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Microsoft CEO commits to Xbox

Microsoft CEO commits to Xbox

Thu 10 Jul 2014 2:27pm GMT / 10:27am EDT / 7:27am PDT
Business

Satya Nadella squashes speculation that he would sell game division, says gaming tech bolsters productivity businesses

Microsoft won't be looking to unload its Xbox business anytime soon. The company today released a memo to all employees from Satya Nadella, in which the recently appointed CEO lays out his vision for Microsoft's future, a vision that clearly includes gaming.

"The day I took on my new role I said that our industry does not respect tradition - it only respects innovation," Nadella said. "I also said that in order to accelerate our innovation, we must rediscover our soul - our unique core. We must all understand and embrace what only Microsoft can contribute to the world and how we can once again change the world. I consider the job before us to be bolder and more ambitious than anything we have ever done."

As for what that core is, Nadella defined Microsoft as "the productivity and platform company for the mobile-first and cloud-first world." That might not sound like it necessarily includes video games, but Nadella added, "We will shift the meaning of productivity beyond solely producing something to include empowering people with new insights."

After namechecking a variety of Microsoft's productivity efforts and promising advances in everything from Office 365 to Windows Phone and Surface, Nadella directly acknowledged the gaming elephant in the room.

"We are fortunate to have Xbox in our family to go after this opportunity with unique and bold innovation. Microsoft will continue to vigorously innovate and delight gamers with Xbox."

"As a large company, I think it's critical to define the core, but it's important to make smart choices on other businesses in which we can have fundamental impact and success," Nadella said. "The single biggest digital life category, measured in both time and money spent, in a mobile-first world is gaming. We are fortunate to have Xbox in our family to go after this opportunity with unique and bold innovation. Microsoft will continue to vigorously innovate and delight gamers with Xbox."

Nadella noted the strength of Xbox as a consumer brand, and added that technological advances pushed by the gaming business can boost the company's actual core businesses as well.

"We also benefit from many technologies flowing from our gaming efforts into our productivity efforts - core graphics and NUI in Windows, speech recognition in Skype, camera technology in Kinect for Windows, Azure cloud enhancements for GPU simulation and many more. Bottom line, we will continue to innovate and grow our fan base with Xbox while also creating additive business value for Microsoft."

Nadella also talked about changing the culture at Microsoft in a handful of ways. He said he wants the company to "obsess over our customers," pledged to invest more in training the workforce and testing new ideas, and resolved to flatten the organization.

"We have clarity in purpose to empower every individual and organization to do more and achieve more," Nadella said. "We have the right capabilities to reinvent productivity and platforms for the mobile-first and cloud-first world. Now, we must build the right culture to take advantage of our huge opportunity."

Speculation about Microsoft selling off the Xbox business had been circulating since last year, when then-CEO Steve Ballmer was planning a major restructuring of the company. When Ballmer announced his retirement in August, the issue was a topic of discussion for his possible replacements.

8 Comments

Mark Dygert
Lead Character Animator

21 24 1.1
He might be a keeper.

Posted:A month ago

#1

Aleksi Ranta
Product Manager - Hardware

272 126 0.5
Nadella says "We are fortunate to have Xbox in our family to go after this opportunity with unique and bold innovation. Microsoft will continue to vigorously innovate and delight gamers with Xbox".

It is true that Microsoft is very fortunate to have built up a Xbox and especially X360 and XBL. But X360 launched in 2005, this is 2014.Where is the real innovation with XB1? The Kinect 2? No, no real innovation there. The hardware? No, no real innovation there. The games? No, no real innovation there? The power of the cloud? No tangible innovation to be seen yet.

I wish from the bottom of my heart that Microsoft would start to truly innovate, to be in the driving seat of the business and not just be reacting to the market. Microsoft be proactive! Show the way for once. And no, visioning a download only future and always online is not the innovation im looking for, and neither is the market. Give us something new. something that would pleasantly suprise us. something that even the competition would envy.

Posted:A month ago

#2
XBOX is the glitzy glamorous entertainment package for Microsoft! there is no way they would sell it.
It is really handy as a R&D test bed for newer technologies with a well known brand, so with good leadership and clarity of vision,, XBOX can have some really good years ahead.

For now, they will need consistent stellar content

Posted:A month ago

#3

Klaus Preisinger
Freelance Writing

1,072 1,007 0.9
Consoles are to gaming, what an Imax theater is to movies. A very controlled business detached from what is happening on the creative side. Profitable yes, but detached.

I'm writing this on my Windows 8 PC, wake me up when your answer comes from a Windows 8 Xone and Microsoft means business in another way than clinically advertising Halo remakes for the early midlife crisis crowd.

Posted:A month ago

#4
Good to hear, because XBox is actually more than just a game system, its also an ambassador for microsoft. Many of this kids playing and being brought up on xbox, will be tomorrows executives, and it never hurts for a brand to be associated with happy childhood memories.

Posted:A month ago

#5

Paul Jace
Merchandiser

900 1,330 1.5
That really is good news. But then again I never thought selling the Xbox brand could be considered very practical in the first place. It opens up alot of avenues for them and not just in gaming.

Posted:A month ago

#6

Nick Wofford
Hobbyist

172 181 1.1
Yeah, the Xbox is how MS plans on getting into your home system once the smart home stuff starts really taking off. They get rid of Xbox, and they're out of the home hardware game.

Posted:A month ago

#7

Andrew Ihegbu
Studying Bsc Commercial Music

440 146 0.3
Give Nadella some time Aleksi, we all know that XB1, Kineckt etc was already too late in development to change when he stepped in. What remains to be seen is if this guy is MS's new 'Steve Jobs' or all talk.

I would also say that - looking at the competition - innovation for innovation's sake has a number of fatal flaws. The Wii sold great, but had terrible retention and third party sales, the Wii U sold terribly until first party sales came through and is surviving largely on brand power from first-party derivative products showing similar flaws to the Wii and other than that, Kineckt is actually the most innovative thing that the industry has actually done in the console space imo, however successful it's been... Obviously VR is the next big thing but with a pricetag as high as the console it will be used on, I think it will likely be a hard sell for a good few more years anyway. YMMV

Posted:A month ago

#8

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