In the last few months, we have been hearing all kinds of online rumors about Microsoft dismantling its tech empire and selling off the Xbox and Bing divisions. The reasons for this decision were specified in these articles circulating online. But, they were enough to keep the Microsoft help line numbers busy with queries from concerned Xbox users.
Microsoft CEO issues a clarification
All eyes were on the new Microsoft CEO Satya Nadella, to make the announcement regarding these decisions to sell off Xbox or Bing or both. And, soon after he took over as CEO, Mr. Nadella clarified that he has no plans for selling off any of the Microsoft’s tech divisions, Xbox or Bing. This statement was then posted on the different Microsoft help line forums and websites online.
This whole thing started when reports emerged online that one of the candidates for the CEO position – before Nadella was appointed – Stephen Elop, now the Executive Vice President of Microsoft’s Devices & Services division, might consider the option of selling off the Bing and Xbox divisions to focus on the tech company’s core businesses, Windows OS and MS Office. And, this was by no means actually Microsoft decision.
Then one thing led to another. Soon, reports started circulating online that with the new CEO, there would be a complete restructuring of the Microsoft businesses, and the company would try its best to revive its position in the OS market, by focusing on profit-making projects. Though very popular, the Xbox and Bing divisions are actually loss making units for the company.
The main reason for this is the stiff competition Microsoft faces from Google and Sony in both these categories. Microsoft had to pump a lot of money to compete with these big tech rivals. They spend a lot of time developing and testing the Bing search, which could not make that much of an impact in the Search Engine market.
Similarly, stiff competition from the Sony PlayStation series is forcing Microsoft to keep the prices of Xbox consoles low. In fact, Microsoft had to reduce 100 dollars from the new Xbox One by removing the Kinect motion sensing device from the package.
But, this is how the tech industry works. You need to spend a lot of money on research and development, marketing, etc when launching a new product. And, you might not see any profit for the first few years. Microsoft gets enough revenue from its other divisions. So, they can easily absorb these losses.Google+