned his nose up at 1.5 BILLION dollars, or about 1/3rd of income. Microsoft has been diversifying its assets to stay afloat these last ~5 years, it's odd that so many want to chop off its legs. Office may be the heart, but you need legs to walk.

image

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

Neronium:
Yeah, I'll honestly say that I'd rather have Steve Ballmer stay as Microsoft's CEO then have Elop run it. Mainly because this was the person who managed to run Nokia pretty much into the ground, and I'd shutter to think how he could screw up Microsoft even more...>.>

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

"Oh nooo"

*smiles*

It would probably get bought up by EA so they could infuse it with their evil, making the most diabolical machine in the history of mankind.

TiberiusEsuriens:
Final ranting point: I know that it states hardware income is often eaten by manufacturing costs, but this guy just turned his nose up at 1.5 BILLION dollars, or about 1/3rd of income.

Yes, but it really doesn't pay to ignore those margins. Revenue was 1.5 bill, but of that D&C Hardware only took home a couple hundred million; the rest went to expenses. Meanwhile D&C Licensing made over $3.9 billion even after expenses. Hardware costs; comparatively speaking, software doesn't.

Kumagawa Misogi:

Neronium:
Yeah, I'll honestly say that I'd rather have Steve Ballmer stay as Microsoft's CEO then have Elop run it. Mainly because this was the person who managed to run Nokia pretty much into the ground, and I'd shutter to think how he could screw up Microsoft even more...>.>

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

I know, but it just feels like Microsoft is in the same situation that Nokia was in back when Elop took over. I mean really with Elop I honestly think he's more incompetent as being as CEO than Steve Ballmer, and I didn't even think that was possible.

Fox12:
"Oh nooo"

*smiles*

It would probably get bought up by EA so they could infuse it with their evil, making the most diabolical machine in the history of mankind.

You mean they would turn it into a Virtual boy?! Those monsters!!!

Kumagawa Misogi:

Neronium:
Yeah, I'll honestly say that I'd rather have Steve Ballmer stay as Microsoft's CEO then have Elop run it. Mainly because this was the person who managed to run Nokia pretty much into the ground, and I'd shutter to think how he could screw up Microsoft even more...>.>

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

God-damn this! As a person who loved all the early 200's Nokias and saw this suicide by "windows-phone", this man makes me rage and the buying of nokia is a huge hit in the gut for whole Finland...

Neronium:

Kumagawa Misogi:

Neronium:
Yeah, I'll honestly say that I'd rather have Steve Ballmer stay as Microsoft's CEO then have Elop run it. Mainly because this was the person who managed to run Nokia pretty much into the ground, and I'd shutter to think how he could screw up Microsoft even more...>.>

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

I know, but it just feels like Microsoft is in the same situation that Nokia was in back when Elop took over. I mean really with Elop I honestly think he's more incompetent as being as CEO than Steve Ballmer, and I didn't even think that was possible.

You do know that Microsoft makes money hand over fist right? that there B2B segments have been growing quarter to quarter both year on year and sequentially for decades and that it's only the part's that sell to consumers that lose money or are seeing stagnation.

Microsoft should exit the consumer side as there name is hugely known while being seen as "unhip".

Apple may have become hugely successful in the consumer space but they were never ubiquitous before the ipod so they never had to deal with changing there image like Microsoft would have to do to become a must have status symbol.

rofltehcat:
I wonder who would actually buy the Xbox division. There can't be many companies with enough cash as well as the required experience/employees/ambition in the video game/console market.

Sell it to Sega.

I mean, they know how to make really great consoles that didn't have games that were just Arcade ports, right?

it's a match made in a board of directors meeting!

I'd actually like to see MSGS throw off the Xbox leash (assuming it isn't bundled with the xbox division). Hopefully it would get the publisher and its studios back to old form.

Kalezian:

rofltehcat:
I wonder who would actually buy the Xbox division. There can't be many companies with enough cash as well as the required experience/employees/ambition in the video game/console market.

Sell it to Sega.

I mean, they know how to make really great consoles that didn't have games that were just Arcade ports, right?

it's a match made in a board of directors meeting!

Don't know if Sega has the assets to buy it honestly.

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

Valve? While it would be cool I dunno if Gabe would be interested, maybe if they had sold the division before the launch of a new console generation and he could then implement his own vision then ya, but I don't think anyone would want to buy a the xbox this early into a new console generation and be locked into all/most of microsofts mistakes.

Sure gabe could implement steam on the xbox, and do away with xbox live/gold and generally improve the software side of thing but I think being locked into Microsofts hardware would be a real problem with anyone.

Because honestly this next generation isn't looking good for microsoft, they have a higher price point than sony, have a console with less power behind it, and the xbox is more difficult to develop for this generation.

So ya I really have no idea who would want to buy the xbox division from microsoft.

I don't give a flying fuck about XBox, although without xbox playstation would have no competition, and their console would likely turn to shit very fast. That guy sounds like a real sleazebag though.

Karloff:

When it comes to profits, Office is certainly far more important to the company than its hardware division. The most recent financials 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.

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.

Kumagawa Misogi:

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.

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

synobal:
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.

Pyrian:

synobal:
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.

BloodSquirrel:

Pyrian:

synobal:
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.

Pyrian:
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.

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.

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.

Brockyman:

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).

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.

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.

Eldritch Warlord:
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:
image

TiberiusEsuriens:
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.

Adam Jensen:
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.

Strazdas:

Eldritch Warlord:
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.

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