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  1. #1
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    Investors want Microsoft's new CEO to kill Xbox, Bing and Surface

    180 if old.
    It's the morning after Satya Nadella's*first day*as Microsoft's CEO. Now that the confetti has cleared, Nadella faces tough choices about the path forward for the company.

    Two influential Microsoft shareholders have been pushing the Redmond software giant to abandon what they view as non-essential product lines so that Microsoft can focus on its core strength: selling enterprise software to businesses. Nadella has spent the last seven months running Microsoft's $20 billion server and tools division, so he could be ideally suited to manage that transition.

    But doing so would mean repudiating much of the legacy of his predecessors, Bill Gates and Steve Ballmer, who have long believed that Microsoft needs to win over consumers, not just corporate IT managers. As a 22-year Microsoft insider, Nadella owes much of his career to Gates and Ballmer.

    Nadella's tenure at Microsoft's helm will be largely defined by how he balances the competing visions of Microsoft's future and the strong personalities who will be pushing those visions in Microsoft's boardroom. Having activist shareholders who are urging Microsoft to rethink its vision could give Nadella an opening to face down his predecessors, if he wants to do so. But it wouldn't be easy.

    The business of Microsoft is business?

    Ballmer envisioned Microsoft as a "device and services" company and reorganized the company last year to better execute that vision. But now Ballmer is out — though still on the board — and with a new CEO come fresh questions about the fate of consumer tech at Microsoft.

    Microsoft's Windows division has been facing shrinking profits; last year, the unit pulled in a net $9.5 billion, down from $11.6 billion in 2012 and $12.3 billion in 2011. Company filings suggest that the drop is largely attributable to declining demand for Windows among consumers, even as sales of Windows to businesses remain strong. The same division also reported a $900 million loss on unsold Surface tablets. The online services division, which oversees search engine Bing, reported a loss of $1.3 billion in 2013 — less than the previous year but still in the red.

    Some investors have suggested that Microsoft*spin off*its money-losing consumer products and focus solely on the enterprise. Even the Xbox deserves to go, Paul Ghaffari, the wealth manager for Microsoft co-founder Paul Allen, said last year.

    But Robert Bontempo, a management professor at Columbia Business School, is skeptical that Nadella will be able to chart his own course on the matter.*"You're asking for Nadella to walk into a board meeting and look Ballmer and Gates in the eye and say, 'The decisions you've made over the past two decades are a mistake,'" said Bontempo. "That's going to take some serious strength of character."

    "There's going to be a lot of tension"

    If Nadella does choose to turn more decisively toward business customers, he may find a useful ally in a man named Mason Morfit. Morfit is a 37-year-old activist investor whose employer, the private hedge fund ValueAct, acquired a0.8 percent stake*in Microsoft in August. That was enough to put Morfit on the board.

    Morfit was reportedly among those who urged Ballmer to step down. Microsoftdenied*that ValueAct played any role in the decision, but the way events played out nevertheless reflected on ValueAct's power as a shareholder voice.

    More important, ValueAct has been a critic of Microsoft's strategy and — like Ghaffari — wants the company to consider shedding some of its investments in consumer technology. ValueAct also reportedly wants the company to*unbundle its offerings, such as Microsoft Office, so that they can be used on other platforms besides Windows.

    "Microsoft has historically had a supportive board," said Bontempo. But with the addition of Morfit, Bontempo said, "this is going to be an extremely toxic environment ... There's going to be a lot of tension."

    That tension could come in handy for Nadella, who will need political cover to pursue broader changes at the company.

    But there are some early signs that Nadella is interested in continuity with his predecessors rather than a radically new strategy. The Indian-born engineer asked — and got — Gates to step away as chairman of the board so that Gates could*advise him*on products and devices. Whatever Gates's qualifications for this job, it's clear Nadella recognizes his own weaknesses when it comes to consumers.*It's also suggestive of Nadella's faith in the "device" part of Microsoft's "device and services" mantra.

    Though no longer chairman, Gates will remain on the board of directors. Analysts say the programmer-turned-philanthropist has exerted a strong influence at Microsoft behind the scenes, even as he's kept a *low public profile at the company.

    How an enterprise-focused Microsoft can keep in touch

    Nadella only hinted at wider changes in a company e-mail Tuesday.*"Our industry does not respect tradition," he wrote. "It only respects innovation."

    But just because Microsoft could stop producing gadgets doesn't mean it needs to disengage from the public altogether. According to one recent former employee, the company has a wealth of potentially inspiring research that would benefit Microsoft's public image but that's never publicized because the corporate structure discourages such results from trickling out.*Many of these projects resemble the kind of work that rivals such as Google routinely turn into conversational hits, if not commercial ones, the former employee said. Unlike Google, however, the focus on selling products at Microsoft detracts from any attempt to publicize an interesting piece of experimental work.

    "Marketing at Microsoft is mostly about sales," the former employee said. "And sales is largely about products. So if your product doesn't sell, it doesn't make it into marketing."

    It hardly helps that Microsoft has very specific ideas about what a product is, the employee added, and that an innovation may never see the light of day if it doesn't fit into one of the company's existing offerings.

    When asked how Microsoft's research priorities might change under Nadella's tenure, a company spokesperson declined to comment.

    If the $10.4 billion Microsoft spends on research and development is as fantastic as the former employee says, Microsoft would have a prime opportunity to do what others in this space have also done: Build a consumer-facing brand that highlights Microsoft's technologies in virtually everything from ATMs to gas station terminals or that shows how Microsoft services are behind the next wave of other people's technological innovation. IBM's*Smarter Cities Challenge*is one example of a services company that stays in the public eye this way. So is General Electric's*Ecoimagination*project. If they can do it, why not Microsoft?

    Yet history suggests this could be an uphill climb for Nadella. Ballmer struggled to build new consumer-facing businesses at Microsoft for more than a decade, with little to show for it. Nadella will have to decide whether to continue with that strategy or make a painful break and focus on areas where the software giant is a proven winner.
    http://www.washingtonpost.com/blogs/...g-and-surface/

    I thought the Xbox brand was doing good, obviously investors don't have the same view :-/

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    Last edited by TGO; 02-11-2014 at 00:54.

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    It will be interesting to see how all this will unfold.




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    I don't think they should do it, the brand has been part of MS for a long time now and while they haven't had the same success as Nintendo or Sony has they have been successful which would make no sense to kill it off now

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    Xbox is successful brand name wise just not money wise.
    I posted in another thread how Satya has been outed as a sheep, so I doubt he will have the guts to go forward with any of this.

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    Quote Originally Posted by Bitbydeath View Post
    Xbox is successful brand name wise just not money wise.
    I posted in another thread how Satya has been outed as a sheep, so I doubt he will have the guts to go forward with any of this.
    Even if he wanted to, he wouldn't be 'allowed' to.

    #IndieStation4 and proud of it.

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    Quote Originally Posted by Admartian View Post
    Even if he wanted to, he wouldn't be 'allowed' to.
    Must be nice to be paid millions in salary and bonus just to do what he's told, instead of actually leading. hmm makes me think even less of the company as a whole.




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    It does sound like they have some crazy restraints in place that are only hurting the company as it is. Nothing big will come out of this change of figure-head (at least that's what I make of it. Bill Gate as adviser, might as well put him back in charge, might help demand respect from investors and move things along better)


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    Quote Originally Posted by TGO View Post
    180 if old.


    http://www.washingtonpost.com/blogs/...g-and-surface/

    I thought the Xbox brand was doing good, obviously investors don't have the same view :-/

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    180 if old? You mean 86 it if old?

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    I would say killing Bing would be a good idea. It's fighting a major uphill battle. Surface as well but not as bad but still pretty severe. Xbox, lol. Just no!




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    The Xbox brand has never been profitable for the long run. If they were depending solely on the gaming industry they would have went out of business years ago. The fact is that despite the success of the 360, MS bled the profits dry as the years went by. Globally the Xbox brand has never been very popular so revenue is lost over sees. MS just tried to use their name to succeed with the Xbox which has failed to firmly establish itself. This generation will make it even worse.

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    This is the same thing posted a couple months ago... change the first line, the rest is the same lol.

    http://www.psu.com/forums/showthread...-Xbox-business
    Last edited by F34R; 02-11-2014 at 06:08.




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    Xbox division won't be closed, no matter how many articles and news we keep hearing how investors want it gone. Bing however, MS needs to close it ASAP.
    Don't know enough about Surface to say anything.
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    Quote Originally Posted by Mael Duin View Post
    Xbox division won't be closed, no matter how many articles and news we keep hearing how investors want it gone. Bing however, MS needs to close it ASAP. Don't know enough about Surface to say anything.
    Yeah I honestly dont see them dumping the Xbox. And why would they if its making them money? I just dont see that happening.

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    In Xbox's life time they were firstly smashed by the SONY with the PS2 (150million) and then nintenso Wii (120million)

    I don't blame them for pulling out.

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    Quote Originally Posted by PS4freak View Post
    I would say killing Bing would be a good idea. It's fighting a major uphill battle. Surface as well but not as bad but still pretty severe. Xbox, lol. Just no!
    Off with Bing but I think Surface needs to stick around a bit longer. It might find a use in businesses. We almost got a dozen of Surface Pro 2s to use as thin clients in and out of the office.


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    Meh......articles like this are quoting the same guy over and over when it comes to Xbox.
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    Why would you want to sell a gaming division they make more than Hollywood don't they?
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    There is obviously something happening here where money is being lost due to Xbox, Bing, and Surface because if top tier investors are getting fed up, then something is definitely wrong and I'm quite sure there is a good reason for them wanting microsoft to pull out of Bing, Xbox, and surface. People that invest in a company, at least high end investors do their homework and what is happening behind closed doors, those investors know what's going on and they know if it's worth more to pull out.

    It's like I said before, if Microsoft broke all these things down into pattens and licenses, they would make a ton more money. like their android licensing alone making $2 billion just buy itself. I'm pretty sure this is what the investors want. It would be a clear cut money maker and more so than keeping it running at this moment.

    older article here. http://www.businessinsider.com/micro...alties-2013-11
    Last edited by Demi_God; 02-11-2014 at 13:23.

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    Quote Originally Posted by TGO View Post
    I don't think they should do it, the brand has been part of MS for a long time now and while they haven't had the same success as Nintendo or Sony has they have been successful which would make no sense to kill it off now

    Sent from my SGP321 using Tapatalk
    Even though X1 is behind ps4 right now, the sales numbers are still impressive and xbox now has a huge name and influence in the games industry. It will be a horrible mistake to kill it

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    The reason to kill the Xbox is not how its doing now, but what it would take to try to recover quickly eroding ground. MS has essentially destroyed almost every 1st party game studio they had, killed multiple IP franchises, and lost voluntary 2nd party exclusives.

    Next week is the PS4 Japan launch and will easily exceed 1 million in sales, possibly approaching 2 million. MS has not made an official statement as to when their 2nd Tier launch is even going to commence, and saying almost nothing about a Japan launch except the Japan Xbox executive hoping they do launch in Japan (probably because his job depends on it).

    MS knows they would have to reinvest billions in the Xbox brand to keep it from ending up in third place again. They would have to sink hundreds of millions into the Japan market, knowing in advance the XBO is probably DOA there. The whole Xbox management level is gone. The entertainment division will have to report to the CEO what it will take to become competitive again and the CEO will have to convince the investors it will be worth investing several billion more to get back market share.

    It wouldn't be unusual for MS to just walk away from the Xbox. They have done that multiple times with multiple products before. There was a time they were seriously competing with Tivo for the DVR market, with the UltimateTV. That competition was intense and when MS realized they were losing, they just walked away. The website www.ultimatetv.com was up for many years after it was canceled, even though MS had long stopped supporting it. Add WebTV and several other fizzled attempts to the list.
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    blig you make good point but there's a lot of leverage in the Xbox brand. i definitely think they messed up with the X1's execution but their idea was brilliant and it will still likely work, we just don't know this early into the generation. however, at this point, i don't think they will surpass the PS4 and i don't think X1 will do what it was meant to do but it will still do very well.

    had they priced it lower...maybe $300-$350, then i would say they had a shot against the PS4. they would have to axe kinect and lose money in ad revenues and a big differentiator between the PS4 and the X1...especially for the casual crowd.

    but price will be a factor moving forward so i think it will struggle.

    they don't need to spend billions to get billions back. they already have a strategy to move forward without a fierce gaming focus. and it will work. if not yet, it will work moving forward. there's a lot of potential to their plan and in some ways, they are trying to skip a generation. ahead of their time.

    not like Sony can't do that, but it's like the Blu-ray, Sony had a vested interest, so they went with it and supported it as necessary.

    MS will support their idea because they do not want to compete with Sony head-on. Sony already has billions invested in their infrastructure. MS doesn't seem to be interested in an infrastructure, hasn't been since their inception.

    MS' idea is just as good, just that it is going to have a tougher fight in the beginning. if they continue to sell and lower the price, i see no reason why they can't be very successful and go where Sony isn't yet. then Sony will be fighting an uphill battle when the market goes where MS already is.

    the challenge is to get to a spot where they can be stable. Sony's fight is to plan ahead and change their focus quickly when it's time. until then, fight as hard as possible to retain their advantage (core game development) until it's either irrelevant or possibly finds a new stand. after all, after Nintendo is pretty much gone and MS moving away from the field...Sony has all the nerdy core gamers to feed, that will benefit them...PC gamers will likely find PS4 more attractive than X1.

    so we'll see. but it's going to be definitely an interesting fight.

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    Quote Originally Posted by Demi_God View Post
    There is obviously something happening here where money is being lost due to Xbox, Bing, and Surface because if top tier investors are getting fed up
    who are those "top tier investors" you speak of and what percentage of shares do they own?

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    Quote Originally Posted by Yungstar 2006 View Post
    who are those "top tier investors" you speak of and what percentage of shares do they own?
    you tell me, all companies that have investors have high end or top tier investors that have put millions upon millions in the company and want to see a return. Somehow you don't know this and the fact that they do in fact do their homework on how a business can improve? they do.

    Investors that invest multiple millions in a company want a big fat return, show me where I'm wrong. Also, show me where I'm wrong where Microsoft doesn't have investors that have invested multiple millions in a company.
    Last edited by Demi_God; 02-11-2014 at 22:27.

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    Quote Originally Posted by Yungstar 2006 View Post
    who are those "top tier investors" you speak of and what percentage of shares do they own?
    ValueAct is one and owns 0.8% (said to be one of the largest shareholders @ MS). Also it is believed (unconfirmed) that they are the ones who forced Balmer into retirement.

    Here's some info from MS about them.

    http://www.microsoft.com/en-us/news/...ncementpr.aspx
    Last edited by Bitbydeath; 02-11-2014 at 22:32.

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