Paul Thurrott Endorses Alan Mulally For CEO; Wants MSFT To “Spin-off” Xbox & Bing

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I received a significant amount of email, from our readers, on my recent editorial: Why Do Investors Want Alan Mulally? (Hint: He Sold Off Major Ford Assets)

While many of you agreed with what I had to say, some accused me of over-analyzing the situation and engaging in conspiracy theories.  Well today our good buddy Paul Thurrott has published an article in which he indicated he would like to see Ford CEO Alan Mulally become CEO of Microsoft and sell or spin-off the Xbox and Online Services Division.  Thurrott writes:

Microsoft, let Alan Mulally gut this company and start over. Review the strategy, shed businesses that don’t make sense.

Quick sidebar. Which businesses should Microsoft shed? […]

There are two. Kind of like Oldsmobile and Pontiac and you’re a car fan who understands history.

They are Online Services and Xbox.

Xbox – Several billion dollars lost in R&D on Xbox and Xbox 360, each, never recovered. $1 billion warranty bill for the most unreliable consumer electronics product ever produced.

Online services – $17 billion in Bing losses in 10 years. $6 billion aQuantive write-off.

Spin these businesses off.

I wholeheartedly disagree with Thurrott and I’ll explain my reasoning in a follow-up post.  Feel free to contact me at surilamin *@* live (dot) com



About Author

Suril is a scientist, journalist and obsessive Microsoft observer. He holds an advanced degree in Biotechnology with minors in Biochemistry, Microbiology, and Molecular Biology. Send him tips on twitter: http://www.twitter.com/surilamin

  • Adrian Remus

    Sell xbox? bullshit mr thurrott, just bullshit

  • pepe

    Why are you talking about Paul Thurrott? Are you having an affair with him? That guy’s opinion is irrelevant.

    • http://twitter.com/surilamin surilamin

      Too many people hold up Thurrott as a god in the Microsoft community. Just shedding some light on the issue.

      Of course, most of our readers here already know this.

      • pepe

        Anyone that consider that guy as a “god in the Microsoft community” can only be retarded.

  • cs

    I don’t understand why companies want to spin off various product lines. I can understand if there is some kind of internal defection but isn’t it better for a company to build up it’s assets to be stronger as a whole? Microsoft is looking at harmonizing all their product lines and while it is probably taking longer than people want it seems like a decent goal if they can execute on it correctly.

    • cs

      I should have pointed out that I understand that Microsoft isn’t doing this and that Paul is just spouting off his usual drivel.

    • Asymgo

      But these items may not be assets and simply continue to deteriorate profits forever that will take ways funds that could be used for better opportunities like developing the next great disruptive innovation.

      • Yuan Taizong

        These assets actually help to develop the next great disruptive innovations of tomorrow, the Kinect was build by Xbox & Bing, and it has been one of the most critically aclaimed innovations in its area, being used on ”mind-reading robots/androids” and more innovation in web-search and voice-search, without these products Windows Phone could never have existed. Maybe Ballmer even bought Nokia as a message to his successor ”don’t derive from my path”.

      • AS147

        Wat are you talking about? The entertainment division is making a profit

  • http://www.rwalrond.com RWalrond

    Remember when the tech public was screaming for Microsoft’s divisions to work more closely instead of trying to one up each other? Now we actually want them to be separate companies? This will improve they way they work together? I don’t agree with this notion.

    • Yuan Taizong

      True, people wanted Microsoft to work together when they were devided, and now MIcrosoft is finally moving to become 1 unified company with 1 strong leader and 1 organized structure… ”hmmm, let’s break it up” (>_<).

  • Guest

    Sorry but that is the most idiotic things I have ever heard. Sell Bing and Xbox? What is this guy smoking exactly!?!??!?!?!?!

    • koenshaku

      Bing and yahoo are the only two that stand against google for market dominance in the online search and advertising market. Xbox is their only successful and globally iconic device. Which they have already taken to integrating the brand into their other services. In summary yes he is smoking something very strong.
      One of many mistakes MS made was abandoning PC gaming services if they built on Microsoft gaming zone which was quite popular at the time and supported just about every game they could have been the steam we know today and wouldn’t have steam identifying PC gaming then switching to other platforms.
      Not to say the console market isn’t much larger, but there are a sizable number of pc gamers all the same and this is alone is reason enough in choosing a platform.

  • Sean D.

    Wow, talk about your foolish ideas…

  • nohone

    Just more proof Paul hasn’t a clue. People claim that Microsoft doesn’t have a consumer focused mind, only a business one. So he proposes selling off one of the most successful consumer products in history, the Xbox. From Xbox, there has been research that is being applied to other areas. It gives them a vector into the home, to control media distribution, and a Microsoft branded device in millions of homes.

    As for online services, without these Microsoft just may as well pack it up and close shop. Everything computer related needs an online component. It was not until a couple years ago that iTunes finally started making money, Jobs said that they did not need to make money from it because it was there to support iPod. Look at where Apple is today with OSX. They have no services to go along with it, and it is a failure. Meanwhile, iPhone has maps (although it is crap), iTunes, the store and more (some from other companies), it is a success. Without online services, their products become static. And while some competition has higher market share, it would just be allowing the competition to grow unchecked.
    There is much streamlining that can be done, but selling off big groups is not helping the company, just harming it. And in usual Thurrott fashion, if they do not do what he says, he will have his usual temper tantrum. He is a reporter not a CEO (no offense to the writers of this site), and to make it sound like he knows best, just shows his head is a bit too big.

    • http://twitter.com/surilamin surilamin

      No, I think you misunderstand I agree with you. I do not believe Thurrott knows best. I am simply arguing (as in the article linked in the first sentence of this post) that supporters of Mulally as Microsoft’s next CEO are also supporters of Microsoft splitting up the company; which I think would be terrible.

      • nohone

        I think you misunderstand my comment. When I wrote “no offense to the writers of this site” I was trying to say that Paul is a journalist who does not know about running multi billion dollar, multi national companies and therefore very misguided. And since you are a journalist writing a tech blog, I was not trying to put you down when I wrote it.
        BTW, I noticed you are wearing a PSU shirt in your picture. Are you a fellow PSU alum?

        • http://twitter.com/surilamin surilamin

          Oh I see, no offense taken, I write here for fun I have a “real day job” haha. Yep proud PSU alum :)

        • Asymgo

          What makes your options more qualified then Paul Ts?

          • nohone

            Let me turn that question around – what makes Paul’s opinion more qualified than mine?
            I am a software developer, I run my own business, I have sold software that is in use by many people (I will not name software names to protect my id, but you would be surprised to know what I have worked on). I have also written books and magazine articles on a wide range of software tech (as well as non-tech related articles), some by Microsoft, some from Microsoft’s competitors.
            Paul’s qualifications include publishing rumors, writing a few books that no one read, whining when he does not get his way, and offering poorly thought out advice to multi-billion, multi-national corporations where, if that advice is followed, will cause the end of said corporation.
            So I ask again, why is Paul’s opinion more qualified?

          • Asymgo

            He could and would acturally answer the question. ;)

          • nohone

            Let him come here and answer it, then. I don’t need to justify myself nor my opinion, if I have an opinion, I will tell it. And it is my opinion that Paul is simply unqualified to make such endorsements.

          • AS147

            The evidence is clear and you are correct

          • Asymgo

            It is obvious you have mistaken the contacted verb won’t for can’t. ;)

            But that is ok I suspect your itchy to fire up your new Call of Duty… Which ironically could be the sane title to your options you find difficult to justify beyond simply antidotal bias. ;)

          • AS147

            Paul has a hidden agenda. He has had run ins with MS for years, most recently he and Mary Jo showed their complete lack of professionalism when Steven Sinofsky left (was fired). Regardless of what you think of Sinofsky they got on the world wide web and literally danced with glee in front of millions laughing like school children because a person who didn’t like them was now gone. Real class folks. I was fans of yours for years until I saw that basically you are overly biaised self interested folk without the best interests of MS at heart.

            Paul often uses the comment that he wants MS to succeed as his income depends upon it but that is horse crap because almost everyone except for him and shareholders believe splitting up and/or selling MS is a bad idea.

            Here’s a hint, why do you think the DOJ back in the early days wanted to split up MS!? It certainly wasn’t to boost their business model was it.

            Paul is a technologist so to answer your question business architecture is not his strength and he should not play in that area.

          • nohone

            One very small correction – not all stock holders think breaking up Microsoft is a good idea. If they do start selling off major components, I will hold onto my stock for a short term because they will get a bump from it, but their long term outlook will be bleak and I will sell after that.

    • Asymgo

      How can you declare Xbox being one of the most successful consumer products ever when they never made a profit from the units while the fruit company has sold more of both their tablets and phone is much less time while Samsung sales more galaxy in a year the Xbox in a life time.

      • nohone

        First, I said “one of.” There have been many good sellers, and I would consider selling nearly 100 million a success. How many things can you claim to have sold nearly 100 million of? The PS2 was considered a great success because it sold 100 million. And with 3 competitors in the market, rather than 2 (Sony and Nintendo), they did quite well.

        Second, in the quarterly earnings announced in early 2008, the entertainment division made money. And that was with the great device, but money loser, Zune as well as other components being in the same division. I believe nice then they have made money.
        Third, it has been very important in breaking into the consumer market and changing the reputation of Microsoft of being the enterprise only company into one that can also do CE. How many people can you say have never herd of Xbox? Very few.
        Four, it taught Microsoft lessons in building consumer electronics and what they need to do to turn themselves into a services and devices company. They built mice and keyboards before, but never full computers. They had MSN Online, but never services that had millions of people online at any given time. Xbox taught them how to build computers. Live taught them how to build services, when there were few if any companies doing that at the time. Yes, other companies had their little search engines or music services, but there was nothing like Xbox Live, and companies like Sony and Apple scrambled to develop something like it, laughing at it while building a copy but not getting even close to what Live offered.
        Five, How many people are exchanging Game Center ids? How many people ask you for your PSN id? I never am asked for those, but I have many people asking me for my Live id. Sony, at first, mocked achievements and then added entitlements only to rename them to trophies. Apple was so uncreative that not only did they add achievements to iOS games, but they even named them achievements. The least they could have done was name them iAchievements, but no, they had to copy the exact name. As they say, imitation is the sincerest form of flattery. And if it were not a success, would Sony or Apple have coped?
        So no, Microsoft did not turn it into a money maker like Windows or Office, but it is a profitable success, a mindshare success, and a success in so many other ways.

        • Yuan Taizong

          True, without the specific combination of Microsoft’s services like Bing, M.S.N. Xbox LIVE, Zune, (THE FORMER-)Windows Live, Skype and others today’s ecosystem (not in the rediculous app sense) of Windows, Windows Phone and Xbox couldn’t have existed, let’s not forget that Bing powers the Kinect, Skype powers a lot of services and Bing does so too for many non-Microsoft web-sites along with the built-in apps of Windows and Windows Phone.
          Having more users and a larger demographic to advertise to and having more people to learn from is only good for the company, only many so-called analysts can’t see this because they look purely at the raw numbers of profit, that’s how American culture works, that’s how media culture works and that’s what readers want to read is about a company that is fiscally successful, as if having superior services and consumer satisfaction is irrelivant.

        • ASYMGO

          “Taught Microsoft lessons on building consumer product” – that is utterly false. They learn nothing about that;
          Kin = fail
          Zune=fail
          Surface RT = fail
          Surface Pro = Fail

          Anyone can sale a 100 million of anything if they can lose money doing so – the object of business is to make money – not just keep some fanboys happy. ;)

          • AS147

            Tell me why you would remove an entry point into everyone’s living room. Getting into media (which Xbox is a stepping stone to) is one of the current big inroads for tech companies. MS has been trying to break into that for years. It has finally gained an increased trust of the content providers by making deals with major TV networks to show their content through XBox. Throwing that away know is like building a house, losing money on the way and finally being able to rent it for a profit and knocking it down before it can deliver long term gain.

            Xbox by any measure is a success it is the number one gaming system, probably will become the number 1 set top box (will happen almost overnight) and is financially profitable (most recently). This provides massive gains to the MS portfolio in the media space, has complimentary technology in the PC market and if it were sold there would be a queue of companies lining up to buy it! Why!? BECAUSE IT IS A SUCCESS!!!!

            Selling it is plain silly.

      • JReuben1

        If you are looking for a rational discourse then you have come to the wrong place – this highly amusing peanut gallery is an echo chamber :)

        • nohone

          Don’t forget everyone – to JReuben1 rational discourse is advising Microsoft to stop work on Windows, a multi billion (and perhaps nearing trillion) dollar franchise, and put all their effort into supporting Ubuntu which Microsoft would make absolutely no money from. And if you were to point out how foolish such a move would be, point out how he tells lie after lie (such as how he claimed Microsoft has abandoned Windows for Linux on Azure) then he starts with personal attacks.
          To him, that is rational discourse.

          • JReuben1

            is that a memo to the team ?
            If you read Thurrott’s blog, you will see that he loves MS; he is nervous about the depreciation of his skill-set investment in MS tech that he has bet his lifetime on, and he “Wants to Believe” that Metro is not the problem. He recommends spinning off the non-financially viable sectors of MS (XBox & Bing) to save the rest.
            He points out that Office, & Windows are still profitable but their margins & market share are shrinking – as cheaper products have reached & surpassed feature parity, there is not much MS can do in the scope of these products to stay afloat. Just as DR-DOS forced MS to head down the Windows path in the first place, MS needs to head into an alternative markets as others have caught up & saturated the smartphone / tablet market while the PC market stagnates. MS had a good 20 year run since they took the poll position out of IBM’s hands (OS/2), but you cant seriously expect that to last forever just because it worked out for 20 years. Industries evolve rapidly.
            I would go a step further; spin off Server & Tools (which is profitable & has innovative offerings) so that it doesn’t go down with the Titanic !

          • nohone

            Let me paraphrase:
            Incoherent, unrelated ramble, then launch the personal attacks.
            Did you claim tat Microsoft should drop Windows in favor of Ubuntu? Yes.
            Did you claim that Microsoft was dropping Windows in favor of Linux? Yes.
            Did you claim that we should get rid of Office in favor of LibreOffice? Yes.
            And then there is your complaints of a drop in margins for Office. Apple and Google have been seeing drops in margins, in their devices and ads. OSS is not seeing a drop in margins, because they cannot even give it away for free. Can you provide proof that Microsoft is seeing a drop in margins on Office? There may be some drops in margins because, when software is first released, there are costs such as employment that are factored into the initial release.
            As for your bit about the industry moving quickly, you contradict yourself. If you think that 20 years is moving fast, and that Microsoft’s competitors are moving fast, you are mistaken.

          • JReuben1

            My opinion is that windows & office have run their course on the desktop, and that OSS (Linux, LibreOffice) are viable free alternatives. Furthermore, they were too slow in entering the smartphone / tablets, so will always be a distant 3rd playing catchup to Android & IOS. It would be in MS’s best interests to refocus on its strengths: Tools & Services + Enterprise Dev.

          • nohone

            You said that we should not rely upon Microsoft’s success because it has been successful over 20 years. Why should we rely upon Linux being successful when it has been completely unsuccessful for 20 years.

            Einstein once said insanity is “doing the same thing over and over again and expecting different results.” The Linux community has been doing the same thing over and over for 20+ years, and have been expecting this year, the year after, and the year after that to be the year of Linux. And now, suddenly, the world will, in one sudden move, adopt Linux, LibreOffice, and the rest of the open source world? We have been hearing this since Windows 3.0, and yet, they have not done anything to change it.

          • JReuben1

            Insanity is doing the Zune over & over again and expecting different results. Metro UX is the real problem, not lack of apps in the app store.

  • http://www.about.me/AngeloGopaul Eingoluq

    I have as much respect for this opinion as people who believe the world is flat and less than 10,000 years old. Their delusions must not be encouraged.

    • AS147

      After years of struggling to catch up this is the biggest threat to MS, the competitors are laughing in their offices TRUST ME.

  • bond

    Xbox would fail as Xbox 360 is based off a modified windows kernel. Xbox one appears to have modified/optimized hyperv, windows 8, and xbox centric kernel. 3 based on windows kernel. Understand the basics and technically what is capable. Bing has Ben deep integrated into windows phone and windows 8 and not to mention every IE for a while…

    • Asymgo

      So that does not have to change if it was sold off – both bing and Box could have strategic agreements to continue the relationship bit they would just need a business model that generated enough profits to support themselves.

      • Yuan Taizong

        They could be more profitable in the future, as they also empower the more profitable other businesses, the next tech revolution will be on the T.V. and other tech companies are struggling there, while Sony and Microsoft have a huge ecosystem already on it, Bill Gates envisioned the Xbox to be Microsoft’s gateway into the living room, and that vision has materialized, Zune has been integrated as Xbox Music and Xbox Video, when the next tech revolution takes over the T.V. the Xbox One could be at the forefront.

  • adambomb

    ROFL! Thurrott must be high today. Sell off Xbox -which is almost in a market where a duopoly exists!?!? LOLOLOLOLOLOL

    • Yuan Taizong

      Yep, Apple must sell off iO.S. and Google must sell off Android,
      good news, I finally found the drug Thurrott is smoking.

  • Mythos88

    Of course Thurottt would want Microsoft to sell xBox–what an idiot.

  • frankwick

    Do not want to spin off xbox. Microsoft has a huge opportunity here with one UI across all screens. XboxOne will run hyper-v. Think about the awesomeness of being able to run all your apps across all your screens. Talk about an app store explosion. Then there is the streaming cab capabilities they haven’t delivered on. Show my Windows 8.x photos on the Xbox screen, etc…

    • Yuan Taizong

      This is something investors fail to see, they only look at their wallets, not their screens, as far as they are concerned Microsoft’s only product is money, they fail to see the companies they are trading in, they just see their balance sheets, this is how economics work, it isn’t driven by innovation, it’s driven by how much profits you’ve made compared to the exact time last year.

      • MS Investor

        What “investors” are you talking about? MS is one of the most widely held stocks out there. There’s no one type of MS investor. Some are individuals and other are institutions. Some have a time horizon of a few days while others have held for decades. That said, the majority of MS’s investors have been unbelievably patient. The stock peaked in 2000, declined about 50%, and has basically flat-lined since. Yet Ballmer has been reelected in every year since, and with very high approval percentages.
        Many of us understand the company, industry, opportunities and challenges just as well as you do, maybe better. So please don’t tell us what we don’t know about our company. Do you even own a single share?

  • Davey

    This is what you do with companies that are in financial trouble. As far as I am aware MS isn’t heading for chapter 11. Not even close!

  • PoohGQ

    I watch that podcast that his on with a guy hosting a Windows show using an iPad! Yuh..I’m not gonna believe a word this turd says anymore. He’s become like that guy that hosted a msmobile.com podcast.. whatever happened to him..?? =/

  • norsem4n

    I can’t believe what I am reading?!??! It sounds like analysts want Microsoft to fail and to make stupid moves… Who else is come out of the wood works with idiotic thoughts?!

  • Duk3togo

    Paul contradicts himself all the time. How the hell does he want MS to become more like Google and then state to spin off the services that could help MS build a strong ecosystem. Google wants to get in your TV in order to add that service to their ecosystem but hasn’t as of now come close to the Xbox numbers. MS can use the Xbox to build a video streaming service, music, and capitalize on search (2 birds one stone). All MS has to do is integrate all their services thru using the same kernel and have them speak to themselves across all their products.

    • Yuan Taizong

      Which is already happening, Microsoft is already several steps ahead of the competition, but people will only look at 2 things the profit & the number of apps in the app marketplace, and because of this, people won’t take Microsoft serious.

      • Duk3togo

        It is already happening but if the Ford CEO takes over and sells off Xbox, Bing, or any division he does feel fit with his vision of MS. It’ll all turn to crap.

        • AS147

          Agreed, MS is probably another two years away from putting in place enough commonality and strong integration to feed its business for another 5-7 year cycle in which time it can continue to build and remain that far ahead of the competition. Its like shooting the marathon runner less than a mile from the finish line.

  • donzebe

    I am surprise to hear that coming from Paul Thurrott.
    I just think the current reorganization Microsoft has put forward should stay and move on.
    spinning off Xbox and Bing is not the answer. We need a unify Microsoft.
    Alan Mulally as CEO ? Microsoft is history, unless he follow and execute the current plan.

    • Yuan Taizong

      True, Windows 8’s most successful components are actually Xbox LIVE Games and ”the Bing Apps” (Bing News, Bing Sports, Bing Finance, Bing Maps and Bing Travel) along with Microsoft’s many other on-line services, selling those off or spinning them off would be a horrible mistake.

    • AS147

      An almost 70 year old professional from a set of industries that move at a much slower pace with a set of disciplines set around production line mentality. Yeah what a good fit for a software company – NOT!

      Explain to him that he needs to be hip with the younger generation, explain to him agile methodology, explain to him the science of destructive innovation, open source, crowdsourcing, software business at all, you get the picture! He will spend so much time trying to catch up with the completely different world of business that is IT he won’t get anywhere and will hold MS back. You need someone who is guaranteed to take the company from a position of knowledge and proven track record in IT and wil last with the company at least 10 years. So is the 69 year old from a largely manufacturing background a good fit!? Does he have the backbone and knowledge to say no to the board pressures when it isn’t in the company’s long term future.
      No, no, no.

      Don’t you dare even put him on the short list MS. Bloomberg stated quite a few obvious reasons why he would be a bad choice http://www.businessweek.com/articles/2013-09-10/why-fords-alan-mulally-shouldnt-be-microsofts-next-ceo?campaign_id=yhoo

      Lets hope Bill gates casts a vote for an innovative leader not a slash and burn old man who is about ready to retire himself?

      • donzebe

        So true, that’s why someone from within, someone that’s been in touch with all or most of the department heads
        Someone that is able to recognize his /her employees when they see them.
        Honestly, no outsider should come close to the short list. Microsoft is not in a desperate situation right now. Just some greedy investors who want to over fill their pockets are wanting to destroy the company for their greed.

  • Blaze Blue

    Can you go back to him and tell him that he has lost his mind. If they do that I will never buy a Xbox again . And might I add, why isn’t this being said about Sony’s playstation

    • Yuan Taizong

      True, but this is because Americans only care about short term profit, while the Japanese are sane and see what they can accomplish in the long run.

  • grs_dev

    If Microsoft was a village, Paul Thurrott would be its idiot…

    • AS147

      LOL

  • grs_dev

    I vote yes for Mulally simply because the way the Nokia deal went. With Microsoft having no credible automotive play now that we know the Nokia deal comes without the “Here” line of business, bringing Mulally on as CEO allows Microsoft to leverage his background and experience at Ford to penetrate the automotive computing industry.

    Nokia’s vision is to be the dominant data provider (DaaS) to automotives. Microsoft could and should position itself as the dominant device these services run on inside an automobile. It also allows Microsoft to further its involvement with unmanned cars, etc.

    Ford and Microsoft already have a good healthy relationship. We know Microsoft and Toyota have a relationship. By extension of the Ford and Toyota relationships, Mazda, Nissan, Renault, Volvo, Jaguar, Range Rover, Subaru and a long list of other car makers become attainable for similar opportunities.

    The world of computing is broken up into where you work, where you play, and the vehicles that take you back and forth from work to play and vise versa…

    • Avatar Roku

      Ford just signed a multi-year deal to use TomTom navigation. Ford is one of the few automakers that doesn’t use Here/Navteq.

    • grs_dev

      Ford still uses sync in its vehicles. Here is NSN. Ford Sync is built on top of Microsoft’s automotive computing platform.

    • Yuan Taizong

      Although I completely agree with you that Microsoft should be in the automobile business, Mulally could break up the company and simply concentrate on embedding Windows Embedded 8 into them, which would be great, but losing some key components like Xbox LIVE and Bing (for voice recognition and Bing Maps/G.P.S.) would (could) be disasterous.

      • grs_dev

        Xbox is integral to the strategy. If you go to Microsoft advertising solution’s website you see the alignment.

        Breaking Microsoft up wouldn’t be about splitting consumer from enterprise. I do think there will be a shake up.

        I Expect things like Microsoft research for example to be sold or shut down.

        I also expect Microsoft learning and the Microsoft press to be either sold or shut down or spun off.

        Another area in my opinion that could be on the chopping block is the consulting services group.

        The mouse and keyboard products could be offloaded in a strategic way to a Logitech or something to that effect.

        While these areas are not earth shattering individually they would show that the new ceo is laser focused on devices and services that cover the spectrum of where people work and play.

        • AS147

          I am sorry but getting rid of R&D in any company (especially a tech company) is completely illogical as it is counter to ensuring future innovation from which businesses are built.

          The thing I don’t get is why every time a new CEO comes into a company they are tasked to do so on a wave of cuts. Where is the visionary, what about coming in and making inroads into other complimentary areas through oh I don’t know…. INNOVATION!?

          The reason (I did really know the answer) is because they are brought in by people who know only one thing, short term profits (AKA greed). They are about as qualified to make these sorts of calls as a dung beetle. Companies that make real cash do so by being innovative (Apple, Skype, Facebook) or you could just shrink the company.

          MS is not losing money, its a $20billion a year business, why treat it like it needs to be clipped? The technology eco systems are merging everywhere, so where exactly do you cut a piece that isn’t going to be a big opportunity in the future!?

          Paul Thurrott may know a fair bit about technology and I suggest he stays away from business architecture as he has no foundation of knowledge or a track record to show he could advise a bubble gum factory what to do.

          • grs_dev

            Getting rid of Microsoft Research doesn’t mean you stop doing R&D. It just means you don’t spend billions on a dedicated R&D group that literally has no revenue components to it per se.

            Innovation means to make different. You don’t necessarily need an R&D company within a company to innovate. You do need people who are in tune with what the market needs and you do need them to be able to rapidly and effectively respond to this need. That’s innovation. If you can predict where the market is going then you become an innovation leader.

            The CEO’s job is not to make cuts. The CEO’s job is to create a vision for growth and prosperity. The COO and CFO are responsible for finding profits hence they are the ones who are usually proposing cuts in order to meet the targets that their CEO has set to the shareholders.

            Yes, it’s true that Microsoft is not losing money per se, but the growth that Apple and Google just to name a couple have managed to capture right before Microsoft’s own eyes while their [Microsoft’s] share of that same pie kept on shrinking can be considered a loss of opportunity.

            In business the definition of relevance, is when your customers start paying less to acquire the goods and services that are core to your business model. Microsoft’s core competencies have been selling for less over the last decade hence the shift in paradigm from a Software company to a Devices and Services one.

            We both agree that Paul Thurott is the least qualified person to give Microsoft advice on how it should run its business. The guy is a shock jock equivalent. The more outrageous he gets in his thoughts and opinions the more money he makes.

          • AS147

            I don’t really care if it is one department called R&D or something else that performs the same function but don’t blame them when the fault is at the feet of management who have no vision even when it is fed to them to take advantage of the very real IP and future value.

            The *function* of R&D is critical to the future of MS. Clearly there have been instances where the unusual massive growth spurts that Google and Apple have experienced could have been Microsoft’s as well. Also be aware that comparing that sort of growth is an exception rather than the rule. Nonetheless it was in the MS space so it is a fair comparison for now.

            There are countless examples where R&D produced technologies that were later proven to be significant but MS corporate did not adopt them e.g. Courier tablet – before tablets were even a thing. This was a tablet that is still beyond it current tablets. A decade later Apple did it and now look where MS are.

            For the future? What about Cortana, Microsoft’s response to Siri. This again looks far better than Siri, will they adopt it? It looks likely but MS has been ahead of the game in speech analytics for years and yet have to release it in the mobile world when others have been benefiting from it for years.

            The other reason for R&D is to showcase MS as a force in this space and to produce patents and technologies it can use in the future.

            Most companies have loss making parts which help the greater good. Its just an allocation of funds. At the end of the day if you properly called out the value of MS R&D it would not be considered a loss maker but would be merely seen as the cost of doing business distributed amongst the other business divisions.

            Whilst MS ignored these innovations they lost some of these people to…..Google and co.!

            Their concept videos (below) are freakishly on the money and these were all the way back in 2000 e.g. from their internet vision in 2000….
            http://www.bloomberg.com/video/microsoft-s-vision-for-computing-internet-in-2000-Yk~w8D4GR1~Ws3BjxEJp4Q.html

            Some reading supporting this..
            http://www.bloomberg.com/news/2013-09-11/microsoft-s-concept-videos-from-2000-were-spot-on-so-why-didn-t-ballmer-build-any-of-it-.html

          • grs_dev

            I think some fact checking is in order here. The Courier was developed by J Allard. He was the head of entertainment and devices division. MSR had very little to do with the courier. Some foundational technologies around pen computing and such but that’s about it.

            While research and development as a function is elementary to any technology centric company, I think Microsoft Reseach (MSR) specifically has been somewhat ineffective as a muscle in the Microsoft body.

            I am merely suggesting that a new leadership team should rethink how R&D is done at a company like Microsoft. I am also suggesting that for the amount of money Microsoft Research has sucked in the ROI hasn’t been there in recent years.

  • Eli_Vance

    Paul Thurrott is an idiot

  • Mad

    He and most other investors just want to make a few quick [billions] bucks, and they don’t care what will happen after. Money shall be in motion, sell out Microsoft, get some fat dividends, dump shares while they are in highs and buy another shares. Rinse, repeat. This is in his mindset, and I don’t even blame him for that as this is the best strategy for minority stake investor.

    Majority shareholders must resist such demands as they lose in such situation. Gates, just look on what Dell does now, and do the same – shrug and show to hyenas your middle finger.

    • Yuan Taizong

      True, the stock market is all about short-term profits, never take it too serious, even as the NASDAQ fell during the bursting of the Dot-Com Bubble, 90% of the ”Dot-Com Bubble companies” stayed in business afterwards, if it proves anything, it proves that the stock market and the ”real” market are 2 completely different things.

  • TheNet Avenger

    Perspective…

    This is the same guy that thought Windows NT would have to be completely rewritten to run on ARM and argued that NT would have to be rewritten for each type of ARM CPU.

    (Which anyone that understands the NT HAL at even a basic level was horrified at the idiocy.)

    He has friends at Microsoft, he understands little more than a kid working at BestBuy selling you a notebook.

    • AS147

      Have to agree, were it not for the internet this sort of guy would not have the profile he has.

  • Bugbog

    I’ve been pondering for awhile now, for people like Thurrott and Mary Jo, at what point is there a divergence from following/commenting/reporting on a particular company, to just being parasitical?

    Yes, you’ve been doing this for quite a number of years, but, at the end of the day, you are merely feeding off of the work of others at the company. Just as in the same way that an “analyst” is not legally accountable for any of his comments or recommendations.

    He.is.Irrelevant!

    • http://twitter.com/surilamin surilamin

      @Bugbog:disqus whats a good email address to contact you at?

      • Bugbog

        Just sent it to your Live address! :)

        • http://twitter.com/surilamin surilamin

          Thanks, I’ll be in touch shortly.

  • Mikado_Wu

    Dumbest thing Paul has ever said. He needs to look into Tax Laws. Xbox billion dollar repair bill. Bull crap. Again I believe that was a Numbers Game.

  • Aman Bhullar

    I don’t get this idea of selling Bing and Xbox. Even for a sec if I do agree that MS should sell it then what is the guarantee that it won’t be bought by some rival company.
    I love the fact that I get Xbox music on my Surface pro for free.

    • Yuan Taizong

      True, without those services, Microsoft would be doomed to use Windows Media Player as its only competition against Google Play Music and iTunes, in other words, it would be a flop waiting to happen (similar to Elop).

  • tomakali

    Its Good to sell XBox and other services IF Microsoft wants to put Windows connectivity services on every moving object on Earth[cars,planes,bikes etc] because that is the future and Microsoft has to take lead now itself.(there are more cars than xbox, and theres no need to build hardware, just provide right software, network and components)

    Its a suicide if microsoft wants to do nothing but sell XBox and other services

  • vmxr

    Paul go home you are drunk

  • Timgriff84

    His comment makes sense but only if the aim is to maximise profit over the next 10 years and for Microsoft to fold in the next 15.

    When he says spin off xbox and bing he really means close them. Who would buy either of them? Bing is only valuable as research and Xbox as a brand only means something if Microsoft is behind it. Particularly as there now between console.

    If this is also the strategy it would also be best to close MS research, the IE team, the a Surface team, forget about phones. Might as well even close everything of office and windows that isn’t support.

    Profits would be amazing until the company failed due to no knew products.

    • Yuan Taizong

      Although this is true, Yahoo! would jump in to buy Bing and Samsung would jump in to buy the Xbox to compete with Sony and on long-term also Microsoft, the Samsung Xbox and Samsung Kinect, now brining Yahoo!’s innovative search into your living room.

      • Timgriff84

        Would they though? Yahoo I can see as a possability but apart from a bit of market share what else would they get? They’d probably be better off using any market to expand beyond search. As a research project its also usless to them. Amazon could be a possability though.

        The Samsung Xbox, I’d question the point. Xbox is at the launch of a new console which makes the current ownership stats meaningless. They wouldn’t be buying 40 million xbox users as they would still need to sell them a new console. How many people would really buy an Xbox One if Samsung made it? Personally I wouldn’t unless it was it was significantly cheaper than the PS4.

  • Yuan Taizong

    I hate it when these business-centric people claim that Microsoft only exists for short-term profits, although that’s where corporations mostly get the most support for, having a long-term vision has (historically always) proved to be the winning strategy, online services are more than just Bing, there’s Microsoft HealthVault, Microsoft SkyDrive, Microsoft Outlook.com, Microsoft So.cl and MANY more that people love and use every day, this will also mean losing a large (more than 400.000.000 people, that’s more than the entire United States) demographic to whom they could advertise, Xbox-users are more likely to support other Microsoft products including online (cloud-)services and Windows and Windows Phone.

    Microsoft shouldn’t get rid of these businesses, that wouldn’t be a sign of profit, it would be a sign of giving up and many people will lose their respect for Microsoft because of it.

  • Vincent Haakmat

    spinning off Xbox and Online services doesn’t make sense to the new Microsoft Framework. BlackBerry is spinning off BBM and watch how fast you’ll see it dying. Because from a consumer point of view BBM is the reason consumers own a blackberry, not because of its security or enterprise prowess. Now that BBM will be available on IOS and Android (and I guess Windows Phone later also), give me one good reason to own a BB phone? So this who spin-off talk is utter nonsense.

  • AS147

    Paul Thurrott placed himself in this position many years ago when he stated that MS should be broken up. This may have made a little more sense then than now but still was not well thought out. The proposal now is even more illogical as this simple view of the portfolio of MS assets and liabilities is not split cleanly down product lines. One supports many others and to remove one just based on the balance sheet does not show the effect on other lines. Lets take Xbox for example, remove this and the ability for MS to leverage that to support its move into music, social networking, wider adoption of Skype and R&D to better other business areas suffers. Remove more parts of MS and these divisions now can’t leverage scale.
    Lets call this for what this is, a pure shareholder populist approach without understanding the long term value both monetary and defensive against future major changes in the tech market. Without this distribution MS ends up become an unbalanced portfolio ill equipped to survive these major shifts. Where would MS be today if they were able to react with touch devices, (albeit they have been slow), without a mobile capability (again slow to move) to counter the move to more functional smartphones and tablets.
    Paul, is over simplifying a complex business strategy to appeal to the simplistic viewers of the world. If business was that simple everyone would be doing it. In reality business is a constant battle and you need a balanced portfolio to spread the impact of current and future risk. Nowhere is that more prevalent than in the IT and financial markets.
    Paul, go back to talking tech and leave business strategy (for which you clearly are not qualified) to those who know better.

  • Ankit

    I think Paul would soon also say they should sell Nokia. It’s too consumer focused not enterprise enough ;)