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Thursday, 07 October 2010 09:27

Microsoft should spin off Xbox 360 business

Written by Nick Farell

Beancounters suggest
Microsoft would do really well if it spun off its Xbox 360 business from Redmond. According to a report prepared by analysts at the investment bank Goldman Sachs Redmond should spin out its entire Entertainment and Devices division, which includes all the business elements linked to the Xbox 360 home gaming console.

Goldman Sachs said that the Entertainment and Devices division can exist on its own after achieving profitability at some point in 2008, with profits reaching 679 million dollars for the most recent fiscal year report.

The outfit handles the Zune music player and the Windows 7 Phone operations, which are set to be more closely integrated with the gaming platform Xbox Live.

The report from Goldman Sachs said that Xbox products could be an appealing stand-alone entity. “Given the historical success of the Xbox and the products’ brand strength, the business could show unlocked value with forced cost discipline compared to as a piece of Microsoft.

It adds that the company’s comments suggest that management still sees significant value in combining the consumer and enterprise efforts, but we view a foot in both camps as preventing a successful focus on one strategy.

Nick Farell

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+6 #1 Roseman 2010-10-07 11:59
I'm pretty certain from what Steve Ballmer has said in all of his recent interviews that this was exactly his strategy all along. To have one half of the company very consumer focused and the other half very enterprise focused. He even said that companies have to do this to survive.

It does fracture the business a bit, but if you look at google their success rides on the freedom within the company. Where there is commonplace between the enterprise and consumer interests there's nothing stopping them from working together on it, I think it's the way forward, I think they're doing a great job.

But this is just my honest opinion.
+5 #2 nECrO 2010-10-07 18:12
Spinning off the entertainment division may be good for that division, but would it be good for Microsoft? Traditionally, you spin off a part of a company to either benefit both or to protect one from the other.

Does this situation fall into either category? Who knows? Not me, but it is worth thinking about.
0 #3 AndromedaB 2010-10-09 02:13
0 #4 blandead 2010-10-10 05:51
analysts should spin themselves off a bridge
0 #5 Wolfdale 2010-10-10 22:58
Quoting nECrO:
to protect one from the other.
Does this situation fall into either category?

im pretty convinced that this is not the case,
microsoft as in windows (corporate and consumer) can very well stand alone, it is a massive company and has a very, very solid base in the world,
they wont suffer from a split, i think in many reasons, they would gain from the split

and the same goes for the gaming division,
they have proven themselves in the past years, and i think it would be very wise to split up from being a single hussle of different companies all under the name of microsoft,

they would still cooperate and live under the microsoft global wing, but the division itself should have freedom

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