Mon, Jan 21, 2013 | 11:19 GMT

Microsoft’s Xbox brand will be “sold to someone like Sony”, failure is “inevitable”

The analysts are at it again. This time, a US firm predicts Microsoft’s Xbox brand is on a downward spiral.

Could MS run into severe trouble across the next three years? One analyst certainly thinks so, beginning with the company’s console division.

“The entertainment division will be spun off, sold to someone like Sony or possibly Barnes & Noble, or dramatically reduced in size,” says Forbes contributor Adam Hartung.

“Unable to make a profit it will increasingly be seen as a distraction to the battle for saving Windows – and Microsoft leadership has long shown they have no idea how to profitably grow this business unit.”

Hartung also suggests the company will be hit with “enormous layoffs over the next three years”, alongside the closure of Microsoft’s online division as the organisation plows money into combating iOS.

“Microsoft makes more than 75 per cent of its profits from Windows and Office,” he added. “Less than 25 per cent comes from its vaunted servers and tools. And Microsoft makes nothing from its Xbox/Kinect entertainment division, while losing vast sums in its on-line division.

“No matter how much anyone likes the non-Windows Microsoft products, without the historical Windows/Office sales and profits Microsoft is not sustainable.

“Failure is already inevitable. At this stage, not even a new CEO can save Microsoft. Game over. Ballmer loses. And if you keep your money invested in Microsoft it will disappear along with the company.”

Scathing words indeed. Thanks, MCV.

82 comments

#1

Joe Anderson
21/01/13, 10:14 am

Pull no punches.

#2

The Auracle
21/01/13, 10:15 am

Is this Adam Hartung being serious or has his anti-Microsoft hatred gotten the better of him here? Until I see a financial report stating that MS are in financial trouble, then I’m afraid Mr Hartung is just regurgitating what many a-MS hater have predicted on the back of every Microsoft Windows release that they didn’t like.

#3

freedoms_stain
21/01/13, 10:15 am

Prediction: discussion will end up being more about Sony than Microsoft.

Don’t let me down lads. Be your increasingly predictable selves.

#4

woe
21/01/13, 10:18 am

Analyst? this is some random blogger thats talking out of his ass.

#5

MrXBob
21/01/13, 10:21 am

This is actually amazing, a very entertaining read if not purely to show how much this person *doesn’t* know.

Let’s not forget the very fact that Microsoft makes more from Xbox Live subscription fees in a single year than Sony has made on actual PS3 console sales in the same timeframe (and it’s not changing anytime soon)

The Xbox brand is far too large, far too successful and far too “involved” in Microsoft’s entertainment strategy* for them to have to sell it. It’ll never happen. Ever. Guaranteed.

*By ‘entertainment strategy’ I mean the whole Microsoft family: Windows, Windows Phone, Surface an Xbox are all completely integrated and almost dependent on each other to create the vast ecosystem that billions of people are hooked on.

#6

Dragon246
21/01/13, 10:22 am

@3,
Popcorn ready! Want some? I have all flavors.

Thats why I don’t hear these “analysts’ anymore.

#7

BraveArse
21/01/13, 10:27 am

As far as I can see, the only function financial analysts in all areas of the markets have is to try and create self fulfilling prophecies. If they generate enough chatter in the press then they can create enough fear on the markets to bring about whatever vested interest they’ve currently got their fat little chipolata fingers deep into at that particular moment.

It’s not about predicting the future at all, rather it’s about creating one that best suits themselves.

MS lost me as a customer a year or two ago, but even I’m willing to call a bullshitter a bullshitter when I see one.

#8

manamana
21/01/13, 10:40 am

This is Bullcrap, as the brand name is immensely strong. That beeing said, I believe this thread could end up in a nintendo is doomed dicussion ;-)

#9

doctorstrange
21/01/13, 10:46 am

Not an analyst, and not someone who knows what he’s talking about. MS have invested too much in Xbox to back out now, and XBL and Kinect are far too popular. They’ve already spent a ton on Nextbox R&D, so the notion that they’d suddenly give up is farcical. From the beginning, MS said that their 3rd console would be their money-maker, and considering the growth of the 360 over the original, that isn’t out of the realms of possibility.

As for Sony buying them, not only does Sony have serious financial problems of its own, with some analysts saying they will sell their entertainment division (also not going to happen), but buying the Xbox would be hugely problematic for them. They couldn’t run two competing consoles, so they’d have to kill the 720, causing all sorts of problems for them, developers and lawyers.

Barnes & Noble? Their total assets are less than the cost it took to simply launch the 360. That’s so painfully stupid, I don’t even know what to say.

Forbes pays contributors based on hits. This article will get hits. That’s all it is.

#10

pukem0n
21/01/13, 10:46 am

Nintendo is doomed!

#11

DrDamn
21/01/13, 10:47 am

@5
“Let’s not forget the very fact that Microsoft makes more from Xbox Live subscription fees in a single year than Sony has made on actual PS3 console sales in the same timeframe (and it’s not changing anytime soon)”

That’s as bad as the analyst. I hear Comet made more on iPads than Woolworths did on pick’n'mix last year too.

#12

Mike W
21/01/13, 10:51 am

They almost had me until they said Barnes and Noble.

#13

Karooo
21/01/13, 10:53 am

Why would you guys cover this? This is rambling from a contributor and he doesn’t have any qualifications to be quoted this way.

MCV is a horrible website, stop linking to that nonsense.

#14

Erthazus
21/01/13, 10:56 am

“saving Windows”

I stopped reading there.

#15

Mike W
21/01/13, 10:56 am

@13

It’s just a prediction bro, don’t take it to heart.

#16

Kaufer
21/01/13, 11:00 am

I think he may have confused Windows Phone with Xbox division.

#17

Goffee
21/01/13, 11:01 am

Can all gaming sites have a dedicated “bullcrap corner” page where this stuff goes, so it doesn’t pollute the actual games news pages.

#18

Beta
21/01/13, 11:01 am

I’m not a massive fan of Microsoft but Jesus, what a load of crap. Are there any “analysts” who actually know what they’re talking about? Because I’ve yet to see one.

#19

Fin
21/01/13, 11:02 am

LOL

#20

KAP
21/01/13, 11:03 am

Imagin if this was true. Lol
Xbox owners would be in complete denile wouldn’t they.
I think this gen Microsoft completely forgot game(s) sell consoles.
Not advertisements.

#21

Monkee_Nutz
21/01/13, 11:04 am

*Looks at article heading*

Well, at least we know what TEA gets up to when he isn’t shoving his vile and really quite nasty pro-Sony vitriol down everybody’s throats on here.

#22

ps3fanboy
21/01/13, 11:12 am

This article just made my day, in 3 years MICKEY$OFT’S CRAPBOX is gone!!! WOOOOHOOO!! :D

#23

daytripper
21/01/13, 11:18 am

The rumours so far about the next Xbox have been underwhelming imo, of course they are only rumours but I can’t see myself buying a console with Kinect or more dedicated to apps and services than games. Just wish both Sony and MS would announce their new systems, this gen is becoming tedious.

By the way, ps3fanboys ip matches Dr.Ghettoblasters

#24

Mike W
21/01/13, 11:19 am

@21

Lol, some of you guys are too much. It’s just a “prediction”, nothing more, nothing less. I guarantee you if some ‘no-name’ analyst said the same thing about Sony, 90% of you guys would be agreeing with him (and you guys know exactly who you are)

So please don’t make this into a big deal. :D

#25

deadstoned
21/01/13, 11:27 am

I’m not sure about the Xbox division being sold, but certainly seeing cuts to its budget.
.
The Windows division is floundering at the moment with Windows 8 and their new un-popular UI. Google have stated they want to take a big cut of Microsofts office market, which I wouldn’t put it past them, especially after what they’ve done with Chrome.
.
I think Microsoft needs to get rid of Balmer and change their culture. They still seem to have the same culture as they did in the 90s.

#26

daytripper
21/01/13, 11:33 am

@24 90% ? Ha ha ha that’s a good one

#27

Psychotext
21/01/13, 11:43 am

What a load of old crap. Entertainment & Devices (gaming and other things) has been showing steady steady profits since 2008 including a massive $1.3bn profit in 2011. As for the actual console. Triple the sales of its predecessor (more eventually), and profitable as a project… what exactly does the analyst want?

Online, sure, it’s going to keep hurting them… but the Xbox project is probably their best chance to get a long term place in the living room before the majority stops buying PCs because they’re happy with the functionality offered by tablets.

Had he said this in 2006 or 2007 he might have had a point, but it’s been a long time since then and the division has been very much turned around (I suspect because of Mattrick’s hard line on profits).

#28

monkeygourmet
21/01/13, 11:51 am

Providing the specs for next gen were roughly correct that VG247 published a few days ago (PS4 being more powerful than 720), I still can’t see MS losing this one…

Sony sound like their going to be destroyed by MS’s media focus this time round.

I know thats not what everyone wants in gaming but it’s obviously the direction which we are heading.

What I don’t understand is why MS don’t try and make a crazy powerful machine and ‘bury’ Sony completly.

Sony just wouldn’t be afford to keep up if MS wanted to keep raising the stakes. It would put Sony in no-mans land, neither a cheaper console like Nintendo’s, or a power house like MS.

I have a feeling MS’s spec sheet is going to be a lot more impressive than people have hinted at. Would seem like a bit of a missed oppertunity otherwise.

Wii U will def be a machine for exclusives (like always), and Sony doesn’t seem to have a plan that makes sense.

On the info given, it just sounds like their doing another PS3.

#29

Hirmetrium
21/01/13, 11:54 am

@25: While I agree Microsoft have some of the worst management ever (look at how GFWL died), Chrome is a piece of shit. It isn’t Windows, doesn’t have the same compatibility or support and nobody likes pissing around with new OS’s. Customers don’t want difficult devices that don’t network nicely with their other ones or have the same file system etc.

At the same time, Windows has been going backwards for years. I honestly think they have lost touch with the consumer, and Windows 8 is another “what the fuck are you doing we didn’t ask for this” marker.

Reinventing the wheel does not work. That’s why we still have wheels.

As for MCV, they lost all credibility with the Doritosgate incident and that Hitman snafu.

Finally, Analyst’s are full of crap. I’ve not seen a single one of Patcher’s predictions come true that somebody who wasn’t paid a dime couldn’t work out.

#30

djjoejoe
21/01/13, 12:06 pm

Pretty funny, I like laughing at how most of the gaming ‘news’ is re-links from other peoples shitty opinions for ‘the future’ of the industry… like that’s in anyway interesting let alone impossible to predict, it’s valueless and kind of insulting.

But hey it’s reasonable to think a company like microsoft that’s been around for as long as it has and currently is the stable home for just under 100k employees worldwide will wither and die out in about 3 years… There’s too many people at that company to let it die that quickly, and measures to change the company (for better or worse) have already been engaged and taken effect with the recent change to micsosoft’s design front, and soon to xbox (same fellow is being hired to work for xbox, that did the recent remake of microsoft).

#31

KrazyKraut
21/01/13, 12:28 pm

I have more faith in Xbox-Brand than the PlayStation-Brand and I say this as a big PS-Fan.

#32

Judicas
21/01/13, 12:44 pm

Really now? Posting rubbish like this makes me rethink whether to come here to read news stories. Complete garbage.

#33

polygem
21/01/13, 1:16 pm

ok. how much? *counts pennies*

#34

DeyDoDoughDontDeyDough
21/01/13, 1:18 pm

I don’t know what Hartung’s motives are, but he is heavily anti-Microsoft. This is the man who called Ballmer “the worst CEO in an American publicly-traded comnpany,” and, looking back at his other notable soundbites, they are ALL attacking Microsoft in some way.

Not the kind of person you want to take seriously then.

I think Microsoft shat in his coffee.

#35

Pytox
21/01/13, 1:33 pm

lol this article so full of BS

#36

Pytox
21/01/13, 1:40 pm

oops double post :p

#37

OlderGamer
21/01/13, 2:07 pm

I really doubt MS will be going anywhere. However I do believe that a focus will be placed on turning a profit this gen. For MS and Sony. And really if you can’t do that, why be in the biz at all? Making games isn’t a life calling and it isn’t a charity.

Plus you/we all assume that next gen systems will fly off of shelves. What if they have decent launches and then stall in a major way? Just saying.

The Xbox brand is strong. I can see it morphing into a streaming style service or even a store front across multipe devices. But I can’t see MS selling it. Look, if it isn’t making money for MS, why would anyone else want to spend money on it? Same goes for Playstation. Or Nintendo. At lest Nintendo and Sony have strong first party IPs that they actualy own. MS has Halo, and not much else. Point is … even if one of the platform holders wants to sell…who would want to buy?

Apple?

I could see Apple, maybe, wanting to buy Playstation or Nintendo(esp Nintendo), but not Xbox.

#38

CPC_RedDawn
21/01/13, 2:10 pm

Ok Ok, whilst I have owned a 360 and sold it a long time ago and I have no interest in the console or its company apart from using Windows on my PC. I also used to despise Microsoft and everything they stood for back in the Windows 95 and 98 era.

But this is from a PS3, Nintendo, and mainly PC gamer. This guy who wrote this makes NO sense. So hes saying that Microsoft make NO money from all those people paying £40 a year to play online something which its competitors offer for free and they still make money. They made NO money from the enormous sales of Halo 4 (I hate this game but it has millions of people that love it) yea sure it cost them a ton of money to make but I bet they made quite a lot from that. Halo 4 has probably sold over 5 million by now easily. Also, they make NO money from Kinect? Really!??? That device is cheap as chips to manufacturer as its not even a HD camera inside the software probably cost more. But it was still the fastest selling gaming device when released and they charged £150 for the damn thing! Not to mention those crappy Kinect games that probably took them about a month a churn out and nothing to produce.

Like it or not, Microsoft DO make money in the Xbox division, otherwise they would of gone the way of SEGA and the Dreamcast by now. They have been making money on the console alone for the past four years of its near seven year life. They took that loss at first but it paid off as with fabrication process shrinks they make the console smaller, and cheaper. The Xbox probably costs them about £50 to make (thats including cables and controllers) and they sell it at retail for £200.

This guy who wrote this or said this whatever he/she did is seriously a Sony or Nintendo fanboy! Pure and simple and I am definitely NOT a Microsoft fanboy.

#39

CPC_RedDawn
21/01/13, 2:12 pm

@37 the day Apple buys Nintendo I shall throw my self off a bridge. That will be the darkest day in gaming history the dark lords that is Apple approach and enter the gaming market (please don’t say they already have with the Ipad and Iphone… please we are talking real triple A titles here)

#40

TMRNetShark
21/01/13, 2:30 pm

They released a successful console, and they probably have a good chunk of people paying the $50 a year for Xbox Live (even though it technically works just like the free PSN), AND they are seen at the superior console (just after the 2nd generation)… yet they can’t make a profit?

OH WAIT, they made a bad type of OS (closed platform)… invested tens of millions of dollars (if not hundreds of millions) on Surface.

If Microsoft wants to be part of the techno game… start making and developing a smartglasses

#41

Psychotext
21/01/13, 3:21 pm

One thing Nick should probably remember for future news articles related to the Forbes site is this:

“Forbes Staff” = Actual Forbes staff members, generally journalists or proper analysts.

“Forbes Contributors” = Batshit mental bloggers like the one who wrote this particular nugget of gold. These aren’t screened by Forbes.

Though I guess in this case it’s more MCV’s (who are fast becoming a bit of a joke for other reasons) fault than Nick’s. That aside, Forbes are doing their reputation no end of damage by not making the distinction far clearer.

#42

OlderGamer
21/01/13, 3:25 pm

But in the end PT hits are hits. I think we are/will see a trend to toss out integerty in favor of generating traffic.

#43

theevilaires
21/01/13, 3:38 pm

While I think more people are swinging back to PlayStation after jumping the ship to the 360 because it was out first its not on the verge of losing its popularity. Americans will always favor cheaper over quality but I think the value of PSN is helping out the PS3 a lot more now that it did 3 to 4 years ago.

Microsoft is going to released the nextbox with Halo 5 and these analyst figures will be mocked. Honestly I don’t know why VG247 even ran with this so called report but never mentioned the analyst report of the PS3 out shipping the 360 worldwide. Seems like this article was meant for a quick Monday flame bait fiesta to me ;)

#44

DSB
21/01/13, 3:42 pm

An analyst is just a guy whose job it is to make astrologists look accurate.

Microsoft has a dire future ahead of them, and I don’t think they’re capable of change either, but calling it doom at this point is just ridiculous.

@41 They’re definitely screened by Forbes.

#45

Da Man
21/01/13, 3:44 pm

Kinect games that probably took them about a month a churn out and nothing to produce.
Internet, another passionate gamer who’s yet to draw a string of text on screen wants to be heard.

#46

Gheritt White
21/01/13, 3:52 pm

“Forbes pays contributors based on hits. This article will get hits. That’s all it is.”

^This.

#47

gomersoul
21/01/13, 3:53 pm

so many people defend xbox here… go sony! me and ps3fanboy still have faith in quality over quantity! plus having a dildo up my arse from MS over rrod, advert blasting on a service you pay for! would mean only a true tool would trust MS next gen… oh wait

#48

Ireland Michael
21/01/13, 3:57 pm

@3 Seems they weren’t anywhere near as predicable as you thought they would be.

#49

Joe Musashi
21/01/13, 4:02 pm

So, let me get this straight. According to the Internet I’ve been assured of the following statuses:

Nintendo: DOOMED
Sony: DOOMED
Xbox: DOOMED

Time to buy me some shares.

JM

#50

monkeygourmet
21/01/13, 4:07 pm

@49

Also,

DmC is shit, Don’t forget that! ;)

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