Microsoft CEO defends Xbox in final shareholder address

Outgoing executive Steve Ballmer says Xbox and Bing businesses are key to the company's broader vision.

In his last shareholder address as Microsoft CEO, Steve Ballmer took time to defend Xbox and Bing as essential components of the company's broader vision after some have suggested it would be wise for Microsoft sell off these businesses to become more profitable.

Speaking about the Xbox One, as reported by Geek Wire and Seeking Alpha, Ballmer said the console's integration of Bing and SkyDrive are examples of Microsoft executing on its plan to unify the company's devices and services.

"No other company could have delivered what we are delivering with Xbox One," Ballmer said. The console is a "reflection of what is possible when a company, our company, is unified under a common vision," he added.

Ballmer announced his resignation in August, saying at the time that he would step down within the next 12 months, but not before a successor was named. Nokia CEO Stephen Elop, reportedly a front-runner to become new Microsoft CEO, may consider selling off the Xbox business and killing Bing entirely if he gets the job, according to a Bloomberg report this month. Elop joined Microsoft in September when Microsoft purchased Nokia's handset business for $7.2 billion.

What's more, Microsoft cofounder Steve Allen's investment group Vulcan Capital said earlier this month that the next Microsoft CEO would be smart to sell of the Xbox business because it is "detracting" from Microsoft's core competencies.

The Xbox One will be released this Friday, November 22.

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Eddie Makuch

Eddie Makuch is a news editor at GameSpot, and would like to see the Whalers return to Hartford.
324 comments
Bobdog52
Bobdog52

Bing is the worst search engine i have ever used
Hate it and would block the crappy thing if i could

ChiefFreeman
ChiefFreeman

Bing uses Google search results. , and Google actually called them out on it. It's a search engine that rips their info off; a fraudulent product. It should be eliminated. Microsoft should keep Xbox, though. Competition is good.

Neo_OnionKnight
Neo_OnionKnight

So it's coming down to Ballmer defending Xbox and Bing, it may actually be time to cash out for MS if they can't push it further. MS already knows that they're surrounded by competitors taking bits and pieces of "their" cake: Valve, Apple and Google to name a few. MS needs to push to new grounds and maybe cutting a limb might work...Well MS it's your call, sooner or later if the bleeding doesn't stop someone's going to call the hatchet men.

DawnBlue
DawnBlue

I can not for the life of me believe anyone who wants to be taken seriously by even one person on earth would defend Bing!

Hurvl
Hurvl

Firstly, his name is Paul Allen. 

Secondly, I doubt that anyone could manage Xbox as well as Microsoft. They've been doing this for a long time and they have the resources to do it. I'm not saying they're a good company or that I like what they've done with the Xbox, but others would likely do even worse. 

The Xbox is highly profitable and I can't see why they'd want to throw that away.

SpicaAntares
SpicaAntares

@Hurvl

"The Xbox is highly profitable and I can't see why they'd want to throw that away."

*was* might be more appropriate than *is*

jhcho2
jhcho2

@Hurvl  

On what grounds do you claim to know that Xbox is profitable? Because it sold 80 million units? Because there are tens of millions of Xbox Live subscription fees? Did you also happen to take into account the 2 billion MS spent on RROD replacements? Or the cash MS threw at developers for exclusives? Or the 100 million wasted dollars MS spent on...*chuckles*..."Controller R&D" for the Xbox One? God knows what else. 

Hurvl
Hurvl

@jhcho2 @Hurvl Since they sell their consoles with a loss, the 80 million sales means that they lost money on their own product 80 million times, but that's all part of the plan. If they made it more expensive, then fewer would buy them and then game companies wouldn't want to develop games for it, because of the lower user base. That's why the Wii U has such little third party support, because only a few million copies could be sold for that platform. The Xbox Live subscriber amount is impressive, but the real money comes from licensing, I think. 

Now, this is the part where I don't have solid facts. I can't say how much MS has gained from licensing fees or how the attachment rate looks like for the Xbox 360, but since the Xbox was launched before the PS3, was easier to develop games on than the PS3 (I think) and has been slightly ahead of it in terms of sales, it would be more appealing for devs to make games for it -> more games, more licensing fees, more money made. So yeah, that's why I assumed that the Xbox was highly profitable. Your additional info has made me wonder how correct that assumption was, but I don't see anything that would crush the image of the Xbox as being profitable.


masterace101
masterace101

If Balmer is even bothering with this, then there must be some Real major talk about selling off the Xbox brand.

blue_shift_91
blue_shift_91

@masterace101 

there's not. not really. seems it's just one of the major prospective CEOs and some other investor are open to the idea.

quickposter
quickposter

They can't keep expanding towards this "broader vision" if it isn't making money though. It doesn't matter how rich MS fanboys claim they are they won't keep losing money on Xbox forever. Its about profit. The 360 may have been profitable but all the money they lost on the original Xbox has still bitten them so their brand as a whole is not profitable.

I find it funny how all these Nintendo haters claim Gamecube was a failure when Nintendo still made a lot of money off the console. Xbox was actually the biggest failure of last generation as PS3 was this generation. The company that sinks the most money on their hardware is the real loser as they can't afford to continue existing.

jimmy_middleton
jimmy_middleton

@quickposter 360 wasn't profitable... the 16% failure rate and cost to replace crippled them. The division as a whole has lost an estimated 2 billion dollars... they won't keep losing that kind of money forever... so, like with Bing... they either need major changes.. or the scrap the division.

devilzzzwin
devilzzzwin

Sega get back in the business.  Buy Xbox.

BJCentral
BJCentral

Man that's just silly. Their are over 46 million people on Xbox live and sony is hating really hard because of that.. I think that's the reason why Sony is charging for their service now.

CarlosX360
CarlosX360

@BJCentral What you do not understand is, Microsoft is losing money for every single Xbox or Xbox 360 sold. All those billions they invested? They never got back. The only lifeline that Microsoft has out of the Xbox Division would be the Xbox Live program. That's it.

On top of that, it's still an uphill battle for Microsoft. To date, Microsoft only could accomplish gathering 100 million Xbox owners (between Xbox and Xbox 360) and only 20% of that are RRoD's. And when you compare that to PlayStation's 330 million units sold across PSX, PS2, and PS3. Worst part is, when I made that estimate - it was only 73 million something like that sold, but since then, Sony released their 80 million sold for PS3, that number just got bigger and it's only going to get A LOT harder for Microsoft to keep up. 

Hurvl
Hurvl

@CarlosX360 But hasn't the Xbox 360 a better attach rate than PS3? Even if not, the large consumer base for Xbox 360 makes it highly attractive for companies to release their games on it and MS doesn't let them do that for free. MS is the upstart that succeded in breaking into the console business.

Sarobi
Sarobi

If he has to defend the Xbox, than I think it's safe to say he knows that the person taking over after him isn't interested in it as much as he is.

randomkidlol
randomkidlol

"Steve Ballmer took time to defend Xbox and Bing"

Who in their right mind defends Bing? That shit should have never been created in the first place, and should just be put out of its misery.

CarlosX360
CarlosX360

@randomkidlol Microsoft is trying to compete with everyone. Google included, hence why Bing was brought in. 

gam3r80
gam3r80

Steve: "hear me out guys,  ...... COLORFUL ACHIEVEMENTS! ...huh! ...any one?"

Hurvl
Hurvl

@gam3r80 Well, Steve Ballmer sure is colorful, but I don't know how marketable "colorful achievements" are.

ascendedcobra
ascendedcobra

As a matter of fact we should start an online petition to get Stephen Elop fired!!! How about it xbros? This clown needs to go!

xXxIRyanxXx
xXxIRyanxXx

@EndBlend @ascendedcobra Sony cant afford it, and since they are only making like $20 per PS4 and are going to have to replace a bunch of them, they have probably lost money in this last week. 

SSJ4Goku2
SSJ4Goku2

@xXxIRyanxXx @EndBlend @ascendedcobra A Sony representative has provided the following statement to IGN:

"A handful of people have reported issues with their PlayStation 4 systems. This is within our expectations for a new product introduction, and the vast majority of PS4 feedback has been overwhelmingly positive. We are closely monitoring for additional reports, but we think these are isolated incidents and are on track for a great launch.

There have been several problems reported, which leads us to believe there isn’t a singular problem that could impact a broader percentage of systems. The number of affected systems represents less than .4% of shipped units to date, which is within our expectations for a new product introduction."  http://www.ign.com/articles/2013/11/14/broken-playstation-4-systems hardly a bunch of systems to replace, seeing as not even 1% out the 1 million and more sold are being replaced. That only equates to about 4000 systems out of 1 million,... that's an extremely low number by comparison... you always lose money selling hardware initially, every company does. So making $20 a system is actually a bonus to Sony, and not a lose. But they make it up even more in software and accessory sales. 

BJCentral
BJCentral

In your dreams pal. See what I don't get is why aren't they having this same discussion over at the sony camp. Two years ago their products we're consider junk, The vita is a piece of crap that has no good software,playstation software couldn't compete with Microsofts,Playstation 3 was in a solid third like the system name, and oh yeah their still not making a profit on the ps4. So no Microsoft will never let master chief go.I mean his initial spells M.C. Bro

SpicaAntares
SpicaAntares

@SSJ4Goku2 

With the RRoD debacle failure rate was between 23% and 54%, depending on what studies you where looking at.

jimmy_middleton
jimmy_middleton

@xXxIRyanxXx @EndBlend @ascendedcobra Sony as a company has had some bad quarters... but their gaming division is a Profitable division... it makes them money while they struggle in TV's and other electronics... Microsoft makes all their money on software... Bing & Xbox are massive losers for them. They need to either restructure and make changes... or cut their losses... they won't continue to lose money on it forever.

SpicaAntares
SpicaAntares

@BJCentral 

The Vita is a piece of crap in itself or it's a piece of crap because publishers aren't making great games for it?

You do realize that if the Bone doesn't sell publishers will stop doing games for it? If they do will the Bone suddenly become a piece of crap? Maybe it's already one about to become a greater one...

As for the Vita maybe you should read the specs before making any judgment. The Vita is about the most powerful, most state-of-art, portable console on the market.

ascendedcobra
ascendedcobra

If you are launching xbox one on friday then everyone in Microsoft needs to be 100% behind it. This Stephen Elop should be fired for even mentioning letting go of xbox and bing. Who is he anyways? He has been with Microsoft for a few months? What a joke! To put doubts in the minds of people right when your are doing a major launch?

I for one really think the direction microsoft is going with the xbone is brilliant. If however this idiot becomes ceo and they do axe xbox, many like me will have nothing to do with Microsoft in the future.

hadlee73
hadlee73

Any suggestion of the Xbox Gaming Division being sold to anyone else is surely crazy talk. Its been the highlight in a fairly lackluster last few years for Microsoft.

deathstream
deathstream

As the PC/Console/Tablet spaces converge, selling off the Xbox unit would be the dumbest thing MS could do.  It would be a short-sighted move with long-term negative consequences.

Alucard_Prime
Alucard_Prime

Good job Steve! The mere mention of the Xbox division being sold to another company is quite unsettling. 

Dannystaples14
Dannystaples14

Well yeah what is he going to do, slam his own console in front of their shareholders?

Give them an excuse and they will bail before you know they are gone.

Vodoo
Vodoo

The Xbox 360 was very profitable for Microsoft. How is being profitable bad? And Elop ran his own company into the ground (Nokia)! Now he's gonna get it back PLUS the whole of Microsoft to ruin as well? He failed over many years to turn Nokia around. He clearly doesn't have what it takes to be a CEO anymore, nevermind heading one of the biggest corporations in the world. Microsoft gave him a handout by not kicking him to the curb when they bought Nokia, and now he's gonna be the CEO? The company stock will tank the minute he takes office.

SpicaAntares
SpicaAntares

@Vodoo 

BTW, do you want to know what a CEO is? It's a guy who walks with a carrot up his ass and surrounds himself with a few ass-kissers who does most of the work; his team. He gets somewhere, bring his ass-kissers, and stir chit a few years. When the smells becomes unbearable he moves elsewhere and repeats the process, while he gets replaced by someone who does the same.

If you need some other definitions I'll be glad to help.

theKSMM
theKSMM

@rolla020980 I think that most corporate executives actually want to be successful...they're just not gonna let success come between them and getting paid.

SpicaAntares
SpicaAntares

@theKSMM @rolla020980

I think I read too fast. I was reading your comment and read: "...they're just not gonna let success come between them and getting laid." I thought it can't be right and reread the sentence.

hummm.... come to think of it...

SpicaAntares
SpicaAntares

@Vodoo 

How many smart CEOs do you know of? The only thing they're smart about is to line their pockets with gold and run as fast as they can when troubles hit home.

CarlosX360
CarlosX360

@Vodoo Xbox 360 has been profitable for Microsoft only, and ONLY because of the Xbox Live program. They still lost money on every single Xbox 360 sold, or replaced.

jimmy_middleton
jimmy_middleton

@Vodoo The 360 isn't profitable... Live does well, but with the 16% failure rate combined with the cost of launching both it and the original xbox... not to mention R&D to get XB1 ready to launch, the Xbox division as a whole has lost an estimated 2 billion dollars. They won't keep losing money like that forever. So like Bing (another money loser) they either need to dig out of that hole AND make it profitable... or cut the divisions and focus on where they make money.

blackothh
blackothh

"No other company could have delivered what we are delivering with Xbox One,"

 Agreed, because no other sensible company would want to deliver such a piece of anti-consumer garbage.

ChiefFreeman
ChiefFreeman

"Nobody could deliver what Microsoft were doing?" Umm, yes, Apple and Google could both do far, far better than Microsoft at anything. This retarded, bald headed ape is the reason Microsoft is in their current state, and the damage can't be undone now. They're becoming irrelevant. I wouldn't buy an Xbox One, not knowing what the future CEO might do with the brand down the road.