Microsoft Co-founder Thinks Company Should Split

News
By Daniel Starkey
published

While Microsoft continues its search for its next CEO, co-founder Paul Allen suggests a split. The chief investment officer suggested by way of his own accounts that manager Paul Ghaffari said that consumer businesses like Xbox and Bing pull resources away from the company's heavy hitters – software and business-to-business services.

Ghaffari, speaking to the Financial Times said, "The search business and even Xbox, which has been a very successful product, are detracting from that. We would want them to focus on their best competencies. My view is there are some parts of that operation they should probably spin out, get rid of, to focus on the enterprise and focus on the cloud."

In real terms, it's hard to imagine Xbox breaking away from the core of Microsoft – game console development and research is hugely expensive on the front-end. Bankrolling that kind of tech isn't easy for a company that doesn't have a multi-billion dollar business to piggy back on. Just ask Nintendo. Most of the key Xbox selling points come from its integration with the Big M, and without that, a single dud could kill the smaller company.

Interestingly, former Nokia CEO Stephen Elop said that he would kill off Bing and sell the Xbox division if he were to become Microsoft's CEO.

Daniel Starkey
28 Comments Comment from the forums
  • the1kingbob
    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...
    Reply
  • InvalidError
    11920837 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.
    Reply
  • hannibal
    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...
    Reply
  • Shankovich
    "Just ask Nintendo." Nintendo has profited more from their hardware sales than Microsoft has the last decade.
    Reply
  • realAMDfreak
    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.
    Reply
  • may1
    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?
    Reply
  • bmwman91
    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."
    Reply
  • jasonpwns
    I'll take my PC.
    Reply
  • ninjustin
    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".
    Reply
  • sun-devil99
    "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.
    Reply