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Microsoft Co-founder Thinks Company Should Split

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November 12, 2013 8:11:17 AM

Do they really think the company could turn a better profit if they weren't investing money into a profitable gaming console? I really don't understand it. Microsoft is trying to get a strangle hold on business (which they pretty much have) and take over the home entertainment system and mobile. This over looks their huge stake in personal computing. They want to be what you use when you are working, general computing, mobile computing, and home media entertainment. They have done a good job so far of all these things (although mobile has kind of sucked, they have tripled their percentage... still a pretty big failure thus far). I don't understand why they want to down size (which in these guys eyes, mean cutting of profitable limbs). They could probably turn a better profit margin, but less profit overall. I guess profit margins make the investors happy...
November 12, 2013 8:34:26 AM

the1kingbob said:
Do they really think the company could turn a better profit if they weren't investing money into a profitable gaming console?

Yes - if they have better places to invest that cash and associated other resources into.

Another problem when a company is pulling so many strings in so many directions is that they lose track of what is important and cross-contaminate products with things that do not necessarily belong together.
November 12, 2013 8:42:55 AM

It is about the profit compared to investement. If the profit they get is not big "enough" (a guite relative term as you can expect) they are willing to drop it. The problem is can they get better profit margins in somewhere else... That may be douptfull in this situation. But at this moment they want to pick the best parts and leave the rest to someone else...
November 12, 2013 8:51:25 AM

"Just ask Nintendo." Nintendo has profited more from their hardware sales than Microsoft has the last decade.
November 12, 2013 8:52:02 AM

BING is definately a failure. It might have some market share in the roundabouts of Yahoo, but it does not seem to be profitable.

When it comes to XBox, it still sells well.

The problem with Microsoft is more strategic. The MS Boat does not seem to go in the right direction.
November 12, 2013 8:52:35 AM

theking1bob
Downsizing and specialization are very different.
Historical facts and today's business norm indicate MSFT really should specialize through dividing its company.
Full integration of PC system in our daily lives simply will not work, and a lot of white collar workers prefer to separate the two from each other. That way they stay productive because there are no distractions while working.
Look at Win8 for example. Is that a successful product as an all-in-one approach to daily computing?
November 12, 2013 9:12:55 AM

Wow, I am sure that having Elop and Allen say this stuff will be GREAT for Xbox One sales. "Hmmm XB1 or PS4...well, at least I am pretty sure that Sony isn't going to abandon their product."
November 12, 2013 9:33:35 AM

I'll take my PC.
November 12, 2013 10:04:16 AM

The Xbox wouldn't be much without it's Windows like OS and Bing is so intertwined into probably both Windows and the Xbox that it would be silly to separate them. Making a "loss" in one division when it helps prop up the whole business is a smart "loss".
November 12, 2013 10:12:51 AM

"Another problem when a company is pulling so many strings in so many directions is that they lose track of what is important and cross-contaminate products with things that do not necessarily belong together."

Hmm...much like Windows 8 Metro..er...Modern Interface on a desktop PC. Microsoft seemed to fail to understand one interface does not fit all devices. They can't understand why people are so reluctant to go to Windows 8. They can't understand people don't want a Windows Phone or Surface on their desktop PC. Now, don't get the impression I don't like Windows 8. Been using for about six-months now but with Classic Shell. Sometimes I forget I am even running Windows 8,and not Windows 7. That is until I happen to move my mouse to the right-side and get the charms bar.

I use Bing, I use Google, just depends on the computer. Keep in mind I only use those for searching and I don't pay attention to the ads. Don't own a gaming console so, cain't comment there. Been using Android phones for the past 2+ years. Looked at Windows Phones, but found the lack of 3rd party apps a reason not to choose them. Plus swiping between screens vertically just seems so wrong and unnatural.
November 12, 2013 10:33:47 AM

They don't need to get rid of XBOX. Just Bing.

Also, IMO, Windows needs to become one single installation file for both the PC (to include Desktops and Laptops) and Mobile devices (to include tablets and SmartPhones).

If they could somehow partner with Google, where Google allows them to use their search engine on their phones, and Google allows it's Android users to install Windows on their phones, such an alliance could potentially destroy Apple. However, for this to work, SmartPhones would have to become much more robust. Right now, I believe the iPhone 5s is the most cutting-edge, because of the 64-bit SoC. When a Windows SmartPhone becomes as powerful as the XBOX One/Kinect in one device...that would kill the competition. That, and when its consumers understand the principle of docking and utilize it to its potential.
November 12, 2013 11:22:05 AM

The competition in the market is tough and he is right about "software and business-to-business services" being their bread and butter. I don't care much for Bing, but selling off parts of the company seems like only one part of a business strategy. Times are changing, but what vision does he have for the company leading it into the future? There is no mention of mobile devices in the article.
November 12, 2013 11:31:33 AM

Never thought I would say this, Balmer please stay! These guys are dumber then people think. While bing is a loss, its a loss leader as it were. And Xbox is part of the whole long term plan. Xbox is the only thing you are doing much better in that would be hard for apple or anyone just to jump in on. Even a 50/50 split between ps4 n xbox is still great. If xbox goes I don't see myself worrying about buying MS products much anymore. Sad but true, as what I have is good enough and most things PC will be going cross platform or made for other platforms. Also who would buy xbox and then agree to use windows as The OS? They would change to Linux Base for sure, back words compat is not an issue as its not even an issue for companies now since they don't care about that. I think those guys are to old to see the future and want to get a fast buck. But since they are just die and leave it where it is today, just make windows better by making work like 7 more (8.1 is better but not good enough) then you will be better off.
November 12, 2013 11:31:48 AM

Never thought I would say this, Balmer please stay! These guys are dumber then people think. While bing is a loss, its a loss leader as it were. And Xbox is part of the whole long term plan. Xbox is the only thing you are doing much better in that would be hard for apple or anyone just to jump in on. Even a 50/50 split between ps4 n xbox is still great. If xbox goes I don't see myself worrying about buying MS products much anymore. Sad but true, as what I have is good enough and most things PC will be going cross platform or made for other platforms. Also who would buy xbox and then agree to use windows as The OS? They would change to Linux Base for sure, back words compat is not an issue as its not even an issue for companies now since they don't care about that. I think those guys are to old to see the future and want to get a fast buck. But since they are just die and leave it where it is today, just make windows better by making work like 7 more (8.1 is better but not good enough) then you will be better off.
November 12, 2013 11:34:59 AM

kanoobie said:
There is no mention of mobile devices in the article.

Seeing how Surface tablets (at least the first generation) were one of Microsoft most spectacular market failures in recent history since Zune, I doubt it would be wise for Microsoft to try getting into phones first-hand. They bought Nokia, might as well use them for something much like Google and Motorola.

Spinning off Xbox as a wholly owned subsidiary wouldn't be such a bad thing - it would at least provide a clear demarcation point between the gaming-oriented business and the everything-else one to help each side focus on their end of things.
November 12, 2013 11:36:33 AM

HP has divided itself and its offshoots have been reasonably successful. Agilent Technologies was HP's instrumentation division and they are still considered a top-tier equipment maker. Avago optoelectronics was HP's opto division and they are still a big player out there too.

Now, for Xbox I see it being a bit harder since they leverage a lot of MSFT software on their platform. If Xbox became its own thing and had to license Windows on each box, that would certainly not help the per-unit cost. And Live...they would need to lease datacenter space from MSFT, and/or build their own. Or maybe not. HP has a history of co-locating with its offshoot companies, and maybe MSFT would consider that too, if it ever came to it.

Realistically, I don't see MSFT splitting it like that after they have invested so much into their devices and services branches. Still, I feel like it isn't entirely confidence-inspiring to consumers to have leaders / potential leaders talking about "abandoning" a product that is just now launching, particularly given the rocky trail it has been over in the last few months.
November 12, 2013 1:27:08 PM

Microsoft lost a direction.
November 12, 2013 1:56:12 PM

red77star said:
Microsoft lost a direction.

I would say they have found too many. Now they have to pick which ones they really want to invest in if they want to maintain or improve their position in them.

Companies like Blackberry that were one-trick monkeys of sorts lost direction: they got distracted from their core business chasing side-markets, failed to pay attention to rising competition in their core market and let it slip through their fingers in the process. Amateur's mistake.
November 12, 2013 2:28:05 PM

Ballmer may look like a shaved chimpanzee but he oversaw Microsoft as a business manager and eventually CEO to the biggest company in the world. Allen is a bitter also-ran and Elop was shipped off to Nokia because he wasn't good enough to hit the top at Microsoft internally. When the real CEO arrives, we will find Elop just signed his own death warrant.
November 12, 2013 3:31:39 PM

What on earth is wrong with MS? It wouldn't be so bad if I didn't like them so much. First they want to become a device and service company, now they want to be a business software company and spin off their consumer hardware and software divisions? I am not a fan of Balmer, but he must have had to deal with a lot of crap in his position.

If MS just had a good, clear-headed leadership then they could turn all of their hodgepodge products into a series of product lines that create value rather than distraction and compatibility woes. Changing things like Office into a membership is a good idea... just not at $100/year for joe consumer (no matter how much 'value' is in it, that price is about $75-50 too high). Having a game console is a dead end street, but turning that console into a computer line, part of which happens to have a focus on gaming, would be a great idea! Having music and video services is also a great idea, but let's not turn those services on their head every 3 years and scare people away from it! Games For Windows, Xbox game services, Windows Game Store... all great ideas, but think about it for 5 minutes and make a single flexible licencing service rather than a bunch of little services. MetroUI is awesome, and having a unified UI between such a wide variety of devices should be applauded, but at the same time give those backwater people their start button back to avoid so much bad press. A winRT tablet is not a bad product... a $500 winRT tablet is a bad product. Adding Office to it doesn't help add value for most people. Strip office out of that thing and sell it for a more appropriate $250-300 and watch it succeed, and offer Office as add-on software or as a 365 package like it is for just about everything else (same with WP's office). Having a console is not a bad thing, having online DRM is also perfectly fine and normal (and is required for just about every other game device these days from PCs to phones and is not a problem), but having a $600 console which spies on it's clients and has no 4K support when you expect the hardware to last 10+ years is a problem. Having a device with 500GB of space when games are 50GB each is a problem. Make kinnect optional, or if you absolutely must have voice commands (which you should, and should bring to win8) then put the mic in the controller or console and make the camera bit optional. And for goodness sake, when a new TV standard is coming out then you should at least have video playback support for it even if you can't play games at that resolution! And finally, subsidize that puppy to get units out the door, you will more than make up for it in overpriced game sales! Having a phone is awesome (seriously, WP is great people, give it a try), but surely MS is a large enough company to work on catching up on hardware support while adding simple highly demanded features like being able to attach a document from the email app rather than starting the email from the office app! I know that such features will finally be coming next year, and there are plenty of other things that won me over to overlook such annoyances, but there is no way that feature (and others like it) is going to take a few programmers more than a week to fix, and the lack of those kinds of features are going to scare off more users (specifically professionals and businesses with money to burn) than the lack of quad core CPU support or 41mp camera support.

Seriously, MS is just so close to being good on so many fronts! And yet it seems like every time they manage to find some sort of product synergy they manage to mess it all up. A blind monkey would have better odds. But after things like this it seems to me that MS needs a new board of directors rather than a new CEO.
November 12, 2013 10:01:38 PM

I'm confused whether Paul Allen said this or Paul Ghaffari? But I read that MSFT is losing $2.5 billion on Skype, Xbox, and Windows Phone. So yeah looking at that it seems like a smart move to shut those down and focus on Windows and I guess the Android patent royalties which are about $2 billion a year. But how long can MSFT keep milking these cows? I think they need to think long term because in 10 years the Windows cow and Office cows may just be out of milk.
It sure would be a bummer because I really like the xbox and am excited for the xbox one new voice and entertainment features.
November 13, 2013 12:51:31 AM

Bing has its place, its safe for kids and all but poorly rooted into windows 8 (add Internet explorer and you got from poorly to horrific )

Most places around the world have out-dated ie's outdated xp due to transition to windows 8. while xp varient in windows 7 better, not saying 8's bad but you don't cut limbs and force anyone over.

Thats cruel and wrong business practice.
November 13, 2013 6:42:25 AM

InvalidError said:
the1kingbob said:
Do they really think the company could turn a better profit if they weren't investing money into a profitable gaming console?

Yes - if they have better places to invest that cash and associated other resources into.

Another problem when a company is pulling so many strings in so many directions is that they lose track of what is important and cross-contaminate products with things that do not necessarily belong together.


Hogwash General Electric, Mitsubishi, Samsung, &c all handle lines of completely disparate products just fine.

This guy is thinking like every other executive that ruins a business. Split a company, slash the payroll in weak areas destroying the ability to ever bounce back and compete dooming the department, take shortcuts in design and testing, and outsourcing everything. The goal being to boost profits for the next quarter. Not the long term health of the company and where it will be 20 years from now.

He could care less. He just wants to pillage Microsoft.
November 13, 2013 6:44:54 PM

These business execs really have no connection to the real world. All they see are dollar signs in the immediate and short term future. Microsoft can do much better than it is without selling anything off. They just have to create an XPhone that integrates with the Xbox One, and stop trying to name everything "Windows" Phone, "Windows UI" etc. People HATE windows now and associate it with bluescreens and viruses. Why on earth would they name their phone a Windows Phone is just beyond my comprehension. It seems so stupid to do that.

They also need to make games compatible with both console and PC so that developers will have to expend little to no effort porting them back and forth. That will make Windows and Xbox very desirable development platforms.

Fixing their mobile sector is beyond the scope of this message.
November 13, 2013 8:35:43 PM

beayn said:
People HATE windows now and associate it with bluescreens and viruses.

The last time I have seen a bluescreen was on an Apple device....
http://www.telegraph.co.uk/technology/apple/iphone/1037...

The last time I remember getting a crash screen on one of my own Windows PCs was three years ago due to one of my new DIMMs having a single bad bit in it. Not exactly Windows' fault.
November 14, 2013 3:50:13 PM

Microsoft became greedy in the speed of blinking an eye. Windows XP was something, innovative, they didn't focus on marketing as much as now, but on the service they gave. What happened now? Xbox One? PLEASE
November 19, 2013 11:13:16 PM

Microsoft is a typical example of a Monopolist turning into a Gafia Bloss.

It is forcing people to use inferior:
Word instead of Wordperfect
Bing instead of Google
Windlows 7 lor 8 instead of XP/2000


It should be killed.

November 19, 2013 11:16:56 PM

Microsoft is a typical example of a Monopolist turning into a Mafia Boss.
Micro Soft do not care about the Customers.
It should look at the Japanese companies like SONY or Toshiba, who are gloing to disappear soon like Akai, Sanyo, JVC.

similarly after the introduction of Winlows 7 and 8, most customers will go and eat apple
!