09-21-2013 01:26 AM
60 123
tools
  1. AR2186's Avatar
    I completely agree with all your points that follow the sentence I quoted. Unfortunately, it is a known fact that many institutional investors disagree. Institutional investors calling for a spin off have been a dime a dozen these last two years. I think if the XB1 sees success quickly and can at least break even, then nothing changes. If XB1 sales don't meet sales expectations, that is when things get complicated.
    As I've tried to explain, the shareholder base isn't correct for an activist spin off, and no one actually wants Xbox spun off, they want the business division (Office, Exchange, etc) spun off.

    No obe really thinks you can spin off Xbox because you wouldnt get anything for it, either by floating it as a separate company or selling it off. It is a part of Windows, just like Windows Phone and just like Windows Server
    09-18-2013 07:18 PM
  2. a5cent's Avatar
    As I've tried to explain, the shareholder base isn't correct for an activist spin off, and no one actually wants Xbox spun off, they want the business division (Office, Exchange, etc) spun off.

    No obe really thinks you can spin off Xbox because you wouldnt get anything for it, either by floating it as a separate company or selling it off. It is a part of Windows, just like Windows Phone and just like Windows Server
    I'm sorry, but it's your word against that of many others. Google can surface dozens of articles discussing a possible spin off. I'm not saying it will happen. Only that it isn't impossible.

    The point of a spin off isn't to get anything out of it. The point would be to get rid of a division that is a drag on the rest of the company.
    09-18-2013 09:24 PM
  3. spaulagain's Avatar
    I'm sorry, but it's your word against that of many others. Google can surface dozens of articles discussing a possible spin off. I'm not saying it will happen. Only that it isn't impossible.

    The point of a spin off isn't to get anything out of it. The point would be to get rid of a division that is a drag on the rest of the company.
    But its not anymore. Its back in the black for several years now. And has the potential to be a massive money maker.
    09-18-2013 09:45 PM
  4. a5cent's Avatar
    But its not anymore. Its back in the black for several years now. And has the potential to be a massive money maker.
    No. The Xbox 360 won't ever be a massive money maker. With the introduction of the Xbox One, it has become clear that the Xbox 360 won't ever earn the money back that MS invested into making it. Investors doubt that the Xbox One will do much better. You can't really blame them either. From their point of view, MS has spent ten years trying to prove the Xbox 360's viability as a profitable business and failed. Why exactly should that change now, with a new console that is much more expensive to produce and is sold at an even lower profit margin than the Xbox 360 was sold at in 2013? That is their thinking.
    09-18-2013 10:18 PM
  5. spaulagain's Avatar
    No. The Xbox 360 won't ever be a massive money maker. With the introduction of the Xbox One, it has become clear that the Xbox 360 won't ever earn the money back that MS invested into making it. Investors doubt that the Xbox One will do much better. You can't really blame them either. From their point of view, MS has spent ten years trying to prove the Xbox 360's viability as a profitable business and failed. Why exactly should that change now, with a new console that is much more expensive to produce and is sold at an even lower profit margin than the Xbox 360 was sold at in 2013? That is their thinking.
    Except over the past 3 years it has been profitable. The reason it went negative was because Microsoft screwed it up with the first one. And then the 360 released with so many issues. So now that it is profitable is when they should drop the whole thing? Bullsh!t.

    Any common sense investor will see the potential income from a device that stands to be in every families living rooms, has game licensing out the wazzo, can replace all cable TV DVRs in the near future, is a center for advertising for games, tv, and movies. And the list goes on.

    Their thinking is not represented holistically by the few loud mouths that have suggested spinning it off. I understand that some may feel that way, but not enough to sway the whole group.

    My company just got bought by investors. We actually aren't doing that well this year, but that's because we are having to make some sacrifices to position us for the future. This is a very common practice for investors. Microsoft is a big company and long term strategies are just that, loonnnnggg term.
    09-18-2013 10:40 PM
  6. AR2186's Avatar
    Pretty clear its not going anywhere after the FAM this afternoon.
    09-19-2013 10:10 PM
  7. a5cent's Avatar
    So now that it is profitable is when they should drop the whole thing? Bullsh!t.
    You are missing the point. The Xbox division is profitable because the 360 is now dirt cheap to produce and can be sold at a profit.

    With the release of the XB1 that changes. MS fully expects profits to shrink to nearly zero.
    09-20-2013 09:29 AM
  8. AR2186's Avatar
    They expect hardware profits to go away. They have also dropped the price of the Xbox as costs have decreased
    09-20-2013 10:56 AM
  9. spaulagain's Avatar
    You are missing the point. The Xbox division is profitable because the 360 is now dirt cheap to produce and can be sold at a profit.

    With the release of the XB1 that changes. MS fully expects profits to shrink to nearly zero.
    And they've also dropped the price and increased the specs as the costs dropped. Including the Kinect packages.

    The reason Xbox division lost so much is because they sold units at a loss and then had to replace the majority of them as they were suffering ring of death. Not to mention their revenue model was still being developed.

    With Xbox One they are no longer selling the unit at a loss. They've fine tuned the divisions operations and mastered their revenue model. They also have a strong market share to work from whereas before they were still the underdog having to make sacrifices in profit to gain market share.

    Microsoft will be getting revenue from game licensing, live memberships, subscriptions services like Xbox music, advertisements on all Xbox properties for movies, apps, music, games, etc. And they may get revenue through cable companies if they eventually move to replace everyone's DVR with an Xbox One or some sort of related product.

    Its actually a huge market opportunity, especially with all the additional functionality it will have over PlayStation.

    I don't know why you are so convinced that Xbox is forever destined to be a profitless division.
    09-20-2013 05:53 PM
  10. a5cent's Avatar
    I don't know why you are so convinced that Xbox is forever destined to be a profitless division.
    I'm not. You still think you are arguing with me, when all I'm doing is reflecting investor sentiment.

    I don't buy any of your arguments in regard to "MS having perfected their revenue model". MS hasn't perfected anything. MS has simply been backed into a corner where they have no choice but to to avoid large losses. The result is a console that is about as powerful as its main competitor, the PS4, but costs $100 more. That is a risky sales proposition. MS wouldn't make that gamble if they didn't have to.

    MS have opened up a few new revenue streams. It will be interesting to see how Xbox TV works out. It's still one big experiment though, and they really need it to work this time. That is all I'm saying.

    Anyway, I feel we are going around in circles at this point. If you still don't understand the point I'm trying to make then I'll have to accept that I failed to explain it well enough.
    09-21-2013 01:26 AM
60 123

Similar Threads

  1. Is it a bit late to jump on a 928?
    By novaprime9 in forum Nokia Lumia 928
    Replies: 10
    Last Post: 09-09-2013, 02:41 PM
  2. "Activist" hedge fund ValueAct weasels it's way onto Microsoft board
    By Bartdog in forum Microsoft News & Rumors
    Replies: 2
    Last Post: 09-04-2013, 10:26 AM
  3. So Elop Will Lead Surface and Xbox?
    By Ben Lehtovaara in forum Microsoft News & Rumors
    Replies: 2
    Last Post: 09-04-2013, 01:51 AM
  4. New to WP and the Lumia 520...few questions.
    By ShaneRay in forum Nokia Lumia 520
    Replies: 2
    Last Post: 09-03-2013, 04:04 PM
  5. Replies: 3
    Last Post: 09-03-2013, 03:33 PM
LINK TO POST COPIED TO CLIPBOARD