Microsoft Spinoff of Xbox Analyzed By Experts

With the sweeping changes going on in Microsoft, several analysts, fund managers and investors are stepping forward to say the company should spinoff Xbox into a separate business. Not everyone agrees, but the idea is gaining traction now that investor ValueAct, who many say wants to do this, is set to join the board of directors.

There is certainly a cacophony of voices about this question, both in and out of the gaming world. Whether you are a fan of Xbox or not, however, it is important to acknowledge that this conversation is happening now, especially since it really has come into the realm of possibility.

Tthe idea started gaining traction when Rick Sherlund, who has been reporting on Microsoft for decades, talked about how one of its bigger investors, ValueAct, was moving in to take a closer role at their company, and looking into trimming its businesses away. Sherlund named Xbox and Bing in particular, being quite explicit that they don’t believe Microsoft has made money off their console. Later, Microsoft announced that ValueAct’s investment gives them the option of installing their president, Mason Morfit, into the board of directors.

Bloomberg and GamesIndustry talked to several experts to get their opinions. Money manager Tim Schwartz thinks there’s value to unlock out of the console if it goes that route. In stark contrast, Gartner analyst Brian Blau thinks it would not survive on its own. While DFC's David Cole cites the poor early reception of the Xbox One as reason to pull out, independent analyst Billy Pidgeon says the company should look at the Xbox as a long term plan. Along similar lines, Panoptic's Asif Khan says Microsoft should focus on fixing their problems with leadership before letting go of any of their businesses.

Many analysts point out the original gameplan to use Xbox to install Microsoft into the center of home entertainment, with TechCrunch writer Alex Wilhelm going so far as to say the short term benefits would not be worth it. However, as BusinessInsider’s Jay Yarow pointed out, the seemingly unlikely possibilities, like Microsoft outright buying Nokia, are already happening, so a spinoff of Xbox would not be out of the question.

As a whole, the argument goes down to whether Microsoft wants to keep Xbox in their plans for the future. The console can actually fit in in the vision of a devices and services company, but it is still up to debate if it is worth their investment or if they should focus on more potentially profitable ventures, like mobile.