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Will Microsoft Sell Off Its Entertainment Division?

samzenpus posted about 2 years ago | from the take-it-all dept.

Microsoft 404

An anonymous reader writes "Forbes analyst Adam Hartung has predicted that Microsoft will sell off its entertainment division, which includes Xbox, in the coming years. He even goes so far as to list Sony or Barnes & Noble as potential buyers. Lets forget how crazy this sounds for a moment and focus on the reasons why Hartung believes such a sale will happen. It basically comes down to Windows 8, and how poorly it is selling. Combine that with falling sales of PCs, the Surface RT tablet not doing so great, the era of more than one PC in the home disappearing, and Microsoft has a big problem. The problem not only stems from the PC market not growing, but because Microsoft relies so heavily on Windows and Office for revenue. With that in mind, Hartung believes Steve Ballmer will do anything and everything to save Windows, including ditching entertainment and therefore Xbox."

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This article is bullshit! (4, Insightful)

theRunicBard (2662581) | about 2 years ago | (#42648355)

I cannot believe this is getting posted here. I know Slashdot hates Microsoft but this is the equivalent of me saying that Apple will sell off the iPad because the iPhone didn't sell as well as they wanted it to. Or something like that.

Re:This article is bullshit! (-1, Flamebait)

Anonymous Coward | about 2 years ago | (#42648425)

Steve Jobs died because some hippie convinced him rubbing cloves on his liver would save his life, what's that about Apple making idiotic decisions?

Re:This article is bullshit! (0)

theRunicBard (2662581) | about 2 years ago | (#42648471)

Well, what you described was Steve Jobs making an idiotic decision, not Apple. Even then, it was a decision on health, not technology - I'm not sure how many people would trust him as a doctor. But yes, my example was idiotic, I was just trying to secure first post (worked!).

Re:This article is bullshit! (0)

Anonymous Coward | about 2 years ago | (#42648503)

Apple made the decision.

Steve Jobs ran that company as a cult of personality hence, Apple made the decision.

Re:This article is bullshit! (4, Interesting)

Jeremiah Cornelius (137) | about 2 years ago | (#42648535)

"When machines and computers, profit motives and property rights, are considered more important than people, the giant triplets of racism, materialism and militarism are incapable of being conquered."

-- Martin Luther King, Jr., April 4, 1967

Re:This article is bullshit! (1)

devleopard (317515) | about 2 years ago | (#42648481)

Pretty sure that's a personal decision by a person and their health, not "Apple". That's like saying that Linus is rude, therefore Linux is a rude operating system.

Re:This article is bullshit! (1)

realityimpaired (1668397) | about 2 years ago | (#42648549)

Been on #ubuntu lately?

Re:This article is bullshit! (5, Funny)

SJHillman (1966756) | about 2 years ago | (#42648595)

Probably not the best example... Linux can be pretty rude at times. Just the other day, it told me to go fsck myself.

Re:This article is bullshit! (0)

amiga3D (567632) | about 2 years ago | (#42648663)

You do know that the pun is considered the lowest form of humor.

Re:This article is bullshit! (1)

Anonymous Coward | about 2 years ago | (#42648719)

Is it in ring 0?

Re:This article is bullshit! (0)

Anonymous Coward | about 2 years ago | (#42648865)

I keep telling people that "lowest" doesn't apply! It's not neurons, therefore by definition it is High Level. Sure, it may be nothing more than a cross-cultural abstraction of those impulses, but that's what High Level is, after all.

Re:This article is bullshit! (0)

Anonymous Coward | about 2 years ago | (#42648653)

But ... Linux is a rude operating system. If I mistype a command, it doesn't even try to be polite about it, saying how well I'm doing otherwise when typing commands, or something like that. It just plainly tells me that the command I typed in doesn't exist. Isn't that rude?

Re:This article is bullshit! (3, Informative)

Anonymous Coward | about 2 years ago | (#42648527)

Forbes has already taken the story down. I get an "Oops!" with a picture of an old typewriter when I click the link.

Agree the story does not make sense. MS is sitting on a bigger pile of cash than Smaug the Dragon. They can easily afford to be in four, six, fifteen different businesses at once.

Re:This article is bullshit! (1)

mark-t (151149) | about 2 years ago | (#42648607)

To be fair here, the submitter may only be guilty of reporting something that they were hearing was already true from another source that is presumably trustworthy.

I'd read about this happening earlier this morning... several hours before I saw it on slashdot.

It may be that the article is BS, but I wouldn't suggest that it appeared here only because of MS-hate.

Re:This article is bullshit! (0, Flamebait)

0123456 (636235) | about 2 years ago | (#42648733)

I cannot believe this is getting posted here. I know Slashdot hates Microsoft but this is the equivalent of me saying that Apple will sell off the iPad because the iPhone didn't sell as well as they wanted it to. Or something like that.

The iPad makes shedloads of money. The Xbox has lost boxloads of money and they're about to have to throw billions more into the pit to produce a new version.

A saner company would have dumped it long ago.

Re:This article is bullshit! (2, Insightful)

Anonymous Coward | about 2 years ago | (#42648873)

Where are you getting your numbers that the Xbox has lost a lot of money? Xbox has been profitable for years now.

The Idea Is Actually Not Complete Bullshit (5, Insightful)

eldavojohn (898314) | about 2 years ago | (#42648745)

I cannot believe this is getting posted here. I know Slashdot hates Microsoft but this is the equivalent of me saying that Apple will sell off the iPad because the iPhone didn't sell as well as they wanted it to. Or something like that.

No, I see distinct differences between your comparison. I wasn't able to read the article before it was pulled but let me address your bad analogy. While you're right that this "analyst" needs to pull his head out of his anal cyst, your comparison is quite laughable and let me tell you why. Traditionally Microsoft's software has been a cash cow. You want the latest Office? You want the latest Windows? Pay up. Everyone. For each computer. Now. And while that's faltered before, Windows 8 has been subjected to a lot of bad PR (both warranted and unwarranted) as well as actually having poor sales.

Now, let's look at their entertainment division. With the initial Xbox release, that division was a sinkhole of money. Like, literally a burn pile for billions of dollars. But Microsoft was patient because they had other stupid insane routes of income with which to fill the tire fire that was the Xbox. Even when they launched the second incarnation -- they fared much better but still they took a loss on the console assuming publishing royalties would pay [slashdot.org] and later on they did. Now, you know, after the bomb of the Zune has run its course and now that Wii U is out Microsoft could be looking at their entertainment division as a potential sale. Why? Because in the past it has been a very risky venture for them and recently profits and revenues of that division have been dropping faster each quarter [microsoft.com] . Basically I see their sales stagnating until they release another console to drum up more money -- and even then they'll probably take the strategy of letting later publishing sales subsidize the initial unit to compete with Nintendo and Sony.

So, now that their cash cows are looking pretty thin will they be in a position to take another gamble in the console market? Will it be painful like Xbox one or will it be great like Xbox 360? And I'm not in this area of management but I imagine they are looking at their revenues and if committing to the next console is a make or break move for Microsoft as a whole (which would be totally f*cking insane if they are looking that bad) then maybe they'd try to sell it to someone else with huge cash reserves. I don't know why Sony would buy and I don't see B&N having a ton of cash after their brick and mortar stores are a fond pastime.

So, to wrap it up, no this is nothing like Apple selling off the iPad because the iPhone didn't sell as well as they wanted it to. I don't think the iPad ever lost them money and the market still looks good for tablets.

Xbox 8 (1)

denbesten (63853) | about 2 years ago | (#42648359)

Either that, or they will release Xbox 8 as an "upgrade".

Sigh.

Re:Xbox 8 (1)

vlm (69642) | about 2 years ago | (#42648711)

Either that, or they will release Xbox 8 as an "upgrade".

Sigh.

Too late. More likely purchase Valve/steam and both "windows 9" and "xbox 9" will fundamentally be a ubuntu install with a linux steam client. The difference is "windows 9" installs on any old PC hardware, whereas "xbox 9" will be hardware with ubuntu/steam already installed and guaranteed working drivers etc. Port Office9 to a steam application, and let the dough roll in. There's no point paying devs to make something "like ubuntu" if ubuntu will release it for free, but there is money to be made in integration, training, support, etc. They'll have to walk the fine line between selling support contracts and putting out a great web presence.

Re:Xbox 8 (0)

Anonymous Coward | about 2 years ago | (#42648851)

...and it will be touchscreen-only.

Re:Xbox 8 (0)

Anonymous Coward | about 2 years ago | (#42648903)

Either that, or they will release Xbox 8 as an "upgrade".

Sigh.

I can't wait! Can you imagine playing XBox games on your big screen TV, using a touch interface? I love to touch my TV!

Won't happen (2)

Anonymous Coward | about 2 years ago | (#42648365)

This is the dumbest thing I've heard on this site yet.

Re:Won't happen (5, Funny)

oodaloop (1229816) | about 2 years ago | (#42648395)

What, did you just start reading today?

Re:Won't happen (2)

war4peace (1628283) | about 2 years ago | (#42648683)

I would have marked you insightful. There's plenty of retarded stories out there on Slashdot. This is merely one of them, and it doesn't even make top 10.

Nooooooo (0)

Anonymous Coward | about 2 years ago | (#42648367)

Baby Master Chief is crying :-(

Are all articles with a question headline lame? (0)

Anonymous Coward | about 2 years ago | (#42648369)

The answer is always C).

Xbox is finally making money (3, Insightful)

alen (225700) | about 2 years ago | (#42648371)

Last i read

The online part is the money loser along with mobile

And why would Sony buy it? They already have a console

Re:Xbox is finally making money (2)

substance2003 (665358) | about 2 years ago | (#42648581)

To kill off a competitor? It's wouldn't be a 1st. Well maybe a first for Microsoft. They usually are the one buying the competitor to kill off their competing product and nto vice-versa.

Re:Xbox is finally making money (0)

Anonymous Coward | about 2 years ago | (#42648655)

Last i read

The online part is the money loser along with mobile

And why would Sony buy it? They already have a console

Xbox has been making money for years, it's the PS3 that is finally making money. Also Sony is the one about to go belly up with it's entertainment division, not microsoft.

Re:Xbox is finally making money (0)

Anonymous Coward | about 2 years ago | (#42648883)

The whole "XBox is making money" thing is blatantly false. Over the lifetime of the project XBox has lost several billion dollars. The first XBox wasn't profitable. XBox 360 isn't profitable either. It is true that the Entertainment & Devices division currently makes a profit (something like 350,000,000 a quarter or so) but it is not enough to offset the accumulated losses anytime soon. Furthermore as the 360 reaches the end of its life, the beginning of the next hardware cycle will be marked by increased expenditures to make and market the new system, which might be sold at a loss (and even if it's not, you can bet the profit margin will be much smaller than that of a mature platform like the XBox 360).
So over the past 12 years or so, XBox lost several billions. They're currently making a decent size contribution to MSFT's quartely profit but this is not expected to last as the new system will likely be unprofitable for a while.

should i should care? (-1)

Anonymous Coward | about 2 years ago | (#42648375)

or does it not does matter?

Warning: duplicate word at line 1. (0)

Anonymous Coward | about 2 years ago | (#42648391)

"will"

Re:Warning: duplicate word at line 1. (1)

war4peace (1628283) | about 2 years ago | (#42648691)

Also, "Lets not forget".

Re:Warning: duplicate word at line 1. (0)

Anonymous Coward | about 2 years ago | (#42648825)

Also, "Lets not forget".

Correcting grammar in the comments section of a message board may be one of most pathetic things imaginable.

Will /. Will Post Grammatically Correct Headlines? (-1, Troll)

Anonymous Coward | about 2 years ago | (#42648393)

See story at 11!

Microsoft Will? (0)

Anonymous Coward | about 2 years ago | (#42648399)

Mighty progressive of Microsoft, giving their text-to-speech programs control over whole entertainment divisions!

Re:Microsoft Will? (0)

Anonymous Coward | about 2 years ago | (#42648453)

And by programs I mean voice profiles. Doh.

Re:Microsoft Will? (0)

Anonymous Coward | about 2 years ago | (#42648551)

Silly editors. That should be "sells", not "sell". And you don't have to call him "it".

MS's gaming strategy has been weird for years (5, Interesting)

RogueyWon (735973) | about 2 years ago | (#42648407)

I've not understood MS's strategy around gaming for years now. Don't get me wrong, I owned an original Xbox and liked it, I own a 360 now and like it a lot - but I've never understood why MS would choose to move into the console market.

I'd have thought that there's much more of an incentive for them to make Windows work as a gaming platform. After all, what's one of the biggest reasons that people shy away from switching OSes? The games. Running modern commercial games consistently and in a relatively hassle-free manner is - and has for quite a long time - been one of the things you can do on Windows that you just can't do on other OSes.

So they launch the original Xbox which is basically - at launch at least - the console that runs games you'd otherwise have expected to be focussed on the PC (Halo and Knights of the Old Republic were both from genres that the PC utterly dominated at the time). Then the 360 comes along and - for quite a long time - if the only reason you stick with Windows is gaming... then why not just buy a 360?

And then as we get to the late-cycle point where PC gaming really starts to outstrip what the consoles can do (even on a bargain-bucket PC), they go and foul it all up with Windows 8.

It's like MS is determined to take one of its biggest advantages in the OS market and hammer it into oblivion.

They make periodic efforts to "get serious" about the PC as a gaming platform, but these tend to be inconsistent, badly thought through and horribly unsuccessful. Games for Windows Live, anybody? With Valve looking at the PC gaming market in a distinctly predatory manner, MS should be seriously worried.

And while it's not such a major matter, they've also made some really odd choices with their internally developed games. First they shut down the Flight Simulator series - a brand with immense loyalty from its enthusiast following - abandoning the market to competitors. Then they try to come back with Flight - a free-to-play-pay-to-actually-do-anything monstrosity that discards the series's historic strengths.

Selling off their entertainment division? At the point where they're finally making a profit from console gaming? It would fit...

Re:MS's gaming strategy has been weird for years (3, Insightful)

alen (225700) | about 2 years ago | (#42648475)

a console is $199 to $399 compared to a lot more for a gaming PC

i used to build PC's for fun and don't want to do it anymore. along with millions of other people who don't care about specs or whatever. you can buy a $199 box with a library of hundreds of games that mostly just work and play on a big TV. the fact that a $1000 PC may have better graphics is a non-issue for most people

Re:MS's gaming strategy has been weird for years (2)

Ice Tiger (10883) | about 2 years ago | (#42648485)

The last version of flight simulator still has new 3rd party products coming out for it and from what I understand was making MS a profit. You can't buy brand loyality like that.

Re:MS's gaming strategy has been weird for years (1)

Zeromous (668365) | about 2 years ago | (#42648491)

>The games. Running modern commercial games consistently and in a relatively hassle-free manner is - and has for quite a long time - been one of the things you can do on Windows that you just can't do on other OSes

FTFY:

The games. Running modern commercial games consistently and in a relatively hassle-free manner is - and has for quite a long time - been one of the things you can do on STEAM that you just can't do on other OSes.

Anyone who has messed around with DRM on Windows in the last 10 years knows what I am talking about. Xbox is about getting a microsoft PC in your living room, that "just works", and in the living room of every person who 1) wouldn't touch windows with a 10 foot pole or 2) people who can't be bothered to figure out why the third game the purchased at brick and mortar last month, won't play (hint: SecureROM and btw, it's your fault the game won't run).

Re:MS's gaming strategy has been weird for years (3, Informative)

Dishwasha (125561) | about 2 years ago | (#42648557)

but I've never understood why MS would choose to move into the console market

It was always Microsoft's goal to have a computer in every home [telegraph.co.uk] . The Xbox has allowed Microsoft to continue in that vein.

Re:MS's gaming strategy has been weird for years (4, Interesting)

CastrTroy (595695) | about 2 years ago | (#42648625)

Games is one of the serious reasons why people won't upgrade their OS though. Because you never know which games are going to stop working when you upgrade your operating system. A lot of games stopped working when you went from DOS to Win95, from Win98 to Win XP/2K and From XP to Vista/7. Games tend to use all kinds of tricks to run at the highest speed possible, as well as for DRM, and often those tricks don't work on the next version of the operating system. Removing games from Windows actually gives people a lot more freedom to upgrade their system when a new OS comes out.

Re:MS's gaming strategy has been weird for years (1)

0123456 (636235) | about 2 years ago | (#42648767)

Games is one of the serious reasons why people won't upgrade their OS though.

Who in their right mind ever 'upgrades' to a new version of Windows? 99.9% of Windows users get whatever version of Windows is on the new PC they buy.

Microsoft have screwed themselves by helping to trash the PC gaming market which was the main driver for buying new PCs.

Re:MS's gaming strategy has been weird for years (0)

Anonymous Coward | about 2 years ago | (#42648757)

They did it to help prevent companies from writing non Direct-X games. They don't want people migrating to other platforms. It was worth it to them even if it lost money.

Re:MS's gaming strategy has been weird for years (1)

parlancex (1322105) | about 2 years ago | (#42648763)

They wanted a living-room presence for their software. It doesn't sound like a big deal now, but 10 years ago it was. Someone probably pitched their ability to leverage their existing investment in Direct-X, both as a platform for games development and with the existing investments made into that platform by partners (easy ports).

Re:MS's gaming strategy has been weird for years (1)

oic0 (1864384) | about 2 years ago | (#42648829)

Because the Xbox is a walled garden they can exploit for maximum proffit. They can carefully extract more money from you constantly as opposed to PC where they only get cash at OS or system purchase and later if you buy their games.

Re:MS's gaming strategy has been weird for years (0)

Anonymous Coward | about 2 years ago | (#42648899)

They moved in to PC because they realized when people criticize Windows it usually goes like this "Windows is a shitty OS not suitable for enterprise computing, but a Windows box does make a hell of a gaming platform!" so they probably figured that since people do seem to get a decent gaming experience out of Windows might as well run with it and make a closed locked down PC in a box and call it XBox. Then you can sell people two PCs! One for using office and one for gaming. Not to mention it lets them go into the low end ghetto market where many people have TVs and game consoles but don't need or want a computer. Making a game console is really a no-brainer. Probably one of their few good decisions in the last decade.

Completely nutty (2)

Samlind1 (667119) | about 2 years ago | (#42648413)

If that's the case then Uncle Fester is completely around the bend. They have one division that is a leading player in a rapidly developing market, and that is Xbox in a market where entertainment is starting to be delivered by IP network and the cable companies are starting to cave or become irrelevant. Just at this moment Fester decides to sell. Holy Jebus Gates, fire that idiot.

well (0)

Anonymous Coward | about 2 years ago | (#42648415)

if 'microsoft Will' is anything like microsoft Bob, i assume the sell off will be done horribly.

won't (0)

jimpop (27817) | about 2 years ago | (#42648419)

won't won't

Re:won't (1)

JoosepN (1847126) | about 2 years ago | (#42648601)

Will Will!

I Dunno (5, Insightful)

MightyMartian (840721) | about 2 years ago | (#42648429)

If Windows is in trouble because of market shrinkage (and that's most certainly the case at the consumer level, not really at the business level), then how does decreasing Microsoft's diversification (which is what I always assumed the XBox division was all about) help things? Sure, it might make some quick cash, but then Redmond is still stuck with the same problems.

I think Microsoft has got an uphill climb with Surface, but while it may not be winnable in traditional Redmond terms (90% for MS, 10% for everyone else), I don't see why in the medium term it couldn't at least grab some modest market share. Beyond that, we already know they're preparing a version of Office for the iPhone, so Microsoft always has a few cards like porting major software packages to competing environments, up its sleeve.

I don't buy this. Not yet. Maybe in five years when Microsoft is in some sort of severe structural decline, then maybe they start selling off divisions, but while the situation is hardly in their favor right now, it's hardly desperation mode at Redmond.

Re:I Dunno (2)

smpoole7 (1467717) | about 2 years ago | (#42648519)

> If Windows is in trouble because of market shrinkage (and that's most certainly the case at the consumer level, not really at the business level), then how does decreasing Microsoft's diversification (which is what I always assumed the XBox division was all about) help things? Sure, it might make some quick cash, but then Redmond is still stuck with the same problems.

This.

I would believe that Microsoft would start deemphasizing Windows and Office in favor of more profitable activities before I'd believe this article.

Wrong Conclusion (0)

Anonymous Coward | about 2 years ago | (#42648437)

If Microsoft wants to survive rather than riding Windows into the ground they should shift to emphasize the entertainment division rather than selling it. Of course I have no faith that Ballmer would do that. He's the wrong guy to be leading the company at a critical moment like this.

Based on Ballmer (0)

Anonymous Coward | about 2 years ago | (#42648451)

Who says Ballmer has months let alone the years before this prediction is due.

Captcha = bygone

ha!

Steve Ballmer (5, Interesting)

ClaraBow (212734) | about 2 years ago | (#42648457)

I'm just a lowly user, but I predict that the next big move that MS makes is to get rid of Steve Ballmer. And the second big move that MS is going to make is release Windows 8 Pro Classic -- which will simply be Windows 8 without Metro bolted on! They have no choice if they want to keep their business customers happy!

Re: Steve Ballmer (2)

ddtmm (549094) | about 2 years ago | (#42648521)

I don't think they'll release a Windows 8 Classic because there'd be no difference between it and Windows 7 (other than having removed Media Center.)

Re: Steve Ballmer (1)

Microlith (54737) | about 2 years ago | (#42648731)

Well, the entire "Modern" enviroment and associated tablet-oriented Start screen notwithstanding, they're the same. But Microsoft is banking on Modern and the WinRT API to establish their walled garden, which they feel they need to compete with Apple.

Re: Steve Ballmer (1)

cnettel (836611) | about 2 years ago | (#42648915)

There are plenty of kernel improvements. Memory page deduplication seems kind of nice (no, not only COW, but detecting copy-on-write from pages that were not allocated with the explicit intent of being identical). Some of the revamping of Explorer could also be kept, depending on the actual intent.

404 (2)

devleopard (317515) | about 2 years ago | (#42648461)

Article not's there anymore. Not surre how long it's been gone, but it's cute to see how many comments there are in spite of this.

Re:404 (3, Informative)

David Gerard (12369) | about 2 years ago | (#42648537)

Re:404 (0)

Anonymous Coward | about 2 years ago | (#42648725)

Awesome, thanks!

More damage than stagnation (0)

Anonymous Coward | about 2 years ago | (#42648465)

I've been saying this to my Softie friends and they keep disagreeing on this point: Ballmer's incompetence will not be limited to Microsoft's stagnation. He will take it much deeper and cause irreparable harm to Microsoft and its stockholders.

They understand he's a terrible CEO but hey, the revenues are still coming in. But it's looks more-and-more like my contention is going to be right, before he's gone, he'll have cut off all of the company's limbs while still declaring victory.

We'll see what happens but the bottom line is that he has to go, much sooner rather than later.

Balmer is the real problem (2)

ddtmm (549094) | about 2 years ago | (#42648469)

They should be ditching Balmer, not the Entertainment Division. Behind almost every failure is a failing management team.

Frankly, dear Microsoft... (3, Insightful)

faragon (789704) | about 2 years ago | (#42648493)

... I don't give a damn. Instead of selling Windows 7 and 8 at reasonable prices, you're turning Windows 8 into 200$, after some time in the 30-40$ (source [cnet.co.uk] . You'll die, slowly, because of being greedy and short-sighted. In my opinion.

Re:Frankly, dear Microsoft... (2)

CastrTroy (595695) | about 2 years ago | (#42648695)

I agree. I bought Windows 8 specifically because it was only $40. That's a pretty good price if you ask me. This is how much the upgrade should cost. The only reason I can think of that they would have upped the price is because PC manufacturers were complaining that too many people were just upgrading their current computer instead of buying new ones. If you have to spend $200 just for the OS, you're more likely to just go out and buy a new machine for $400 which already has the new OS it. Not sure if it actually happened, but it's the only thing that makes sense to me.

Article disappeared! Mirror copy (1)

Anonymous Coward | about 2 years ago | (#42648495)

The article has inexplicably vanished. Here's the text from the Google cache [googleusercontent.com] while it lasts:

Microsoft [forbes.com] needed a great Christmas season. After years of product stagnation, and a big market shift toward mobile devices from PCs, Microsoft’s future relied on the company seeing customers demonstrate they were ready to jump in heavily for Windows8 products – including the new Surface tablet.

But that did not happen.

With the data now coming it, it is clear the market movement away from Microsoft products, toward Apple [forbes.com] and Android products, has not changed. On Christmas eve, as people turned on their new devices and launched their first tweet, Surface came in dead last – a mere 2% compared to the number of people tweeting from iPads [businessinsider.com] (Kindle was second, Android third.) Looking at more traditional units shipped information, UBS [forbes.com] analysts reported Surface sales were 5% of iPads shipped [thenextweb.com] . And usability reviews continue to run highly negative for Surface and Win8 [inc.com] .

PC sales declining

This inability to make a big splash, and mount a serious attack on Apple/Android domination, is horrific for Microsoft primarily because we now know that traditional PC sales are well into decline. Despite the big Win8 launch and promotion, holiday PC sales declined over 3% compared to 2011 as journalists reported customers found “no compelling reason to upgrade.” [reuters.com] Ouch!

Looking deeper, for the 4th quarter PC sales declined by almost 5% according to Gartner [247wallst.com] research, and by almost 6.5% according to IDC [247wallst.com] . Both groups no longer expect a rebound in PC shipments, as they believe homes will no longer have more than 1 PC due to the mobile device penetration – the market where Surface and Win8 phones have failed to make any significant impact or move beyond a tiny market share. Users increasingly see the complexity of shifting to Win8 as not worth the effort; and if a switch is to be made consumer and businesses now favor iOS and Android.

Microsoft’s monopoly over personal computing has evaporated

From 95% market domination in 2005 share has fallen to just 20% in 2012 (IDC, Goldman Sachs.) [businessinsider.com] Comparing devices, in 2005 there were 55 Windows devices sold for every Apple device; today explosive Apple sales has lowered that multiple to a mere 2! [businessinsider.com] (Asymco). Universally the desire to upgrade Microsoft products has simply disappeared, as XP still has 40% of the Windows market – and even Vista at 5.7% has more users than Win8 which has only achieved a 1.75% Windows market share [thenextweb.com] despite the long wait and launch hoopla. And with all future market growth coming in tablets, which are expected to more than double unit volume sales by 2016 [sfgate.com] , Microsoft is simply not in the game.

These trends mean nothing short of the ruin of Microsoft

Microsoft makes more than 75% of its profits from Windows and Office. [businessinsider.com] Less than 25% comes from its vaunted servers and tools. And Microsoft makes nothing from its xBox/Kinect entertainment division, while losing vast sums in its on-line division (negative $350M-$750M/quarter [businessinsider.com] ). No matter how much anyone likes the non-Windows Microsoft products, without the historical Windows/Office sales and profits Microsoft is not sustainable.

What can we expect next at Microsoft?


  1.  
  2. Ballmer has committed to fight to the death in his effort to defend & extend Windows. So expect death as resources are poured into the unwinnable battle to convert users from iOS and Android.
  3.  

  4. As resources are poured out of the company in the Quixotic effort to prolong Windows/Office, any hope of future dividends falls to zero.
  5.  

  6. Expect enormous layoffs over the next 3 years. Something like 50-60%, or more, of employees will go away.
  7.  

  8. Expect closure of the long-suffering on-line division in order to conserve resources.
  9.  

  10. The entertainment division will be spun off, sold to someone like Sony [forbes.com] or possibly Barnes & Noble [forbes.com] , or dramatically reduced in size. Unable to make a profit it will increasingly be seen as a distraction to the battle for saving Windows – and Microsoft leadership has long shown they have no idea how to profitably grow this business unit.
  11.  

  12. As more and more of the market shifts to competitive cloud infrastructure Apple, Amazon, Samsung and others will grow significantly. Microsoft, losing its user base, will demonstrate its inability to build a new business in the cloud, mimicking its historical failures with Zune (mobile music) and Microsoft mobile phones. Microsoft server and tool sales will suffer, creating a much more difficult profit environment for the sole remaining profitable division.

Missing the market shift to mobile has already forever tarnished the Microsoft brand.

No longer is Microsoft seen as a leader, and instead it is rapidly losing market relevancy as people look to Apple, Google, Amazon, Samsung, Facebook and others for leadership. The declining sales, and lack of customer interest will lead to a tailspin at Microsoft not unlike what happened to RIM. Cash will be burned in what Microsoft will consider an “epic” struggle to save the “core of the company.”

But failure is already inevitable. At this stage, not even a new CEO can save Microsoft. Steve Ballmer played “Bet the Company [thephoenixprinciple.com] ” on the long-delayed release of Win8, losing the chance to refocus Microsoft on other growing divisions with greater chance of success. Unfortunately, competitors already had enough chips to simply bid Microsoft out of the mobile game – and Microsoft’s ante is now long gone – without holding a hand even remotely able to turn around the product situation.

Game over. Ballmer loses. And if you keep your money invested in Microsoft it will disappear along with the company.

Illogical. (1)

NuAngel (732572) | about 2 years ago | (#42648501)

To make more money, we're going to sell of the division that currently brings in the most profit? Microsoft is far from being in the kind of bind where they need to start selling of parts of the company. Microsoft's "weak" Windows 8 sales were predicted. Maybe not quite as weak as they have been, but Microsoft didn't "bet big" on Windows 8. They knew the wildly revamped interface would be a huge gamble, and they expected negative reaction. But they are safe, because the large sales of Windows 7 in the enterprise world cushioned the harder than anticipated blow of Windows 8. But with so many businesses so heavily invested in Windows 7, Windows 8 was the PERFECT time to release an OS that had more "market research" potential than "sales" potential.

Backwards (4, Insightful)

MobyDisk (75490) | about 2 years ago | (#42648513)

Microsoft is more likely to sell off the Windows Os side and keep the entertainment division. XBOX exists because they knew that the future of Windows depends on it being in your living room. They are supposed to be using the xbox to sell Windows in the same way Apple uses the iPad and iPhone OS to sell Macs.

With that said, Microsoft is doing a terrible job at this, but the strategy depends on tying entertainment to OS so selling it off would be illogical.

Re:Backwards (1)

NewWorldDan (899800) | about 2 years ago | (#42648753)

Mod you the hell up.

Everything these days on the consumer side is about the user ecosystem. Whether it's the Google, Apple, or Microsoft system, it's about having a suite of applications and services that work together. Microsoft is the only one with a game console. The X-Box represents a huge amount of leverage and tie in and there's no way they'd give that up. That's why they bolted Metro on to Windows 8. By itself, Metro is actually pretty slick, even if no one really seems to want it. But if developers can target the desktop, game console, and mobile in one application, that's a pretty big advantage.

If anything, Microsoft should be looking to buy out Barnes and Noble. It gives them an online sales footprint and a nationwide chain of stores. The Nook tablets might not be the most popular, but I'm betting that they're outselling WinRT by a fair margin. Of course, Microsoft would find a way to destroy B&N, but that's a subject for another post.

Re:Backwards (1)

Anonymous Coward | about 2 years ago | (#42648769)

Microsoft is more likely to sell off the Windows Os side and keep the entertainment division. XBOX exists because they knew that the future of Windows depends on it being in your living room.

Gamers are a fickle bunch. There is a generational shuffle. Atari, Sega, Sony, Nintendo, and almost every player in the industry has enjoyed time at the top only to get shoved to the bottom in the shuffle. MS can't effectively lock-in gamers like they can OS/Office users.

LOL wut (0)

Anonymous Coward | about 2 years ago | (#42648523)

Microsoft would sell off their most profitable division why?

UPDATE THE LINK! (5, Informative)

David Gerard (12369) | about 2 years ago | (#42648525)

Forbes has vanished the article. Here's a copy on the author's blog. [thephoenixprinciple.com]

Don't Bother, Dude is a Moron (0)

Anonymous Coward | about 2 years ago | (#42648609)

Why would MS sell a profitable division of their company in reaction to other parts being less profitable?

That's like saying Amazon is going to sell their Music division because the Kindle sales have slowed down.

Re:UPDATE THE LINK! (1)

Anonymous Coward | about 2 years ago | (#42648761)

Thanks. Some followup issues -

1) Hartung predicts huge layoffs at MS, on the order of half the company. That would be a far bigger story than spinning off Xbox. That would be like IBM in the '90s.

2) But do his numbers make sense? I doubt it, but Hartung does have a decent resume. Just because Apple is kicking MS' butt and is picking up market share doesn't mean that the MS has to shut down half the company. Fire the CEO, now, that's a different matter.

3) Why did Forbes take Hartung's story down? I wouldn't be surprised if someone on the business side got a phone call from Redmond, WA.

WTF (0)

Anonymous Coward | about 2 years ago | (#42648543)

Will Microsoft Will Sell Off Its Operating System Division?

FTFY!

Seriously this article speaks of Windows performing poorly so hey! why not ditch that instead? Xbox is performing much better than expected regardless of what some will say.

Will Slashdot Will Fix Its Grammar (0)

Anonymous Coward | about 2 years ago | (#42648571)

Will Slashdot Will Fix Its Grammar

Will Slashdot Will Fix Its Grammar? (0)

Anonymous Coward | about 2 years ago | (#42648623)

Will Slashdot Will Fix Its Grammar? -- Fixed

An anecdote (1)

David Gerard (12369) | about 2 years ago | (#42648611)

Anecdote: my work currently has XP, Office 2007 and Lotus Notes. We're looking at replacing Office and Notes with Google Apps ... and XP with Linux or Chromebook-style thin clients unless you can come up with a good reason you need a general-purpose PC. Google Apps is pretty much the hot favourite with lots of people saying "hell yes!"; the second part is just being mooted, but it's being seriously mooted. It'll be interesting. (I can already do all my work in Xubuntu.)

This isnt all that unreasonable. (0)

Anonymous Coward | about 2 years ago | (#42648619)

Considering the pounding of the wardrums we've been hearing for the past five or so years that console gaming is reaching it's zenith this doesn't seem so implausible. We have handheld devices that are providing powerful entertainment at a fraction of the cost, and the graphical prowess of these devices are rapidly catching up to machines that are several times their size and aren't a tenth as convenient. There's also the resurgence of PC gaming as smart developers side step the primary development machine the publishers have built into a monolith over the last three decades. Kickstarter, easily acquired tools and resources are helping to make that transition easier by the day.

This article and Hartung's prediction maybe be bullshit, but those wardrums are getting louder and you can be sure Microsoft is listening and weighing it's options.

No. (3, Informative)

Megane (129182) | about 2 years ago | (#42648629)

Betteridge's law of headlines [wikipedia.org]

The best part is that Forbes (apparently) pulled the article because (apparently) it was just too much wild speculation.

So MS Holds onto the OS Buggy Whip? (1)

BoRegardless (721219) | about 2 years ago | (#42648639)

Pardon the pun, but it looks like MS is going to carry WinOS & MSO to the grave.

Xbox is a foothold in the living room (4, Interesting)

Stone316 (629009) | about 2 years ago | (#42648665)

Why on earth would they sell that off? Makes absolutely no sense. This type of reporting is totally and utterly a pile of crap. Must be a slow news day and this guy has an article quota to keep.

Completely stupid article (1)

js3 (319268) | about 2 years ago | (#42648669)

Makes no sense

This doesn't make any sense (1)

macwhizkid (864124) | about 2 years ago | (#42648703)

The Xbox is basically a specialized, stripped-down Windows gaming computer, in terms of both software and hardware. The games use DirectX, just like regular Windows, and make it trivial for developers to port their games to desktop. In other words, the Xbox ecosystem makes the Windows platform stronger, not weaker.

Re:This doesn't make any sense (1)

0123456 (636235) | about 2 years ago | (#42648795)

In other words, the Xbox ecosystem makes the Windows platform stronger, not weaker.

Uh, no. The Xbox has helped to kill Windows gaming because the majority of new 'PC' games are crappy ports of crappy console games which barely touch the power of a high-end gaming PC.

Something will happen (1)

AdmV0rl0n (98366) | about 2 years ago | (#42648713)

Although people are venting, it should be of note that both MS and Google are in a war. And that war is bleeding casualties

Microsoft is killing MSN Live and Messenger. Google has killed off services and solutions. Windows 8 is part of a huge MS screw up where they are trying to align devices. This isn't a fit for their windows, so windows has had to go through the disaster that is called 8.
Phones, Xbox, PC and Tablet all with the same dire 'Modern *Cough Metro *cough* UI - and they killed zune which could have used the same. Their store is a disaster, as are the applications - and the development platform where you write once and deploy across devices is pure fantasy land.

Xbox depending one how much fiddling you do on the accounting side has lost MS billions. Its now at the end of the current machine design lifespan. And the high street market in the UK where they used to sell into is a disaster area. They are currently basically giving away 8 for peanuts, and only doing so has generated sales. They give away office in surface, because its so utterly broken and can't operate with add ins and stuff people need that they would not get away with charging for it.

At some point, and I think it will be soon unless there is something not visible, something will crack. Either the numbers or the money will turn into the red, and this stuff will go through the ringer. MS in recent times made ok money, but 7 started losing sales, and 8 has tipped into a slide. On the other side, while they are still shifting office, the theory of driving office on top of modern UI may well end up like a Win 8 disaster in the office area.

At which point certain plans or divisons will end up under scrutiny. I'm not expecting divions that lose billions to survive with that background.

MS is a very scewed up company right now. Its old divisions are being decimated and wrecked, and new ones are a mess. Includin the 'everything cloud' and azure.

To put this in a context. Here is a prime example. You can't add surface to AD.
How that actually passed board level or adult level checks its hard to know. A windows machine that is aimed at business users, has office installed (albeit laughably broken) and cannot be added to AD.

The bottom line is actually some of this shit has die, be sold off. Because frankly they are wrecking everything, stupidy, in badly thought out efforts to unify unconnected systems and devices, into an eco system no customer asked for, or wanted. Or will want.
 

Betteridge's Law... (1)

Anonymous Coward | about 2 years ago | (#42648723)

No.

If he does, he's a fool. (1)

jimicus (737525) | about 2 years ago | (#42648783)

The operating system - and, for that matter, Office - is becoming less and less important as more companies transition to web-based services for the bulk of their work and find that they don't need anything like as sophisticated as Office for the odd spreadsheet or bit of word-processing.

Sure, it's not happening anything like as quickly as a lot of us predicted five or ten years ago. But it's happening.

In such a climate - particularly when you're still a profitable company with a lot of cash in the bank - I would think it makes more sense to diversify than it does to concentrate on the two things that have historically made you lots of money but might not continue to do so for very long.

Microsoft Will (0)

Anonymous Coward | about 2 years ago | (#42648785)

Sounds like the Microsoft equivalent of the Borg Collective.

Hon Hai might buy it (1)

Animats (122034) | about 2 years ago | (#42648801)

The obvious company to buy the XBox line would be Hon Hai Precision Industries, the parent of Foxconn. They already make the XBox. Hon Hai's CEO wants to develop a global brand of their own. [siliconhutong.com] It would just mean Hon Hai taking over a slightly larger portion of the supply and marketing chain for something they already make.

Think Expedia IPO (0)

Anonymous Coward | about 2 years ago | (#42648813)

The rumor has been around for a while now, that Microsoft will put the Xbox group up as a stand alone IPO the same way they did with the Travel site Expedia. This isn't selling the group, it would make it accountable to itself and open the door to alternative (non Microsoft) technologies.

Let's recap (1)

obarthelemy (160321) | about 2 years ago | (#42648855)

1- build a very mature OS/Office/Entreprise business with slow growth
2- build a faster growth Entertainment business with, at last, OK results
3- sell 2-
4- watch 1- stagnate
5- ???
6- Profits !

MS have a monopoly rent on entreprise OS and software. The only thing they can do is use that rent while it lasts to try and become relevant in the mobile space. Even being an also-ran would be better than the non-entity they are right now. I think their best chance is to pull an Apple, integrate hardware and software, either by buying Nokia outright or keeping them straightjacketed by whatever exclusive deal and right of first refusal they have on takeovers.

The article is wrong in that MS can do *nothing* about Wintel PCs falling out of favor, so *nothing* about Windows on desktops/laptops sales. It's pointless to invest more in Windows. Actually, I'm pretty sure MS could stop doing anything but security updates for desktop/laptop Windows over the next few years, and that would not impact sales. It might even turn out better then pulling another Win8 on users.

MS can try and get more Windows phones and tablets out. They missed their opportunity to preempt competitors like they did in the PC market though, and will never get it back. Android and iOS are good enough and big enough that whatever MS comes up will at best get to par, and OEMs are not dumb enough to let MS once again get all the profits and devalue the hardware business.

I think it's already too late to achieve much success in the general market though, and that the best MS can hope is to milk the market of companies who insist on Windows Everywhere, and can't/won't handle iOS nor Android. Apart from Office, there's *zero* reasons to buy a Windows phone nor tablet these days. RT tablets are inferior to iOS/Android on all scores; and x86 tablets are so expensive you can get an x86 laptop *and* an ARM tablet for the same price.

The Entertainment division is actually one of the few recent MS success stories, had has a lot of similarities to the Mobile market: consumer not entreprise, ecosystem, media-oriented... Getting rid of it makes no sense.

Well, personally, (1)

cellocgw (617879) | about 2 years ago | (#42648859)

I think Microsoft should sell off 100% of Microsoft, preferably to some Linux house which will have the common sense to bury Windows* OSs deep in the ground, never to be heard from again.

Troll != Analyst. (1)

guidryp (702488) | about 2 years ago | (#42648905)

Don't reward Trolls like this guy.

He is clearly posting outrageous nonsense for page hits, and the /. just gave it to him (I did not follow the link, but many will).

Microsoft Will? (1)

Jmc23 (2353706) | about 2 years ago | (#42648907)

Is he like Microsoft Bob 2.0?

Will Microsoft Will ? (1)

thygate (1590197) | about 2 years ago | (#42648909)

Who on earth is Microsoft Will ?

Clickbait is clickbait think like a businessman. (0)

Anonymous Coward | about 2 years ago | (#42648917)

That doesn't sound like good business sense. While the entertainment unit would be a successful spinoff, no doubt, what would be in it for Microsoft as a whole to spin off a highly successful division? They're not hurting for cash, so they're not going to spin it off to make cash, the enterprise Windows unit is still making good money, so they're not trying to separate an incredibly lossy half of the company from an incredibly successful one... So what then?

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