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Microsoft might abandon Win. RT; Nomura warns of Xbox losses

  • Microsoft (MSFT) Devices & Studios product chief Julie Larson-Green during a recent UBS conference talk: "We have the Windows Phone OS. We have Windows RT and we have full Windows. We're not going to have three."
  • Though not overtly stating it, Larson-Green hints Windows RT, which has been virtually abandoned by OEM partners, will get the hook. She admits RT lacks the flexibility of traditional Windows (albeit while suggesting it's more mobile-optimized), and that Microsoft didn't do a sufficient job of differentiating its Surface RT and Surface Pro tablets.
  • Mary-Jo Foley previously reported Microsoft is thinking of merging Windows Phone and RT. She now says (citing a source) "it's more likely that the Windows Phone OS core is what Microsoft will use as the starting point" for its merged OS, rather than RT.
  • Meanwhile, Nomura's Rick Sherlund is making a fresh case for unloading the Xbox unit (previous): He thinks the business will likely lose over $1B this year, and simply isn't enough to "cement Microsoft’s position in the consumer market," given the popularity of mobile media consumption.
  • A big issue: Mobile's volumes have come to dwarf the console market's. While Sherlund thinks Microsoft might sell 3M-4M Xbox One units in 2013, and Sony is aiming for 5M PS4 sales by the end of March, IDC thinks Q3 smartphone and tablet shipments respectively totaled 261.1M and 47.6M.
Comments (13)
  • Matthew Davis
    , contributor
    Comments (3661) | Send Message
     
    This is way off. Of course a junky $100 android tablet will outsell an Xbox, what terrible comparisons. The case should be made that PS4 should be sold off because its an even bigger money loser.
    25 Nov 2013, 06:55 PM Reply Like
  • rjgood
    , contributor
    Comments (233) | Send Message
     
    Agreed. The 'disposable device' consumer market shifts so quickly...just ask AAPL. Even if they had dominance in phones/tablets...MSFT would be suicidal to drop Xbox regardless of the loss. The console is the only viable door to owning the TV War at this point...chromecast is nothing more than a receiver, and brings no real value.

     

    The Car (Ford Sync powered by Windows), PC (windows dominated) and console (Xbox) are the three areas MSFT needs to hold to the death. They move very slowly.

     

    The Smartphone/Tablet are important, but disposable. Much more exposed to market conditions than the 3 slower moving devices. Dropping Xbox in favor of a $150 tablet opens the door for any competitor to rule the living room.

     

    Instead of dropping Xbox, partner with cable providers to subsidize Xbox units instead of DVRs…at $0 initial cost to consumer, for $5 per month. 100 million Xbox units ship as a result.
    25 Nov 2013, 07:14 PM Reply Like
  • joro_ianev
    , contributor
    Comments (378) | Send Message
     
    I've always thought analysts had little brains and zero business sense. These calls just reinforce those thoughts.

     

    Everybody is so focused on mobile. Yet there are tens of millions of X-Box owners who use their systems to play games and watch movies. It is a great ecosystem for Microsoft to continue to develop, alongside porting Windows for small mobile devices.
    26 Nov 2013, 02:32 AM Reply Like
  • Derek A. Barrett
    , contributor
    Comments (3534) | Send Message
     
    Joro I agree and this is a great entry point into the living room. Microsoft wants to own all the end points for consumers and giving up Xbox would be a huge step back towards making that happen.
    26 Nov 2013, 03:59 AM Reply Like
  • samuel_liu
    , contributor
    Comments (2793) | Send Message
     
    It is good that Msft get out of its Windows malaise!
    25 Nov 2013, 08:00 PM Reply Like
  • Derek A. Barrett
    , contributor
    Comments (3534) | Send Message
     
    Yes please dump RT already ! It is the equivalent of Windows NT for DEC Alpha chips from 1999, cept DEC chips had even more momentum behind them.
    26 Nov 2013, 01:38 AM Reply Like
  • ambiorix
    , contributor
    Comments (58) | Send Message
     
    Not having looked at MSFT's financials in any detail, I always assumed that Xbox was making money?! So many others in that market do make money. If losses have been piling up they should dump it sooner rather than later. As for convergence and TV war, (surface) tablets are possibly better positioned than the XBox
    26 Nov 2013, 02:53 AM Reply Like
  • Matthew Davis
    , contributor
    Comments (3661) | Send Message
     
    ambiorix

     

    Here is a nutshell rehash of the console wars from 2007, Xbox 360 was released at a loss, and took 5 years to start turning a profit. Sony attempted to release the PS3 at $700 to make a big profit in the beginning, however they had to slash prices because everyone laughed them out of the door. Not until a year ago was Sony's PS3 profitable. Both sides have learned huge lessons, that they need to either break even or a small loss per console. The point is not the hardware, its the subscription services that come with it, that make up the difference.
    26 Nov 2013, 09:38 AM Reply Like
  • Ruffdog
    , contributor
    Comments (1208) | Send Message
     
    DishTV and DirecTV will merge. Nexflex will partner with MSFT to buy the merged company. Then MSFT will spinoff the XBox division keeping an interest in the new company as MSFT has with Facebook.

     

    Then XBox INC. with Skype will be the entertainment console of the future; one in every room of the house. Movie streaming, TV video phone calls and gaming. Mom in the kitchen can even call the kids in their bedroom to dinner. The new company will have many, many opportunities to give the consumer what he wants.
    26 Nov 2013, 11:16 AM Reply Like
  • rjgood
    , contributor
    Comments (233) | Send Message
     
    MSFT owns plenty of FB, and what did FB do?
    1. The FB Home "aka Facebook phone" runs on Android.
    2. Partner with Google for ads.

     

    Letting go of Xbox would remove MSFT from the Living room TV war permanently.
    26 Nov 2013, 04:57 PM Reply Like
  • Otto70
    , contributor
    Comments (10) | Send Message
     
    Analysts throughout 2012: "IDS data shows PC is dead, Microsoft is doomed, its core business is dying, Microsoft needs to innovate and diversify".

     

    Analysts in 2013, after MSFT showing no signs of death, "Microsoft needs to shed non-core businesses and concentrate on its core business. Innovation is costly."

     

    Repeating over and over again the same claim (Xbox loses money and will continue to do so) doesn't make it true.
    27 Nov 2013, 12:10 PM Reply Like
  • Matthew Davis
    , contributor
    Comments (3661) | Send Message
     
    this time Xbox will e quite a juggernaut in profit...wait and see. people will pony up $500 to have the most innovative machine in the world.

     

    Xbox One is Microsoft's iPhone.
    28 Nov 2013, 10:28 PM Reply Like
  • Ruffdog
    , contributor
    Comments (1208) | Send Message
     
    10 years from now every household will have only entertainment device on their living room table and each bedroom, an xbox that you can game, watch movies, cable channels , surf the net, work documents and spreadsheets and any other entertainment task you need or want to do. Attend next year's CES.
    6 Jan, 01:19 PM Reply Like
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