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Microsoft May Drop Their Xbox Division. Here's Why

Top Microsoft investors want new CEO Satya Nadella to slim down the company's operations and refocus on its core business: selling enterprise software to large businesses. And to do that, they want him to get rid of Bing, Surface, and even cash-cow Xbox.

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Rig_Master1346d ago

Only a matter of time till the new CEO dumps the entire Xbox fiasco.

LeeMajors1346d ago

Hard to see him leaving Ballmer's failed products intact. Microsoft is 0-3 in the console market after 14 years. It is long past time for them to dump the Xbox trainwreck.

The first Xbox just barely avoided coming in last place due to Nintendo giving up on the GameCube early. The Xbox 360 came in last place last gen. And now the Xbox One is crashing and burning. The PC market is rapidly dying and Microsoft is wasting time and resources on failed products like the Xbox instead of focusing on the core Microsoft markets that are vital to the company.

LOGICWINS1346d ago

The Xbox brand was a trainwreck? It singlehandedly introduced/popularized online gaming to the masses and made Sony prematurely drop the PS3s price less than a year after it launched.

Anyone who considers that a trainwreck isn't living in the realm of reality.

Rig_Master1346d ago

Yes. Microsoft's core monopoly market, desktop PCs, just went through a 10 percent drop. And Valve is starting to seriously threaten Windows as a gaming platform. And when the new Microsoft CEO has to answer what his plan is..."keep losing in the console market with the Xbox"..."keep trying to kill Google with Bing"? There is every indication that Microsoft is entering a new era and the Ballmer days of throwing billions at markets is coming to an end.

LeeMajors1346d ago (Edited 1346d ago )

"It singlehandedly introduced/popularized online gaming to the masses and made Sony prematurely drop the PS3s price less than a year after it launched"

Boggle.

PC online gaming, Dreamcast online gaming. Even the PS2 that didn't come with online capabilities but had to be bought as an add-on had more people playing the massively popular SOCOM online than Microsoft had online players on their entire system.

So, yes, the Xbox could be played online. Golf clap Microsoft.

And the PS3's first price drop came as a direct result of the very new and expensive Blu-Ray drives dramatically dropping in manufacturing costs.

LOGICWINS1346d ago

^^LOL, really? Blu-Ray drivers dramatically dropped in manufacturing costs in just SEVERAL months?

The PS3 dropping to $499 had NOTHING to do with the 360 stomping it early on?

/facepalm

Stay classy friend...stay classy ;)

LeeMajors1345d ago (Edited 1345d ago )

"360 stomping it early on"

My god. You can't possibly be serious.

The 200 dollar more expensive has PS3 outsold the Xbox 360 every single year on the market. Including the very first.

Let me guess...you get your 'sales' numbers from the little kid Xbox fan who created vgchartz...

In a hilariously pathetic way, the RRoD fiasco is really the one bright spot in the entire 14 year Xbox trainwreck in that it massively inflated installed base numbers for the 360. Too bad for Microsoft that those same 25-35 million Xbox fans out there are in no mood to once again buy 4-5 extra consoles like they did with the 360.

Anon19741345d ago (Edited 1345d ago )

You hit the nail on the head there. The idea that the PS3 was forced to drop the price due to the Xbox 360 "outselling" is laughably easy to disprove. Just go to either company's investor relations site and look at the sales figures. The PS3 handily outsold the 360 despite their price difference right from launch. Saying the 360 was outselling the PS3 is some serious revisionist history.

The main thing to remember here, and something I've pointed out before, is that it's not about if the EDD division is profitable. Even with the numbers they're putting up, it still pales compared to other divisions in Microsoft. If you invest the same amount in 2 divisions and one consistently gives you a 30% return, the other 5% , at some point you're going to want to reassess where you're putting your money.

And according to financial analysts as recent as last November, the Xbox is costing Microsoft 2 billion annually and this is being hidden in the division by Android revenue. Do people honestly think that's going to get better with the way the Xbox One is performing relative the PS4?

pwnsause_returns1345d ago (Edited 1345d ago )

i wouldnt say the xbox brand is a trainwreck. it has done a few things right in the past 8 years. it forced sony to make drastic changes with the PS brand as well.

it also has a fanbase.

say what you say about the x1, but people are buying them here and in the UK. its just harder for them to break thru worldwide.

if anything, they need smart people up there and stay current with what the fanbase wants. they suffered last year because they didnt do that and are paying for it. they put idiots up there that in which my opinion, almost destroyed the brand in the past 4 years. but it looks like they're listening now.

LeeMajors1345d ago

"it forced sony to make drastic changes with the PS brand as well."

LOL!

Always the same rhetoric when teams or groups come to grips with the inevitable losing outcome of their side. The 'we did not lose in vain!' rationalization.

Irishguy951345d ago Show
BitbyDeath1345d ago

@Irish, don't forget 360's numbers were heavily inflated by at least 10-20 million due to the RROD fiasco.

If you were to take that away plus the one year advantage they really only got around 40-50 mill consoles. Bit more than the first console sales but then again many jumped to 360 because PS3 wasn't available until a year later.

Rig_Master1345d ago

>Sony went from butt****ing the Xbox to 'matching' the Xbox 360 in sales.

Wait! You mean that Xbox installed base numbers drastically went up on a console with a failure rate so bad the average owner bought 4-5 duplicate consoles hoping to finally own a model that functioned properly?

Shocking!

Perhaps Microsoft should bring back the RRoD to help inflate Xbox One sales?

Gamer6661345d ago (Edited 1345d ago )

To begin with they are not 0-3 in the console market. They did not win the first two generations they participated in and they are on target to be at least second this generation (X1 sales are about double Wii U sales at this time last year). Not coming in first is not a reason to exit. Pepsi is second to Coke... Are they selling off?

Also, I would hardly call the last generation a failure. MS had a console that lasted a year longer than PS3. And coming in 3rd is more a statistical tie for second than it is truly coming in third. Both PS3 and 360 are in the 80 million range.

As for the first gen Xbox, MS came late to the party and made a pretty good showing with about 25 million sold. Which speaks to their improvement in the second generation X360 to over 80 million sold.

As opposed to Sony... Its first generation was 100 million, Its second console was 155 million, but the PS3 plummeted to 80 million. Who should really consider their options?

And Nintendo hasn't even cracked 5.7 million and it has seen two holiday seasons with Wii U. After selling over 100 million with the Wii. They really need to look at their options.

MS has a product that has improved its sales in every generation it participated in so far and according to current figures is on the path to do the same this generation. Meanwhile Sony showed close to a 50% decline from PS2 to PS3... And Nintendo is showing a epic fall. IF anyone needs to rethink their products it is Sony and Nintendo. Fortunately for Sony they did on PS4 and the results are looing good. Nintendo, not so much.

Christopher1345d ago

LOGICWINS is correct.

Sony definitely went into the PS3 genre with too much arrogance. This doesn't mean they sucked, but they did not expect to have the competition they did.

Microsoft forced them to vastly improve PSN in so many ways. But, Sony also has forced MS to improve in so many ways.

We have the PSN and services we do now because of competition. We have the XBL and no-DRM on XBO because of competition.

This is the whole point of competition. It forces them to keep on their toes to beat one another.

Hocking1345d ago

"@Irish, don't forget 360's numbers were heavily inflated by at least 10-20 million due to the RROD fiasco.

If you were to take that away plus the one year advantage they really only got around 40-50 mill consoles. Bit more than the first console sales but then again many jumped to 360 because PS3 wasn't available until a year later."

Yep.

And now we are seeing the Xbox fanbase back at its true size with the Xbox One.

Axios21345d ago

http://www.geekwire.com/201...

360 bested the PS3 in years 08, 10, 11.

Anyone who thinks the sales of 360 hardware are inflated need do one thing...

Check software

or

Check the financial reports from the publishers

in both cases 360 sells more games

Hocking1345d ago

"As opposed to Sony... Its first generation was 100 million, Its second console was 155 million, but the PS3 plummeted to 80 million. Who should really consider their options?"

My god. Stop to think what you just wrote.

PS2 vs PS3

PS2 150 million console over 12 years
PS3 80 million consoles over 7 years

PS2 12.5 million consoles/year
PS3 11.4 million consoles/year

The PS2 sold 80 million more console AFTER it dropped to 200 dollars in the second half of its life.

The PS3 has easily another five years of sales...

Do the math.

Sayai jin1345d ago

@LeeMajors...investors look at market share. Looking at who came in as far 1st, 2nd, and 3rd is very misleading. Sony owned 65 to 70% of the market during the PS1 days...they crushed the MS and Ninty. MS and Ninty shared the other 30 to 35%. Last gen Sony lost their market share by a large margin..each manufacturer did very well, but only MS and Ninty gamined market share. Soplease tell me how MS is 0-3. This gen has just barely started.

JokesOnYou1345d ago (Edited 1345d ago )

"Microsoft May Drop Their Xbox Division. Here's Why." -Tom McKay, PolicyMic

"Meanwhile, Xbox is widely considered the most successful product Microsoft has engineered in the last decade. And writing off Microsoft Studios, which helped engineer video game franchise successes like Halo, would be a massive loss of developer talent. Meanwhile, it's unclear who Microsoft would even want to sell Xbox off to. Any potential buyer would also be one of their biggest competitors."

"The bottom line: Don't freak out — Xbox doesn't seem to be going anywhere just yet. And even if Nadella does decide to make a major transition, it seems even more unlikely that they'll just decide to shut it down." -Tom McKay, PolicyMic

-Uhm Tom not only did you never give any solid reason other than just a waaay out of left field guess that pretty much sounds like "yeah they might sell off the xbox division because microsoft has a new CEO", OK so?....but worst is your final two paragraphs from your own article contradict your headline, lol= even he doesn't believe his own news piece.

-If anything micro recent acquisitions in cellular and investments in new studio's says the xbox division is a key part of their future business strategy=

"The Entertainment and Devices division was as well up until 2008, and it’s thought that the Xbox business is the primary reason it’s in profit now" 

"And although it is now making a profit you can see from the graph that it’s a very negligible one compared to Microsoft’s other divisions." 
http://fileiserve.info/2014...

-So this "negligible" profit since 2008 is 1-2 billion dollars per year, yet a brand that started in the red should be dumped just when it's making you a few billion just because it isnt making 10's of billions like other divisions even though the company as the whole is making huge profits???? I think alot company's like sony for instance who are losing tons of cash as a whole would like that fanatical position.= It would be terrible business to dump a investment that is making profits.

Godmars2901345d ago (Edited 1345d ago )

Really can't count XB1 as a failure with it launched in under six months. Its going to be at least a year to properly judge such.

@LOGICWINS:
I for one hate if not despise online for what its done. From the fall of SP gaming to titles being released unfinished and buggy, to DLC - Or as it use to be known, Unlockable and Easter eggs!

@cgoodno:
MS should have never allowed DRM "rumors" to reach the level they did, whcih became public conformation.

And still, where most of Sony's arrogance was applied to devs and publishers with the PS3, MS tried to dictate to consumer and industry alike. Continued to do so with indies and even Kinect well after the DRM 180s.

BG115791345d ago (Edited 1345d ago )

People aren't seeing the big picture here.
When there are only 2 consoles that can compete in the market, it is really easy to get a good second place. The big problem her is how much money MS is spending to only get a second place.
This is really bad. Investors must not be very pleased with the results.

Rockstar1345d ago

@ Rig_Master...

>Sony went from butt****ing the Xbox to 'matching' the Xbox 360 in sales.

Wait! You mean that Xbox installed base numbers drastically went up on a console with a failure rate so bad the average owner bought 4-5 duplicate consoles hoping to finally own a model that functioned properly?

Shocking!

Perhaps Microsoft should bring back the RRoD to help inflate Xbox One sales?

...Give it time ;)

SITH1345d ago

Not going to happen. You kids better be more concerned with console maker that IS closing divisions to keep the lights on.

+ Show (19) more repliesLast reply 1345d ago
AngelicIceDiamond1345d ago

Again with this?

MS spent way to much time money on the X1. and have many first party projects in the works right now.

Plus future X1 OS integration's and updates.

Forget it, its not happening.

Why would anyone wish a downfall for a console anyway? I mean who is that sick in the head?

BitbyDeath1345d ago

Someone else will buy it, Xbox will live on.

Godmars2901345d ago

"Someone else will buy it, Xbox will live on."

Not the way Windows has been interwoven into the brand. Anyone who buys Xbox would have to consider either rebuilding the whole thing from scratch, or continue to rely on MS for support. Effectively lease something supposedly outright bought.

Axios21345d ago (Edited 1345d ago )

What kind of flame bait article goes back 2 quarters to find a loss for Surface?

Why not post the most recent quarter with Surface profits?

Oh ya, flame bait, truth goes out the window

Surface revenue of $893 million last quarter

matt1391345d ago

As soon as that happens you will see the prices of playstation products sky rocket and the quality deteriorate as they won't have any competition to keep up with!!

S2Killinit1345d ago

I really don't think MS is going to get rid of xbox. However, I do hope that they split the xbox division from the rest of Microsoft, allowing xbox to live as a separate entity. That way, xbox will loose the anti consumer BS, and still survive.

otherZinc1345d ago (Edited 1345d ago )

LMAO! At the clowns that think they know how business is run at the corporate level.

Yeah, M$ is about to release a System Selling game TitanFall. Now, a wannnabe journalist business expert wants to get rid of the XBOX Division, funny.

This is a ploy to damper the enormous attention M$ is getting, due to the overwhelming approval of the TitanFall reveal.

M$ will enjoy the massive fiscal year end March sales numbers of TitanFall & the XBOX ONE console.

So no, this is a stupid article.

+ Show (3) more repliesLast reply 1345d ago
donnieboy1346d ago (Edited 1346d ago )

No those investors need stfu!! All of Microsoft's consumer fan base will be tarnished if he does that...

Mikelarry1346d ago (Edited 1346d ago )

while i don't agree with the article " all microsoft consumers" i don't think so, MS is not just a games/ console company but it would not look good on them as this would be the 2nd console they just uped and left

donnieboy1345d ago

Microsoft is trying really hard to make consumers favor them and create a fan base. Its going for the pro-consumer and consumer crowd than the professorial crowd....

dedicatedtogamers1346d ago

They absolutely won't drop the Xbox division.

HOWEVER (and we're already seeing the evidence of this everywhere) they will turn Xbox into their catch-all media brand and shift focus away from gaming. They're already pushing stuff like "Xbox Music" and "Xbox Video" and whatnot. Xbox will be used as their media brand where gaming just happens to be a part of it, but it will no longer be the focus.

MightyNoX1345d ago

I don't know, man, weirder things have happened. I'm not saying we're going to wake one day and see an article headline 'WTS Xbox Division, Plz PM Sateya99' but I can see them making taking the steps prepping it to be a subsidiary ala what Sony with their TV division.

Mikelarry1346d ago

From the article
adella said he saw "a 'software-powered world,' a 'mobile and cloud-first world,' and that doesn't sound like a world where Microsoft makes a gaming system

did i wake up in a twilight world or wasn't the cloud what the xbox one is all about????

jhoward5851345d ago

Microsoft won't abandoned their xbox division b/c too much money was invested in their cloud tech.

kingdip901345d ago

Microsoft would still own the cloud tech if they sold xbox... azure is used for much more than the potential it offers gaming.

Half-Mafia1345d ago

Azure has been around for years. The XBO just has been integrated into it.