Xbox, Smex-Box... Microsoft's Diversion

| About: Microsoft Corporation (MSFT)


Microsoft is having problems selling its Xbox and this is part of the talk in this week's E3 convention.

This version of the Xbox has been accompanied by pricing problems, product problems, and PR problems.

Microsoft needs to focus more, and try and eliminate snafus and not-so-good product buzz.

In an earlier post, I suggested that Microsoft (NASDAQ:MSFT) should probably get rid of a lot of its consumer business, including the Xbox product.

For one, I argued that this end of the business was not that profitable. The competition is fierce and this is basically a zero marginal cost product.

Second, the Xbox is a distraction to management from what it should really be focusing on.

In other words… Microsoft should narrow its focus to businesses.

The distraction is popping up this week at the E3 convention.

Microsoft is getting its "butt kicked" by Sony Corporation (NYSE:SNE) with its PlayStation 4.

The price of the Xbox is too high. Microsoft is lowering the price and altering other features of the Xbox package to be more competitive.

Furthermore, Microsoft stumbled out of the gate with public relations screw ups that turned off potential purchasers.

Reports are that the PlayStation 4 system has sold seven million units. These reports also say that the Xbox package has only sold five million units. And, the sales mastery has existed in every month since the two were in the market together except one.

To me, Mr. Nadella, Microsoft's CEO, needs to lessen this diversion from all the other things Microsoft needs to do. And, publicity like this is something that neither Mr. Nadella nor Microsoft needs at this time of turnaround.

Disclosure: I am long MSFT. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.