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Get Ready for an Xbox Spin-Off From Microsoft

An article from Bloomberg today speculates that with Ballmer leaving, there's a very real possibility that Microsoft will spin off the Xbox division sooner rather than later.

PC Magazine columnist John C. Dvorak is a proponent of busting Microsoft into four to six entities, and believes this is a good start. "Some analysts see the proposed Xbox Corporation being valued around $17 billion right out of the chute."

"When you really think about it, the Xbox is unlike anything else Microsoft does. The company stuck with this product and developed a winner by actually being patient for a change. But still, the profit margins are not there insofar as Microsoft is concerned and it might just be spun off to make the books look better."

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Anon19741544d ago (Edited 1544d ago )

Interesting read. Certainly an Xbox spinoff doesn't have to be a bad thing. As PC Mag points out, a separate XBox company wouldn't have the pressure or scrutiny on their operations from inside and outside of Microsoft for not meeting the higher profit margins seen in Microsoft's other divisions. On it's own it could be viewed on it's own merits.

The drawback as I see it would be the removal of the safety net being part of the larger Microsoft company brings with it. I think being part of the larger, wildly profitable company has allowed the Xbox to take risks they wouldn't have taken on their own. I was pretty damn skeptical of the appeal Kinect brought when it was announced, but they absolutely hit a home run with the product. If not for the backing of the larger company, would an Xbox company on it's own have taken such a huge risk? I also hadn't considered what this would do the the Microsoft store as we don't have those in Canada.

Personally, it'd like to see Xbox remain part of the larger company.

warewolfSS1542d ago

How are you gonna post a story and the. Be the first person to cement on that.
Especially being a known Sony fanboy.

Rhaigun1542d ago

I agree with you to an extent, but being under the umbrella of a larger company also means you are subjected to oversight. Especially the way MS manages the rest of their divisions. That's why we see the cheaper components for max profitability.

I think a separate entity would bring forth more risk and innovation to make itself more appealing. Eg.,Nintendo

NewMonday1542d ago

"The drawback as I see it would be the removal of the safety net"

exactly!

one big change would be less throwing money around for timed exclusives and heavy advertising because they wouldn't be able to hide it in the big corporate budget.

n4rc1542d ago

it could go either way imo..

We dont really know what agenda shareholders or MS execs are pushing on the xbox division.. would we see the push with Skype and such otherwise? its hard to say.

But not having the muscle and resources of Microsoft behind them may end up hurting the brand.. would we still have access to the Azure cloud if it wasnt? etc

YNWA961542d ago

Since MS are building a one type fits all kind of system as far as windows 8 goes, Xbox 1 is integral to this, so it would not make sense to do this. They want to own the living room, this is the way in.

maniacmayhem1541d ago (Edited 1541d ago )

@Darkride
I disagree, having them spin off will allow them to take more risks and not be under some huge company eye or under multiple execs or managements idea of what the Xbox should be. Especially management who are not even in the Xbox division.

With Xbox being it's own brand and department hopefully they will have a staff that is only dedicated to making the Xbox a better system. To me this is somewhat good news.

P0werVR1541d ago

A spin-off is unnecessary for a company like Microsoft and is already counterproductive to how much they've put into it already.

The truth of the matter is, these are all pure speculations giving in recent news.

What needs to be considered are the already established "infrastructure" and made decisions previously and how that reflects the total opposite of these articles stating otherwise.

+ Show (3) more repliesLast reply 1541d ago
Silver3601542d ago

They are totally discounting that Xbox is the only product that MS sells that regular people want to buy. How long will windows be relevant when most people are running to tablets and smart phones. Basic of economics, you have to build new revenue streams as your business ages or you will eventually go out of business. Something new will always come along to make your core cash business obsolete.

CRAIG6671542d ago

Exactly, the xbox division makes billions in profits, why would they dilute that revenue stream? They will fight tooth and nail to stay relevant in the gaming industry, it's probably already clear to them they won't win by numbers this coming gen but it's still very likely they will make the kind of money that we can only dream of...

iamnsuperman1542d ago (Edited 1542d ago )

No it doesn't it makes roughly a billion (if that) for Microsoft. Not billions (otherwise this topic wouldn't happen)

CRAIG6671542d ago

ok 1 billion, not sure how you are with maths but that's a sh*t load of money.

stuna11542d ago

@GRAIG667

For sure it's a lot of money, but you also have to take into account the overall expenditures involved in keeping the Xbox division profitable! Right now a lot of the cost involved are masked by Microsoft the business as a whole.

PlayStation_41542d ago

1 billion is nothing to Microsoft though.

Campy da Camper1542d ago (Edited 1542d ago )

From an investor standpoint, if they see this division making a billion a year and have strong evidence and/or foresight to believe it could make 5 billion a year they will take action to do so.

People seem to forget that Sony and ms are businesses and answer to shareholders and a board of directors whose sole purpose is to make said shareholders money. If there were proof that ms could make double the revenue building kinect trains, guess what? We would soon see kinect trains.

I personally don't like motion controls for gaming. I don't want a camera in my living room and that is why I'm not buying a xbone. That said, there could be uses for it in other applications. Say Samsung bought the license and made some new gaget then I might be interested. This is what I feel is being talked about in the ms boardroom. Not the juvinelle notion to just scrap the gaming division but talking about what other things could be done with their assets. If ms realizes more money could be made as a vendor to third parties then guess what, this could be ms last gaming console.

Red_Devilz1541d ago

Do you know that Xbox division as a whole is in terrible loss for MS? (It doesn't matter to MS because they are making more money in other areas of business)

Source: http://www.neowin.net/news/...

+ Show (3) more repliesLast reply 1541d ago
cellur1111542d ago

@craig667 You do realize that Microsoft is worth over $250 billion? 1 billion to them is nothing.

Magicite1542d ago

I thought it was like 600+ some time ago?

SilentNegotiator1541d ago (Edited 1541d ago )

"They are totally discounting that Xbox is the only product that MS sells that regular people want to buy"

I would think that would be why some investors want it split away from Microsoft; so that they can invest in Xbox, with less baggage.

corvusmd1542d ago (Edited 1542d ago )

This could actually be a great thing for Xbox Fans....Like the article even said, by creating a separate Xbox entity, they would be more free to do what they want. I still think they should look into buying Activision, that way they could have exclusive rights to Destiny and COD

...Uh, why am I getting downvoted for this? It's about being happy about change, am I not supposed to be happy about possibilities?

iamnsuperman1542d ago

Didn't Activision just buy back shares so it can function on its own (I know its parent company wanted to use its profits to sort its financial crisis out but still). I don't think Activision wants to get bought. Just because you have the money doesn't mean you can buy it.

corvusmd1542d ago

Fair enough point, I know they were willing to be bought by MS in the past...I was just thinking it would be a good idea if possible.

n4rc1542d ago

Activision is owned by vivendi... They are massive and in no position to have to sell anything.. I doubt it would ever happen.

n4rc1542d ago

I stand corrected... Didn't know vivendi sold off the majority of their shares 2 months ago

gaelic_laoch1542d ago

Xbox need an experienced hardware company to take over the brand or its dooomed!

hennessey861542d ago

I agree and I think Samsung would be perfect

gaelic_laoch1542d ago

A joint venture with Samsung would be perfect, M$ deal withs the software and network infrastructure and Samsung produce the best hardware available.

After the xbone debacle this year, if there is to be anymore consoles after this upcoming gen there will need to be a major shakeup!

M-M1542d ago

To be honest, I expect Samsung to make their own console for some reason.

IHassounah1542d ago

I hope it doesn't get out of Microsoft hands , they have more servers than ever , taking out the Xbox brand is just removing the Xbox Live service

AceBlazer131542d ago (Edited 1542d ago )

Cause Activision would just love to throw away all future profits for some quick cash.

Meant to be a reply.

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