Microsoft Is Planning A Restructure, But An Analyst Thinks That The Company Should Sell Xbox
According to sources, Microsoft is planning a major restructure. The chief executive officer, Steve Ballmer, will try to reconfigure how the company runs internally. According to a letter to investors, Ballmer wants Microsoft to focus on devices and services in consumer and enterprise markets.
“This is a significant shift, both in what we do and how we see ourselves – as a devices and services company. It impacts how we run the company, how we develop new experiences, and how we take products to market for both consumers and businesses. The work we have accomplished in the past year and the roadmap in front of us brings this to life,” wrote Ballmer in the letter.
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The restructure could see key executives gain more duties and responsibilities. The executives in question include Interactive Entertainment’s Don Mattrick, Skype president Tony Bates, and Serves and Tool president Satya Nadella.
The whole idea behind the restructure is to simplify a very complicated management structure. According to reports, there is a lot of infighting and corporate clashes. In fact, one of the reasons given by Windows president Steven Sinofsky as to why he left was due to the disagreements.
While that sounds all very fair, an analyst has offered his thoughts on the matter. Nomura Equity Research analyst Rick Sherlund has noted that the planned change is due to shareholders looking for better returns on Microsoft stock. He further notes that Microsoft should sell the Xbox and Bing search divisions.
Now, Sherlund does note that the Xbox division is doing well, however “it doesn’t seem like a good enough business for Microsoft to focus on.”
I’m, however, not too sure what Sherlund means. Microsoft has just invested billions in the development of a new console. And that new console will be a product that can include all of Microsoft’s systems into one. Basically, it’s a way for Microsoft to expand Skype, its server-base systems, as well as Windows. Why would it be a bad thing to keep? How could it be a bad thing?
“There is a shift in the wind upcoming for Microsoft, with shareholders likely demanding a greater say in the direction of the company and how it might be run to drive a better return to shareholders. We think there are a number of things that could be done to improve the return of cash to shareholders and improve the profitability and cash flow of the business,” he believes.
“Xbox is one of the areas of success for Microsoft and is cool to consumers, but it is perhaps time to assess whether this can ever be material to the overall company and might be more leveragable to a consumer-oriented company such as Samsung. Perhaps they would be willing to pay several billion dollars for this to leverage their substantial consumer electronics business?”
To be frank, Microsoft has a fair share of problems. The restructure is definitely a good idea and everyone will soon be in a role that can help the company be more efficient.
As for selling off Xbox, and Bing, well..
Xbox, coupled with Kinect, and loaded with Skype and Windows 8 is an ecosystem on its own. Skype allows Microsoft to be involved in quite possibly the largest social network and instant messaging system, helping the Xbox move forward socially. With Kinect, they’re able to control the living room. Combine Skype and your living room, and that’s a whole new world on its own. Families connecting to one another all over.
If anything, Microsoft will not succeed as much without all of it working together. What they can achieve in terms of growth and market share, with this system, is great. The new Xbox far surpasses that of just ‘games’.
Actually it’s quite evident that Xbox is no longer just games. There’s a much broader picture here, but we know this, because we’ve seen the reveal show.