Will Microsoft Sell Its Xbox Division?

Source: Getty Images

Source: Getty Images

In an interview yesterday with Fox Business, Microsoft (NASDAQ:MSFT) co-founder and former CEO Bill Gates was candid about his views on the company, including the possibility of selling off the Xbox division. If Microsoft’s recently appointed CEO Satya Nadella wants to do it, Gates said, he would “absolutely” support the decision.

Once Gates’ comments were picked up by gaming sites, however, Microsoft moved quickly to reassure gamers. The company’s communications lead Frank Shaw gave GameSpot the following statement: “Mr. Gates’ comments today were reflective of his support of Satya as CEO. As Mr. Gates noted, Microsoft is committed to gaming across multiple platforms with Xbox as the centerpiece of our gaming strategy. We remain committed to Xbox and the millions of Xbox fans around the world.”

This isn’t the first time the possible sale of the Xbox unit has come up. Microsoft co-founder Paul Allen’s investment group, for instance, has suggested that the company spin off the Xbox business so it can “focus on their best competencies.” Also, Prior to Nadella’s appointment as head of Microsoft, CEO candidate Stephen Elop said that if he were the CEO he would consider selling Xbox in order to focus more closely on the company’s corporate customers. In an interesting turn of events, Elop now the Vice President of Microsoft’s Devices & Services business unit, which covers Xbox.

It’s easy to see why some people are in favor of the company ditching Xbox to focus on other things. On its face, it might seem that Xbox is pretty far removed from Microsoft’s core business of making and selling the Windows operating system and Office software. But in reality, the Xbox division isn’t as separable from the rest of the company as it might seem.

For one thing, gaming is a big business on Windows PCs. Ask any PC gamer, and they’ll tell you Windows is the premiere platform for PC games. While Mac gaming has been getting better in recent years thanks to download services like Steam and the Mac App Store, it still has a long way to go before it could possibly catch up to Windows. Everyone who buys a Windows gaming PC is putting money in Microsoft’s coffers.

Beyond that, as Gates said in the Fox Business interview, “We’re going to have an overall gaming strategy, so [selling Xbox is] not as obvious as you might think … We’re taking PC gaming, Windows gaming, and Xbox gaming, and bringing those a lot closer together.” The closer the ties between those divisions, the harder it becomes to cut Xbox out of the equation. While the Xbox One isn’t selling as well as the PlayStation 4, it’s still selling faster than any other Xbox console in the company’s history. Ultimately, however, Gates said he’s “sure Satya and the team would look at [selling Xbox] and it’s up to them.”

Meanwhile, the people working on Xbox don’t seem too concerned, at least not in public. Microsoft’s head of Xbox Phil Spencer has said that Nadella is a “good supporter” of Microsoft Studios as well as the Xbox unit. He said on Twitter (NYSE:TWTR) that the company is “very committed” to Xbox, “from the top of Microsoft to the Xbox teams.”

So will Microsoft ditch Xbox? The evidence available so far points to no.

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