Microsoft Corporation (MSFT) Won’t Spin Off Xbox Or Bing

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Microsoft Corporation (MSFT) Won’t Spin Off Xbox Or Bing
efes / Pixabay

Microsoft Corporation (NASDAQ:MSFT) is not going to sell its Xbox or Bing businesses despite pressure from a section of shareholders. Microsoft CEO Satya Nadella said during the Code Conference in Rancho Palos Verdes that the software giant has no plans to spin off Bing or Xbox businesses. In fact, he was quite happy with the way the Xbox unit was going. Nadella said that before the acquisition of Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V)’s handset business, Xbox has been the key source of the company’s hardware know-how.

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Microsoft developing a smarter search technology

Microsoft Corporation (NASDAQ:MSFT)’s latest console Xbox One has sold more than 5 million units since its November 2013 release. The Redmond-based company recently launched a new version of Xbox One without the Kinect motion sensor, which costs $399 compared to $499 for the original console. The move was aimed at boosting sales. And initial reports suggest that demand for Xbox One has increased since the launch of low-cost Xbox One.

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As for Bing, Nadella thinks this has been a success, too. The loss-making search engine has only 18% market share, or 30% including the Yahoo! Inc. (NASDAQ:YHOO) searches that are powered by Bing. There were speculations that Microsoft Corporation (NASDAQ:MSFT) could sell Bing to partner Yahoo. The key reason for keeping Bing is that the service is built into the software and services on Windows Phone and Windows 8.1.

Satya Nadella said Microsoft Corporation (NASDAQ:MSFT) is currently developing a smarter search technology which could predict what task a user wants to perform. It uses the recommendation technology that Pandora Media Inc (NYSE:P) and Netflix, Inc. (NASDAQ:NFLX) use for music and movies. But Microsoft will apply it to a broader range of interests and activities.

Microsoft must build, rather than buy, at least one major new product

Nadella also laid out his vision for the “post-post-PC era.” He said Microsoft Corporation (NASDAQ:MSFT)’s future will depend on its ability to develop, not purchase, at least one major new product that is on par with Windows, Office or Windows Server. He said building the “next big thing” is crucial, and if the company has to buy things along the way that’s fine. But it must build something big. Nadella said the company will work on technologies that encompass more than mobile devices.

Microsoft Corporation (NASDAQ:MSFT) shares were down 0.54% to $39.97 at 12:34 PM EDT on Wednesday.

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Vikas Shukla has a strong interest in business, finance, and technology. He writes regularly on these topics. - He can be contacted by email at vshukla@valuewalk.com.
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  1. I don’t know where the rumor about Microsoft selling the Xbox division ever started. It is a huge profit maker for Microsoft. Licensing, memberships, movies, music, games, its crazy how big of a cash cow it is. It seems that Microsoft and Sony have both gotten away from the concept of selling a console at a loss also.

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