Satya Nadella has some tough choices to consider for this year. He is Microsoft’s new CEO who has been called to dump the Microsoft’s Entertainment and Devices division that comprises of Xbox and Surface. It seems that new pressure from two influential shareholders has been put on the Microsoft. They want Microsoft to give up the video game industry and hardware and only to focus on its services and software. We have been hearing rumors regarding this issue for many years that the investor are quite concerned about the profit from the Microsoft’s Entertainment and Devices division because this division is less profitable as compared with other division.Investor consider this division as an unnecessary distraction. They speculate that this division will hardly make enough profit to be worthwhile.
According to investors, Bing is making a loss these days. The Entertainment and Devices division was doing great until 2008 and they thought that the primary reason of this profit was xbox business; though we don’t get the complete breakdown of profit of this division.
Investor say that Xbox business is still several billion dollars in red. The main reason is that they spend a lot for entertaining into gaming world and also on the research and development of Xbox One. Although they are making the profit the division but this profit is simply negligible when compared to Microsoft’s other divisions.
According to Washington Post, even Microsoft co-founder Paul Allen is agreed that Microsoft should sell the Xbox business as the investors are highly concerned about negligible profit of the division.
Satya Nadella surely has some pressure from the investor. He might consider advice of Paul Allen but he is also taking pieces of advice from other advisor such as Bill Gates on how to run this particular side of the business. Actually, his background is not in hardware, so he surely needs to know what the experts of this field are thinking. Rather than dumping xbox, he wants a better plan.
Although Microsoft didn’t give a hint that it will drop Xbox brand yet speculators have started thinking about the buyer of this division. They thought that Microsoft won’t like to sell it to its close rivals such as Google or Apple. Sony can’t afford this division at this moment. Therefore, all hot gamers speculate that Nintendo could be the possible buyer. They have enough money to buy Xbox Brand and they have been also talking about mergers and acquisitions. The cost of Xbox would surely be quite high, we don’t know exactly whether Nintendo will be ready to spend billions of dollars or not.
Question of buyer will only arise when Nadella makes a final decision. There is also a possibility that Xbox brand will not be sold. New CEO might stand for the future of Xbox and make some profitable plans