Bill Gates hints that Microsoft could sell off its Xbox division

Bill Gates, Microsoft’s newly appointed “technical advisor,” has reignited the perennial debate about whether Microsoft should sell off its Xbox and Bing businesses. For years, analysts and investors have leaned on Microsoft to sell off the loss-making Xbox division. With new CEO Satya Nadella saying that the company should focus on its core markets, rumors that Stephen Elop (now Microsoft’s hardware chief) wanted to sell off the Xbox and Bing businesses, and now Gates’ comments that he would “absolutely” support the CEO if he chose to sell off Xbox, is a sell-off or spin-off imminent?
In an interview with Fox Business, Gates answered some probing questions about the possibility of selling off the Xbox and Bing divisions — and while he didn’t come out as being for or against a potential spin-off, his responses strongly hinted that the company is continuing to ponder the possibility. Gates said he’s certain that “Satya and the team would look at that [selling the Xbox division] and it’s up to them.” If the new CEO chose do so, he would “absolutely” support him. Following Gates’ comments, Microsoft’s communications chief Frank Shaw was quick to tweet: “Bill’s comments re Xbox reflected support of Satya as CEO” — not support for a possible sale of the Xbox division.

It probably doesn’t help matters that the PS4 is massively outselling the Xbox One

It’s also worth pointing out that Bill Gates said in the same interview: “We’re taking PC gaming, Windows gaming and Xbox gaming, and bringing those a lot closer together.” Here he is probably referring to the fact that Microsoft now uses a common Windows 8-based kernel across PC, smartphone, tablet, and game console — and if these platforms are intrinsically linked, he says a sell-off is “not as obvious as you might think.”

In short, then, while Gates might’ve spoken out of turn, we should try to keep his comments in context. We would also be wise to remember that, in a world where tweets and blog posts can be shared around the world while the truth is still putting its shoes on, one slightly misspoken word can lead to a whole lot of exciting, but ultimately superfluous debate.

Microsoft’s three CEOs on stage: Bill Gates, Satya Nadella, Steve Ballmer

Still, when all’s said and done, it wouldn’t be all that surprising if Microsoft does actually sell off the Xbox and Bing divisions. Stephen Elop, when he was being considered for the Microsoft CEO position, was rumored to be considering a sell-off. Now that he’s head of Microsoft’s hardware efforts, which includes Surface, Xbox, and the newly acquired Nokia handset businesses, he’s in an ideal position to champion such a spin-off. As we’ve already covered, I doubt Microsoft cherishes the idea of inheriting a barely profitable 250-million-handsets-a-year businesses. It will be years (if ever) before the handset business is integrated with the rest of Microsoft’s efforts.

Outwardly, as far as we can tell, Microsoft still fancies itself as a products-and-services company. In a perfect world, I’m sure Microsoft sees itself selling smartphones, tablets, and game consoles that are perfectly married to Windows, Office, Bing, and Azure. It isn’t going to happen quickly, though, and I’m sure there’ll be a lot of pressure to sell off its non-core (i.e. non-software) businesses over the next few years.