Microsoft's Xbox division doesn't make money, may be sold, claims analyst
Diminishing Windows profits to necessitate cull.
by Matt Maguire on 22 January 2013, 11:56 am
Microsoft will soon sell its entertainment division – the home of Xbox – according to a US business analyst.
The prediction was one of half a dozen that Forbes contributor Adam Hartung made regarding the company, whose future he claimed was already in jeopardy.
“No matter how much anyone likes the non-Windows Microsoft products, without the historical Windows/Office sales and profits, it’s hard to see how long Microsoft can remain sustainable,” he wrote.
“Microsoft makes nothing from its Xbox/Kinect entertainment division, while losing vast sums in its on-line division (negative $350M-$750M/quarter).
“The entertainment division could be spun off, sold to someone like Sony or possibly Barnes & Noble, or dramatically reduced in size.
“Unable to make a profit it will increasingly be seen as a distraction to the battle for saving Windows, and Microsoft leadership has long shown it doesn’t know how to profitably grow this business unit.”
Slow sales of Microsoft’s Surface tablets and Windows 8 were also harbingers of doom, claimed Hartung.
“Expect substantial layoffs over the next 3 years,” he wrote.
“They could even reach 50-60%, or more, of employees.
“The future is looking very difficult for Microsoft–and for your investment if you own Microsoft’s stock.”
While I'm not that surprised that the Xbox division hasn't been profitable (Sony has been in the same boat). I don't believe that the online-division just means XBL, Microsoft has other major online ventures like Bing and it is difficult to compete against Google.
Articles 7 months ago that I could find show that the Xbox division is profitable:http://www.gamesindustry.biz/articles/2012-07-19-x
If anything in that article is true, Microsoft should cut their losses and cancel the X720, it wouldn't make any sense to develop a next generation console if there are concerns with the division's profitability in the long run...
Wow, I wouldn't mind if Sony picks up the Xbox. There are plenty of its games to be had....
Then we can finally kick the "PS3 has no gaems."
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I saw a similar article on egn
I hope its true.I want MS to crash and burn so bad.
MS you turned your back on the core gammer and decided you rather make Mommy and Daddy and the little brats happy.Then go on to be hypocritical when not offering adult themes and avatar selections to please mommy and daddy then allowing adult advertising like beer to show up on your products for the 360.I could go on and on..
I just hope you Crash and Burn now.I want to see this happen so I can laugh at your destruction.
I don't care about MS or the xbox, but I want what is better for the gaming world.
im afriad its very much true, i reported this same concern rumor a few months back. One thing they could be doing is stop doing gaming hardware consoles and start puting it all in the software part. This is what I think and alot of guys think xbx720 is going to be something like a online gaming network only. Not a pure hardware console device. maybe a some type of cable box or dish to excesss a netwrk via online. which would be cheaper to do becuase can they focus on software and they have a online network. a dish to make is no more than 100$
A pc market software gaming selling site like apple store. hp store. .etc etc. If you notice everyone is going the mobile, digital route and pc route becuse its cheaper if own alot software. I agree they made money but you alway have debts to meet which will always tke like 60% or something like that. Psn and ps+ and ps home program is saving sony skin genre. They are smart they broke even on the hardware on the console 2-3 yrs ago and seeing is profits and the software is doing great profits.
This is why e3 2013 is a huge deal, we have to what they say, this will effect the gaming climate worldwide. This is very close to what nintendo did when they were looking at closng dwn rumors and the ceo gave a remarkable speech. Saying "nintendo is about hardware and will continue to make hardware!!." Not did he stand firm it rang true for them. lol. They ran away with wii console and nevr looked back.
But think they be ok they have good folk with degree there., they are very good in the digital software gaming buisness. there only costly fault was fighting apple yrs ago and trying to put them out of biz a few yrs ago almost did.. Apple came back and they are not joking with Ms in any fashion they are trying to put them under. I find it unique that apple didnt try harm nintendo or sony directly they went right after Ms. Although sony and ninted took a lot hits from the war apple is on with Ms. Its rumored apple is making a huge announcement at e3 2013. I think and they are going totry to finsh ms off once and for all. I honestly think nintendo and sony will some how survive if they(apple) do get into gaming but ms not so much.
Like they always say never try to run the old dog out the yard. He been around longer and he will fight to the end to stay in the yard..
vp-psn legioniaree group.
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I have confirmed that the Online division of Microsoft does not include XBL, it basically includes Bing search and MSN portals.
XBL is part of the Interactive Entertainment division
Here is a visual representation how Microsoft's various divisions stack against each other in terms of profitalbility. Based on this chart, I see no reason for Microsoft to drop the entertainment division. It may not be hugely profitable for Microsoft, but they aren't making the losses like the online division consistantly does...