Microsoft’s CEO Satya Nadella has revealed they will not spin off the Xbox Division any time in the near future, despite pressure from multiple shareholders who see Xbox as a bad investment and something Microsoft should stop working on.
There were multiple reasons for Nadella wanting to keep the Xbox Division inside Redmond, the first being most of Microsoft’s hardware know-how is from the Xbox division and the Xbox One is the device that will enhance all experiences on all platforms.
Right now, Microsoft doesn’t make much profit from the Xbox One or Xbox 360 and has placed big bets on video games and consoles that have not paid off. Investors do not see this as a market Microsoft should continue to be active in.
Microsoft’s co-founder Paul Allen investment group Vulcan Capital was the first source to come out and say Microsoft needs to get rid of Xbox and should look to become a less consumer focused company, as the overwhelming majority of revenue comes from software and services to business customers.
Cloud based services and business management has become a core focus for Microsoft in the past decade, moving away from a full consumer end of software sales to a more enterprise focused company, with Microsoft Azure and OneDrive leading the charge.
The Xbox One might not be successful right now, the installed user base is below the PS4 at around six million units worldwide. The actual amount of money Microsoft make per console sale is pretty low too, meaning they don’t make profit on that area either.
What Microsoft needs is to sell a lot of Xbox Live Gold subscriptions, since they are $60 per year for basic Internet and multiplayer capabilities. First party titles that do well can add to their profits on the Xbox One, but overall the games console doesn’t generate a lot of profit or revenue for the company.