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[Synth]

Sega Xbox.

It's probably too late now (Sega are no longer who they used to be), but really this is what MS should have done in the first place. They would have had tons of valuable IP to start out with, and may not have been blown up so badly in Japan and Europe in both preceding generations.

They also probably wouldn't have bought Rare.. so everyone wins.

 

[Chozolore]

I've got a business degree. Now, it's just a bachelor's (Information Systems), not an MBA, but I had to take two terms of finance, three of economics, three of accounting, one of operations management, et al.

No offense, but if half the people in this thread had ever taken one finance class, the discussion here would be completely different. The amount of ignorance so far is, well, understandable, I guess. It's a gaming fan site.

yet no insight from you,hmmm

 

[Mr Swine]

I feel that after 9-10 years in the console market, MS still doesn't know what to do. One would think that after the 360 they would know alot better about the market than having all these PR fiascos one after another with the Xbone. I honestly think they would have faired alot better if they made the Xbox division a software powerhouse like Nintendo instead of nearly killing all their in game development studios :/

 

[numble]

This investor and his lackeys can kindly go and fuck themselves. Last I checked Xbox was one of the few division that was making them a decent profit. Besides isn't MS turning into a 'devices and services' company ?

Check again. XBox is not a division, and there are some divisions that do more than a "decent profit":

Yeah, there's no source for the Xbox numbers there either...

They want to get out of the whole division. Even if there were massive losses on other products in the division, the XBox clearly has not done as well as other divisions, and even an optimistic 20% profit margin (I'd bet any margin isn't even above single digits) brings down Microsoft's overall margin.

 

[Hindle]

So realistically what are the chances of them selling the division?

 

[Dacvak]

I can certainly understand their perspective. And given the current consumer/jouralist opinion of the Xbone and the assumed cost of it, I'm not surprised. It'd probably be a smart move for Microsoft, honesty.

 

[Gorillaz]

So realistically what are the chances of them selling the division?

Personally, I see them waiting out this gen or at least 5 more years. Next Gen rolls around and they do the math for how much RnD cost.....they might just say "fuck it"

 

[Diddy Kong]

If the xbox division is shuttered what will happen to the RARE IPs?

Unless Ninty decides to get them probably the same thing they're doing now.

 

[Hindle]

Personally, I see them waiting out this gen or at least 5 more years. Next Gen rolls around and they do the math for how much RnD cost.....they might just say "fuck it"

Why would they be spending billions on the X1 If they were going to pull out of the industery in 5 years?

 

[SneakyStephan]

How in the hell has Microsoft not made money off of Xbox?

RROD cost them a lot of money I assume, look at how many gaffers are on their 3rd-4th-5th xbox 360.
Mine broke after my warranty expired (It didn't get played on much) so I never bought a new one.

All those refurbs and replacements probably add up fast.

There's a graph somewhere that shows their losses year after year, they lost billions in the first 3 years after release, more than they've been able to make back in profit since.

 

[Coolwhip]

Why would they be spending billions on the X1 If they were going to pull out of the industery in 5 years?

Once they find out the battle for controlling the TV is lost, who knows. And it's not uncommon for the direction of a company to change with a new CEO.

 

[Parch]

A lot, but not so much as no one could pay up. If they are sold, I just hope they sell their IP's and studios instead of putting them on windows 8 exclusive, that is the true worst case scenario.

I'm not sure there's anybody who would want to pay. It's not like they have to if they wanted to get into consoles. They could just start their system with new IP's, or go shop for them like everybody else.

I'm betting most companies would rather not pay MIcrosoft a damn thing, especially if Microsoft think those IP's and franchises are so valuable. That type of initial investment is exactly what would make it difficult for the new guy.

I don't think it's necessary for someone to "take over" Microsoft's gaming division. I'm not so sure there's anybody who even wants to.

 

[jcm]

Siri kinda sorta?

Siri isn't a product, though. If this list is accurate, they've never just bought and remarketed a product line.

 

[N.Domixis]

Oh god, I may be a sony fan but selling of the xbox division sounds terrible. I do not want sony all by them selves. Sony would be able to do anything they want and I have no choice.

 

[smokeandmirrors]

Investors gave MS time to create a new avenue with Xbox, it's not bringing in the $$$$ as they hoped for
They want MS to give up or start selling it off and go back to it's roots
Sooner or later investment calls are made, if the company like sit or not

It's funny because their 'roots' have almost stagnated at this point. Although I think everyone at Microsoft is unavailable to think ahead right now.

 

[Row]

Why would they be spending billions on the X1 If they were going to pull out of the industery in 5 years?

They're spending billions to achieve certain goals. If those goals aren't met or at least significant progress shan't been made toward them it makes sense to cut their loses and shift the resources elsewhere.

And those goals are definitely not gaming related

 

[avaya]

I see a re-org and spree of acquisitions.

On the list of things to do addressing the personal mobile market and ring fencing the business product lines must be priority, this wouldn't make Xbox a big deal for the new CEO at least not immediately.

Potential BlackBerry acquisition, which they should have done bloody years ago.

 

[Lasthope106]

This investor and his lackeys can kindly go and fuck themselves. Last I checked Xbox was one of the few division that was making them a decent profit. Besides isn't MS turning into a 'devices and services' company ?

I don't think you know what you are talking about. The Xbox division is still in the red. Making millions for a few quarters is not what shareholders are expecting when the rest of the MS divisions are bringing in Billions.

 

[BLACK AMERICAN PSYCHO]

Who the hell would even buy it?

 

[neptunes]

In about 1 year, we will have solid numbers on XB1 and Microsoft will of course have fiscal reports from the financial years end and new projections, I think the future of the XB1 lays entirely on the launch. And whoever the new boss is of course.

You honestly think the success of a new product is going to depend entirely on its launch period? Which is usually the beginning of any product life cycle?

by this logic the PS3 was a total failure

 

[avaya]

Who the hell would even buy it?

Amazon or Samsung. For them making money doesn't really matter.

 

[Coolwhip]

Who the hell would even buy it?

Nintendo, just so they can sell a Wii U X bundle called Xbox.

 

[~~Hasan~~]

lol

 

[Chobel]

You honestly think the success of a new product is going to depend entirely on its launch period? Which is usually the beginning of any product life cycle?

by this logic the PS3 was a total failure

I don't think that what he means. It depends on launch because a new CEO is coming next year and that CEO (unlike Balmer) won't care about Xbox if it's not making enough profits by the time he takes control of Microsoft.

 

[PJV3]

How much have they sunk into the latest console? it sounds like billions on software and services alone.

 

[Grimhammer]

Yeah....because xbots would love an increased sub.
No...they should just need to drop kinect and focus on games....throughout the lifecycle.

 

[Mystic_Wanderer]

This investor and his lackeys can kindly go and fuck themselves. Last I checked Xbox was one of the few division that was making them a decent profit. Besides isn't MS turning into a 'devices and services' company ?

This is brilliant!

 

[zomgbbqftw]

Amazon or Samsung. For them making money doesn't really matter.

I think a sale to Samsung would be difficult for MS given how well Samsung are doing in the very area that they are weak (mobile). If they sold it to Samsung and then Samsung go on to make a success of it the decision would then look like a bad one.

I think a sale to private equity would be the preferred option for MS as they would not be selling a potentially profitable/important division to a competitor and the buyers would probably not do very well with it, validating any sell off, and any undervaluing of the business to get rid of it.

The only advantage in a sale to Samsung would be to screw over Sony, and I could see the current senior Xbox management pushing for such a move, but with a new CEO and potentially new management, cooler heads would probably rule and they probably wouldn't view Sony as a real concern for where they are headed (enterprise, b2b) and would prefer setting it up to fail.

 

[Ginko]

Do you have a source for those numbers? Somebody's ass doesn't count as a source.

Seriously. The quality of the discussion in this thread is deteriorating dramatically with these un-sourced charts that keep popping up.

I really think GAF should monitor the quality of self-created data and stop false information from spreading like these charts in here.

EDIT: Also, stop saying that the Xbox division will be sold. It won't. If anything, it'll be spun-off, and that's still unlikely.

 

[digoutyoursoul]

That gif gets me everytime

 

[Sydle]

They're spending billions to achieve certain goals. If those goals aren't met or at least significant progress shan't been made toward them it makes sense to cut their loses and shift the resources elsewhere.

And those goals are definitely not gaming related

If a goal is growth then they have to be in growth markets. The video game market has grown every generation, so it would be stupid to just exit if MS has any aspirations of being in consumer entertainment ever. Especially when the market is getting ever so close (inside the next 10-15 years) to being more of an online service and content (games, music, movies, TV) business which have far higher margins. There's just too much established at this point: the 360 doubled its install base, Live makes tons of money, and MS just got the TV services studios in motion and more game studios.

They need to keep their Xbox strategy in place, because it's growing. The tablet and mobile phone markets need to be key focus areas, because if those grow then there is certainly Windows growth, as well as Office and Xbox (entertainment content/services) growth potential. With more subscriptions to services there are more advertising sales opportunities within content to continue growing the ecosystem.

 

[Mystic_Wanderer]

Seriously. The quality of the discussion in this thread is deteriorating dramatically with these un-sourced charts that keep popping up.

I really think GAF should monitor the quality of self-created data and stop false information from spreading like these charts in here.

I concur; one cannot spread blatantly false rumors like "TITANFALL NOW PS4 EXCLUSIVE", so letting BS charts/graphics slide is a poor choice.

 

[Row]

Yeah....because xbots would love an increased sub.
No...they should just need to drop kinect and focus on games....throughout the lifecycle.

Terrible idea form an investor POV

Investors want growth. When you invest, for example, $100 in a company, do you want that to stay at $100 year after year with a $0.23 dividend every quarter? No, you want it to increase and see that $100 go up to $150, $200, etc. The higher the better.

MS growth was stagnating, so they started making hardware to generate growth and sofar it hasn't worked and there have been many failures, the Xbox included when you look at it strictly from a profit and growth perspective.

MS isn't going to generate growth focusing on games, which is why they really want to tap into TV with the XB1 as that's where they can make big money. If they can't do that, then it's easy to see why investors would want them to stop wasting time and money on it.

 

[DR3AM]

didnt investors tell sony to drop out from their electronic department?

chances of this happening are very slim, the guy owns 1% in MS

 

[avaya]

I think a sale to Samsung would be difficult for MS given how well Samsung are doing in the very area that they are weak (mobile). If they sold it to Samsung and then Samsung go on to make a success of it the decision would then look like a bad one.

I think a sale to private equity would be the preferred option for MS as they would not be selling a potentially profitable/important division to a competitor and the buyers would probably not do very well with it, validating any sell off, and any undervaluing of the business to get rid of it.

The only advantage in a sale to Samsung would be to screw over Sony, and I could see the current senior Xbox management pushing for such a move, but with a new CEO and potentially new management, cooler heads would probably rule and they probably wouldn't view Sony as a real concern for where they are headed (enterprise, b2b) and would prefer setting it up to fail.

I agree with that, for Xbox fans the best scenario if a sale were to happen would be a sale to Samsung. The private equity option is interesting and I'd also imagine PE would shit the bed with it rather quickly since the business isn't really a free cash flow monster able to service debt and there are few tangible assets to raid for distributions. Then again I was surprised Freescale turned out as well as it did for Blackstone though it's probably an exception to the rule.

 

[zomgbbqftw]

Seriously. The quality of the discussion in this thread is deteriorating dramatically with these un-sourced charts that keep popping up.

I really think GAF should monitor the quality of self-created data and stop false information from spreading like these charts in here.

EDIT: Also, stop saying that the Xbox division will be sold. It won't. If anything, it'll be spun-off, and that's still unlikely.

Which mugs would buy those shares?

Investing in a one product company that is up against a better capitalised competitor (Nintendo) and conglomerate (Sony) with profitable divisions to subsidise a loss leader business model is a mug's game.

 

[dragonbane]

Seriously. The quality of the discussion in this thread is deteriorating dramatically with these un-sourced charts that keep popping up.

I really think GAF should monitor the quality of self-created data and stop false information from spreading like these charts in here.

EDIT: Also, stop saying that the Xbox division will be sold. It won't. If anything, it'll be spun-off, and that's still unlikely.

It could. Gaming consoles are likely on their way out anyway and the profit of the Xbox division is piss poor compared to Windows. If the investment doesn't pay off soon or worst One actually makes less money than 360 then why would an investor still be interested in it?

 

[Chobel]

So in case they're considering selling Xbox division (I hope not), when will that happen? next year or the end of next generation (2018/2019)?

 

[casmith07]

Might be old but I read online somewhere that Ballmer was set to retire soon?

Edit: he's stepping down at the end of the year as CEO, but will remain on for up to 12 months to help transition.

http://www.marketwatch.com/story/mi...to-retire-2013-08-23-91033834?dist=lcountdown

 

[avaya]

Which mugs would buy those shares?

Investing in a one product company that is up against a better capitalised competitor (Nintendo) and conglomerate (Sony) with profitable divisions to subsidise a loss leader business model is a mug's game.

Say a partial spin-out with MSFT still holding a fair chunk of equity. Would be tempting for high yield investors....totally binary bet on MS ponying up the capital when things go tits up though.

 

[Skinpop]

as much as i don't like MS it would be a sad thing to see xbox disappear

 

[Jonm1010]

Check again. XBox is not a division, and there are some divisions that do more than a "decent profit":

They want to get out of the whole division. Even if there were massive losses on other products in the division, the XBox clearly has not done as well as other divisions, and even an optimistic 20% profit margin (I'd bet any margin isn't even above single digits) brings down Microsoft's overall margin.

So would Xbox comprise of just the entertainment division or are things like Xbox live rolled into windows live?

Either way I would make the case that the original Xbox is now a sunk cost. It's over, it's done, it's not rational to make decisions based on it at this point. Today it seems the Xbox brand as a whole is profitable and it is generating a steady stream of profit between console sales, license fees, games and Live. There is also the non-monetary benefits of the brand which are brand loyalty, brand awareness and brand favorability(although severely hurt by the XB1) that helps microsoft as a whole. I suppose one could argue that some of the people in the division could be better used in other divisions with more profit potential and that's a legitimate argument. However I feel like just up and leaving consoles altogether before playing out this up coming gen would be rather foolish. Especially given that the grunt work of building your brand and establishing a customer base has already been done and the next gen consoles seem to aim for day one profitability. Plus the xbox brand and infastructure has a lot of potential and growth and perhaps a new philosophy from a new CEO could shake things up and deliver an even better Xbox brand.

 

[Gorillaz]

Why would they be spending billions on the X1 If they were going to pull out of the industery in 5 years?

Because being just a video game console isn't their final goal. Its the be all end all service in the home

 

[CassidyIzABeast]

Reminds me of the guy who wanted Sony to sell of their Entertainment divisions.

 

[zomgbbqftw]

I agree with that, for Xbox fans the best scenario if a sale were to happen would be a sale to Samsung. The private equity option is interesting and I'd also imagine PE would shit the bed with it rather quickly since the business isn't really a free cash flow monster able to service debt and there are few tangible assets to raid for distributions. Then again I was surprised Freescale turned out as well as it did for Blackstone though it's probably an exception to the rule.

Yeah, I really think that's the big attraction for a sale to PE, hoping they shit the bed and validate the sale of the division for a knock down price.

Freescale is definitely an exception. I've seen too many PE deals go bad with the PE company selling the assets of piecemeal to get their returns in the end.

Say a partial spin-out with MSFT still holding a fair chunk of equity. Would be tempting for high yield investors....totally binary bet on MS ponying up the capital when things go tits up though.

Unless MS gave a guarantee that they would pony up (doubtful) and maintain the stake for at least 5 years before starting a gradual sell off, regardless of how well or poorly the shares perform in those years I would be wary of an investment in Xbox. Very wary.

I really hate assessing one product companies, they always make me uneasy. Great potential to make money if they strike gold, but massive loss potential if they fail to do so.

 

[Randolph Freelander]

So in case they're considering selling Xbox division (I hope not), when will that happen? next year or the end of next generation (2018/2019)?

If they decide to bail out, it's not a 6 year plan. They aren't going to ride this generation out like it's a retirement tour.

 

[MrNyarlathotep]

People are seriously questioning the level of loss incurred by the first Xbox?
The one that cost MS money on every unit sold?
The one with the deal where nVidia fucked them so hard on the GPU manufacturing costs, that MS have never went back to nVidia, and killed off all hardware production the second the 360 was released?

River in Egypt time, I guess.

 

[soulassssns]

lol @ Investor

 

[Randolph Freelander]

So would Xbox comprise of just the entertainment division or are things like Xbox live rolled into windows live?

Either way I would make the case that the original Xbox is now a sunk cost. It's over, it's done, it's not rational to make decisions based on it at this point. Today it seems the Xbox brand as a whole is profitable and it is generating a steady stream of profit between console sales, license fees, games and Live. There is also the non-monetary benefits of the brand which are brand loyalty, brand awareness and brand favorability(although severely hurt by the XB1) that helps microsoft as a whole. I suppose one could argue that some of the people in the division could be better used in other divisions with more profit potential and that's a legitimate argument. However I feel like just up and leaving consoles altogether before playing out this up coming gen would be rather foolish. Especially given that the grunt work of building your brand and establishing a customer base has already been done and the next gen consoles seem to aim for day one profitability. Plus the xbox brand and infastructure has a lot of potential and growth and perhaps a new philosophy from a new CEO could shake things up and deliver an even better Xbox brand.

Look at that graph. Look at it. Look at the big red, green, and blue sections. Then look at the microscopic violet section. Look at it again. Take off your gamer goggles and look at the data that's right in front of you. (This isn't so much at you as it is a lot of people.)

For being such a growth division, it ain't growing much. It's certainly understandable if investors are looking at the same thing and growing ever more impatient, particularly if they believe that the resources being devoted to that division could be better spent on the more profitable areas to drive larger returns.

 

[Melchiah]

Yeah, there's no source for the Xbox numbers there either...

From the thread.

the graph is the result of computed data of the 3 companies public declared incomes

I believe Jokeropia took operating income numbers from financial statements, and made a cumulative graph. It's not the same as cash assets though, but might give you an idea of how much each company makes.

http://neogaf.net/forum/showpost.php?p=19625451&postcount=103

Updated with Microsoft 2nd Quarter 2010 FY earnings
http://www.microsoft.com/msft/earnings/fy10/earn_rel_q2_10.mspx

Updated with Nintendo / Sony 3rd Quarter 2010 FY earnings
http://www.nintendo.co.jp/ir/pdf/2010/100128e.pdf
http://www.sony.net/SonyInfo/IR/financial/fr/09q3_sony.pdf

More in the link.