The CEO of Microsoft is being pressured by investors to drop the company’s Entertainment & Devices division, which produces the Xbox gaming system and the Surface tablet. While the Xbox business is several billion dollars in the red, investors are less concerned with the Xbox and more with the search engine Bing, which is currently making a loss. Investors argue that the company should focus on software and services only.
This latest development has been a long time coming. Entertainment & Devices was losing money until 2008, and while Microsoft has yet to release a detailed report of what is responsible, it’s now making profits (presumably thanks to the Xbox). However, the aforementioned profits have been negligible compared to Microsoft’s other divisions (see the graph below).
According to the Washington Post, even the co-founder of Microsoft, Paul Allen, thinks the Xbox should be sold to another company so that Microsoft can focus on its declining Windows business. And compounding this is the fact that current CEO Satya Nadella does not have a hardware background.
Whether Nadella will actually sell the Xbox is hard to say. If he does, who would he sell it to? Apple or Google seem unlikely as they are very close rivals to the company, and Sony seems even less likely as competing with the PlayStation is the reason Microsoft began producing the Xbox in the first place.
Interestingly, the most likely option seems to be Nintendo – CEO Satoru Iwata has hinted recently that the company may be interested in mergers and acquisitions, though Forbes analyst Adam Hartung suggested the even more bizarre option of companies not associated with the gaming industry such as Barnes & Noble.
At this point, however, speculation is simply that. Nadella is reportedly consulting with advisors such as Bill Gates on how to run E&D. They may not sell at all. Until Nadella makes the future of the Xbox clear, we can only wait.
