Microsoft Co-founder Thinks Company Should Split

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.

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  • 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...
  • InvalidError
    506955 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.
  • 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...