Microsoft CEO Satya Nadella told the inaugural code conference that despite pressure from some shareholders there was no way he was going to spin off his Xbox business. In fact Nadella said he was pretty pleased with the way the Xbox business was going and had no plans to do anything different. He notes that prior to Nokia, Xbox is where all of Microsoft’s hardware know-how came from.
“It is the thing that is really going to power all the experiences on all the devices today and tomorrow,” Nadella said. “In order to be in the hunt for those experiences, and get it right, you do need to from time to time build devices, so you don’t leave anything to chance.”
Rumours that Redmond was planning to spin off the Xbox business were common currency late last year. Cofounder Paul Allen's investment group Vulcan Capital was the source of some of the rumours which stated that the next Microsoft CEO would be smart to consider spinning off the company's consumer business, which includes search advertising and the Xbox brand.
Vulcan Capital chief investment officer Paul Ghaffari went on record as saying that the "overwhelming majority" of Microsoft's revenue is generated by selling software and services to business customers and Redmond should stay focused.
"The search business and even Xbox, which has been a very successful product, are detracting from that. We would want them to focus on their best competencies," Ghaffari said. "My view is there are some parts of that operation they should probably spin out, get rid of, to focus on the enterprise and focus on the cloud."