Microsoft

Ditching the Surface, Xbox, and Bing would be a mistake for Microsoft

Scott Lowe doesn't agree with some Microsoft investors who think that the company should pull the plug on the Surface, Xbox, and Bing. Do you think Microsoft should ditch these products?

 

Microsoft devices
 

The International Business Times recently reported that a “number of Microsoft investors told the new CEO and the company's board of directors that they should cancel endeavors like the Xbox One next-gen gaming console, search engine Bing, and the Surface tablet.”

The situation at hand

I believe that Microsoft has made some serious missteps in recent years that have resulted in the company now being in the position that it's in. However, under Ballmer’s leadership, Microsoft also made a number of great gains, most notably in the areas of Server, Hyper-V, and cloud computing.

Unfortunately, Microsoft's mistakes are pretty serious ones, and there are areas of the company that investors question -- namely, the Xbox, Surface, and Bing. Even though Surface revenue more than doubled in the most recent quarter and interest seems to be on an uphill trajectory, the devices still receive a lukewarm reception. Investors likely believe that the efforts going into Surface should be devoted to more profitable ventures. After all, Office 365 and Azure are simply exploding in popularity on the enterprise front, so why not focus there?

Give up on the Xbox and Surface? Maybe

When looking at the Surface and Xbox, I see that both work well in the consumer space, although Surface also crosses the line and can be used as an enterprise device. Surface absolutely struggled initially, but as I mentioned earlier, interest in it is gaining. I think the device itself is actually quite nice. However, the operating system -- Windows 8 and Windows 8.1 -- leaves a lot to be desired. With a better operating system, Surface could be a hit.

There was an additional reason that Microsoft had to build the Surface. Its hardware partner ecosystem was (and still is) a mess. Race-to-the-bottom pricing left a bad taste in the mouths of consumers who were tired of buying what amounted to junk. At the same time, consumers began to see products like the iPad --  pretty reasonably priced -- skyrocket, thanks to a thriving software ecosystem and well-built hardware. The Surface was Microsoft’s answer to the market. It was a well-designed piece of hardware, but pricing was a bit high and, again, it was saddled with Windows 8. Today, the partner ecosystem is getting better around Windows devices, but I don’t think Microsoft will see real light at the end of the tunnel until Windows 9 hits the scene.

With regard to Surface specifically, it should continue to be developed if for no other reason than to keep a quality option in the market. The Surface should also serve to keep partners on notice that Microsoft will step in and take its own corrective action if its partners are unable to do so.

As for the Xbox, it’s certainly a consumer play, but as we move inexorably closer to the Internet of Things and as new home automation options come to play, the Xbox is a natural fit as the managing platform for this kind of activity. It’s a hub into the home. While it most likely wouldn't have an immediately negative impact on Microsoft, it could limit the company’s future opportunities with regard to the consumer.

It seems as if investors want Microsoft to focus solely on the enterprise, but the consumer front is also important, especially if the company wants to compete with Google and Apple. Today’s Bring Your Own Device (BYOD) trends can impact tomorrow’s enterprise decisions,  and Microsoft can’t be left out of the equation. This makes the Xbox important as a strategic asset, and one that Microsoft needs to find ways to leverage further.

The verdict: Microsoft should keep both the Surface and the Xbox.

Bing

And then there’s Bing. What can I say about Bing that hasn’t already been said?  It’s an okay search engine, but not a great one. I really want to like it, but every time I use it, I end up disappointed. I do like Bing’s image and video search features far more than Google’s, but given that traditional web search still dominates my needs, I always find myself going back to Google for those services.

Bing is definitely intended to be the anti-Google. It’s here that I think Microsoft may have to consider some tough options. Most importantly, if they keep Bing around, Microsoft needs to improve the results to be more actionable. However, I don’t see Bing going anywhere anytime soon, especially since the company embeds Bing in additional products.

Summary

What we all believe -- me, analysts, and even investors -- really doesn’t matter. What does matter is that Microsoft’s new CEO needs room to make the decisions that he feels are in the best interests of the company. More importantly, he needs to be afforded the opportunity to take a long view and not work to ridiculous quarter-to-quarter expectations.

Do you think Microsoft should pull the plug on the Surface, Xbox, and Bing? Share your thoughts in the discussion thread below.

 

 

About

Since 1994, Scott Lowe has been providing technology solutions to a variety of organizations. After spending 10 years in multiple CIO roles, Scott is now an independent consultant, blogger, author, owner of The 1610 Group, and a Senior IT Executive w...

32 comments
rswinney
rswinney

XBox is definitely a keeper. Its success can continue to help maintain the revenue stream. Surface can be a keeper if the ecosystem continues to improve and there is more integration with Office. Bing should be let go because unlike Internet Explorer when Microsoft played catch-up, Google and Yahoo are just as strong financially and Bing will eventually be way more money than its worth to keep around.

jmoody76
jmoody76

MS should keep them around but really need to work on the Surface and Windows phone better. I am seeing more Apple and Android products make their way into the business space because users buy these products for personal use and want to bring them to the office. MS really needs to work on the Windows Store to get more apps or these devices aren't going to make it.

dkiehl777
dkiehl777

I agree with Scott on all the points above.  I think a lot of the reason Google and Apple have done so well is that they offer options to Microsoft.  Those of us who have been around a while remember when there were calls for the government to break up Microsoft.  Where would we be now if that had happened?  It could have taken years for personal and business users to recover from the chaos.  Here's a thought about consumer vs. business ... If a consumer is impressed with their XBOX or their Surface, aren't they more likely to embrace other new Microsoft products and platforms?  Don't we now need Microsoft because they offer an alternative to Apple and Google?  Things that make you go "Hmmmmmm ..."

gelfling6
gelfling6

Very odd, that investors are telling Microsoft to ditch the Surface. It is their direct competition to Apple's iPad, (shades of IBM ditching their PC making, and selling rights to Lenovo.)  XBox, has been their Game console, which is basically another form of hardware they've been selling for years, trying to compete with Nintendo, so it's been a head-to-head by that battle.  bing, Ummm.. Seriously, they should've done some research naming their search engine.. There is a translation for the Chinese word " bing' " , pronounced as the we would say it, actually means the absolute WRONG thing if translated. (Disease , and yes, You can look it up - 病 ). Or, are they looking to lighten the load, going 100% software again, and stop promoting hardware?

SusannaC
SusannaC

MS should definitely keep going with Surface and Xbox. Bing is another story: they should keep it, but direct it toward their primary audience and make Bing the search engine for Business! That would be something useful and different. I find Google has declined in quality over the past few years, specifically in terms of my work/search needs.

woowoo095
woowoo095

Thou offend the chum lords, why have them quarter the only consumable goods of Xbox and the Surface? I didn't notice Bing being good at search for video, but still not interested. We accepted your mobile devices the minute we said it didn't have this or that for us to buy it. Platform, Platform, Platform, it's the eco-sphere everything is built on. The parts you speak of are the movable items at the end of the rainbow. No other titan of the industry is going top to bottom the way MS has. Well not because they aren't trying, but I don't want a dell switch or an hp phone. I want congruent products made to tailor fit everything else I already bought. Maybe if you turn my Xbox into a home video service that answers calls and changes the channel I'll consider keeping it, done! Maybe if you turn my phone into an all in one for business and personal, done! What about my Surface Pro, so I don't need a workstation! Done, Done, and Done! What more do they want? Oh, to be more recognizable than Coke. Well that spot is already taken, but sugar water isn't everything. Come on Big Blue you got more going for you than you think. I work on servers. Not Apple servers or Tarraria, but business servers that 90% of the world uses. When I'm not on Linux or Apache I spend all my time in windows, so what's the problem?

davebrewer1951
davebrewer1951

No, No and No because;


1. Some of your correspondents describe the Surface as lame but it depends what you're comparing it with. It's easier to use in a Windows network environment than any of its competitors and while I have some reservations about the requirement to use Microsoft application store I have the same reservations about using Apple Store and Google Play. I like my Surface RT 8.1 and prefer it to my Galaxy 10.1 and my iPad 3. It certainly is easier to use on the school's network.


2. I've not used the Xbox one but have used previous versions. The real benefit over their competitors was the stability and performance of Xbox live. I have no doubt that MS will be able to continue its lead in networkability because their competitors see this functionality as an add-on whereas MS see it as core to the product.


3. Bing could do with improving as suggested by other correspondents (I especially like the blank front page as with Google) but we need it to be there, it's the only competitor to Google. I agree with one of you correspondents Bing is far better at tracking down (and filtering out guff) technical solutions. 


As for Windows 8; XP was a great OS, lasted for over ten years and frightened off IT departments from moving on to Vista. This ignored the major advances in Vista & Server 2008 in the AD environment. which have continued through W7 and now W8 & Server 2012. I wish I'd moved the school on years ago.




waltersantiago
waltersantiago

Why drop anything? Right now Microsoft is in a great position in the marketplace with all these products. Maybe they were a little late getting into the mobile game nonetheless, productive-wise, the Surface is the best choice nowadays in the byod market. The only problem I see with these MS products is the entry price. The price for the Surface Pro is kind of steep something that they can easily fix by adding the keyboard/cover as part of the oem packaging. With all the success they are having in the enterprise (server) level, and with the addition of the Nokia brand with its cellular phones, the road for the MS productive ecosystem line is only up. Add to that formula their Hyper-V platform, and the cloud products such as Azure and Office360 and there you have an all inclusive enterprise level ecosystem that it is hard to match in terms of compatibility. 


The XBox as the article mention, can become the backbone of another very important ecosystem. That is the automated home ecosystem. If they can keep growing that console heavily into a high-level AudioVisual hub that could integrate professional hi-def sound and video together with a better a much faster streaming mechanism there'll be no way to stop them to become the standard de-facto equipment for every home entertainment system. In terms of Bing, there should not worries either. There are only 3 major players in the search engine market and Bing is second only to Google.  While Google keeps searching for ways to increase its eco-system with chrome and android, MS already has a strong, at enterprise level-proven, and much better secured and productive one. Bing can always be embedded as an extra to all the rest of the products. Sort of become the Internet Explorer of the new Microsoft's metro-ecosystem. The free add-on that eventually will generate advertising money as more and more people keep getting into the MS metro-ecosystem. As I said, they did start late with the mobile, the cloud and even the with game console business, but one thing they have done right is keeping all these products compatible with one another. If they keep doing that, especially with all the new products to come from the newly acquired Nokia line, they'll be unmatchable. No one will be able to go even close of having a line of product so extensive and so compatible with each other all under one corporate roof... (and I am not even counting of all the software app available in the MS ecosystem, which is also unparallel to any other software ecosystem). I cannot wait to get my hands on the new Surface 2 Pro, the new improved Windows 9 o/s, the new better Lumia PDA and the next-gen Xbox console, so I can then connect them all to each other, and to my enterprise system of servers (including my storage and my printing capabilities). What else I need? Ah, some SkyDrive space and Office360 for off-the-road fun... and to top it up, I'll create my web presence using Azure cloud tools combined with a Hyper-V-based management system that would connect me and my company globally using one simple product platform, Microsoft. No need to go or buy from anyone else.


If you think that MS is in bad shape? You are not following the industry. All they need is for the new CEO to have this hyper-interconnectivity/compatibility vision. And knowing his background and from what World he came from (he use to work implementing and integrating MS Servers/IIS/Enterprise Accounting (Dynamics)/CMS and ERP strategies), not only I think that they are in good hands, but that within the next 5-10 years MS will be even bigger than it is today. I am investing the house on this company.

A41202813GMAIL
A41202813GMAIL

Please, Keep BING, Pretty Please.


Without A Mediocre Product Like BING, No One Will Know How Good GOOGLE Really Is.


GO, G !


blueberry606
blueberry606

Seriously? Why are we even having this conversation?

kbennett50
kbennett50

I have 2 Surface Pro's and an XBOX. MS needs to keep them. The Surface has a place and I use it at work.

Gisabun
Gisabun

Can't see why they would ditch Xbox. They make money off it. Sure the latest console is pricey.

Can't get rid of Bing because they are getting ad revenue from it and still control a nice chunk of the market.

As for Surface, both are over-priced. correction - the Pro is *WAY* over-priced. Pro should be in the same range as the iPad. I'm more of a Microsoft but I would never buy one at that price.

[And why am I not surprised. An article like this based on TWO investors out of how many? TechRepublic is turning into the IT version of the National Enquirer.

director859
director859

As a consumer and IT professional, I think that MS should continue to market and improve the Surgace and the XBOX. However, they need to keep the items affordable and on the Surface, get rid of Windows 8. With a better OS like Win7, the Surface would be a better system. As far as the XBOX goes, MS needs to develop games that do not require the Internet for Co-op play and go back to the Xbox Live Gold Family pricing. 


IMHO, Bing needs to go!

adornoe
adornoe

With what MS has don in the last 10 years, and with the direction in which they're headed indicates,and with the current state of technology in mind, Microsoft cannot afford to lose any of those three items mentioned above.  Bing has become integrated into a lot of MS's services, and it's part of the ecosystem which MS has decide will be integral in it's future that includes all kinds of devices and all kinds of services.  So, Bing will be around forever as part of MS's ecosystem.  If they were to "ditch it", either by selling it or by just discontinuing it, MS would lose a lot of credibility in everything else they do.  MS is not Google, where it can just ditch a service or product with no repercussions.


The Surface tablets is part of their devices strategy, which means that, they want to be a player in smartphones and tablets and PC of all kinds, and in gaming systems.  All of those are ways for Microsoft to be everywhere, in many different forms, with devices and with services.  So, NO!!!, the Surface devices are as crucial to MS's future as Bing.


The XBox is, again, another part of the overall strategy to be a player with anything that gets people to connect to any and all of MS's services. XBox systems are part of the "new" InternetOfThings strategy, and ditching the XBox division would kill any credibility which MS needs to compete in IoT and with connected services.


So, NO!!!, MS needs all three of those items, and they''ll actually have to add more services and devices to their already large portfolio of devices and services.  To do any less, would just make them irrelevant in most of what is to come in devices and software and services. 

Developr
Developr

As an independent IT contractor that depends heavily on several Windows applications to get my job done, I have become very attached to my Surface Pro which can run any of the applications that run on my higher performance workstation laptop.  The Surface Pro is a professional tool when compared to any iPad or Android tablet out there. I would never recommend the use of either Android or iPad tablets in the enterprise space; they are toys meant for users who are more focused on entertainment than serious work!

With that said, I could care less what MS does with either Bing or Xbox, although I realize that there are many users who love to waste their precious moments of life being addicted to the Xbox platform.

Pronounce
Pronounce

MSFT's investors probably don't have enough clout to ask for, and get, a bailout when the company tanks because it won't subdivide, and that is a good thing for us taxpayers. But as a long time user of Microsoft products I want them to succeed and really want them to subdivide. (If GM had allowed Saturn to break off from the parent corp back in the day it would be a very profitable car company now instead of killed by a corporation who couldn't understand the concept of putting the customer first. And speaking of this if MS wants some expertise in this area I know the person: i.e. the same one person who worked with the GM board.)


Cloud is where the gold is right now and should be MS' first priority.


Corporate is hedging its bets by on the one hand working with MS to support their legacy products based on legacy hardware and a legacy OS and then on the other hand supporting BYOD the realm owned by Apple. Microsoft needs to be careful about setting their projects goals based on the desires of these fickle corporations.

DJMorais
DJMorais

Why drop Bing? It's a great search engine. Perhaps a bit bloated, so they could probably streamline it a bit and clean up the interface some, but I get way better results using Bing rather than Google, which completely sucks in my opinion. Never have liked Google and never will. It's nice to have an alternative anyway. 

Since I don't game and don't have numbers in front of me to see how this console stacks up against the competition, I cannot comment on the XBox. Seems to me that it's got a pretty strong presense though, as I know a lot of people who do some pretty hardcore gaming, and many are on the XBox.  

The Surface? Well, I'm on the fence on that one. That might be one to let go of. I think they missed the mark on that device and am just not sure that it will ever pull its weight in the market.

And whatever they do, make darn sure they knock it out of the park with Windows 9. Windows 8, though not near as bad as people seem to think it is, got off to a horrific start and now has this negative stigma attached to it which most likely will never go away.  It will be interesting to see what decisions get made over the next year or so.

dvsit
dvsit

I use Bing Reward and have searched my way to $25 in Amazon Gift cards from them. Google has given me 3 surveys to complete for $1.25. I'll keep using Bing. Yeah I don't think the search results are as good, but when they give me rewards to use their service that's a good enough reason to use them. 


Surface is LAME! It's not a tablet! It's a laptop that tries to give you a tablet experience and fails.


Xbox One is something completely different. It would be nice if they joined XBox ID with Windows games. Or play Xbox Live games on your PC n' stuff.


The more I use Win 8 the more I like it. They really need to more to the Desktop Windows, Tablet Windows, and Phone Windows.

LordTye
LordTye

Bing is a faster search engine than Google but they need to ditch the ads and have a clean search page like google!! The Surface is overpriced. Drop it to $250 for the top of the line and they'll make volume profit!! Xbox One is nice were Xbox 360 is fantastic. It's OVERPRICED!!!! Drop the price to $300 and Microsoft will sell the Xbox One in the Billions!!!!

nibby059
nibby059

The surface, yes please remove it, Bing is annoying in the extreme, possibly keep the Xbox, my son would be lost without his but it is a younger persons thing. Give me a good game of Mahjong and I'm happy!

blarman
blarman

The thing Microsoft is missing and has been for quite some time is the vision to see HOW these devices fit into the future of computing.  Surface falls under this heading heavily and I completely agree with the author's assessment that Windows 8 is a dog.  Though it is functional on tablet-like devices like Surface, Microsoft just hasn't been able to hit that home run they needed to make it competitive with either Android or iPad, which also enjoy much stronger developer participation in mobile apps.


XBox' problem is that they keep trying to force consumers into an always-connected, subscription model.  I had an XBox 360 for a while, but there is no way I would get the XBox one for this reason.  I already paid for the console and the game and I'm already paying ISP fees - one more is too much.  As far as a platform, the exclusivity of several of the top game developers is what has made XBox the leader, but I really don't see anyone using XBox as a home hub - not when everyone has a PC or phone (which is where Microsoft has really dropped the ball).


Bing will always remain the bottom of my list for search results.  Google just gets it done.  And it certainly didn't help Microsoft when they got caught re-displaying Google's results!


All-in-all, I think that divesting these products would be a good thing because it would force them to sink or swim.  Bing would scrape by due to it being the default engine of IE.  XBox will continue to remain strong in the console sphere, but they will have to persuade users to pay the monthly fees or raise the console prices, as right now they are operating at a loss.  Surface would drive the next version of Windows to be consumer-centric rather than Microsoft-centric - something about 15 years overdue in my book.


Bill Gates understood the business model of selling software, but wasn't the visionary of Jobs.  Ballmer was a disaster all around - too hung up on trying to shut off competition instead of just beating it with a better offering.  Ballmer also allowed too much competition and not enough cooperation internally in Microsoft which have caused structural problems in the business that are not going to be solved overnight.


Microsoft has a couple of solid performers in Office and Windows Server (as long as they don't try to overhaul the GUI on THAT, too) and effectively leverages other products like Hyper-V, etc.  They would do well to focus on business-centric products that make up their core business.  When they come up with consumer devices, they need to put them out to fill a need, however.  This attitude of "if we build it they will buy it" is a legacy of Microsoft's defunct monopoly that disintegrated when Apple and Android took over the mobile space.  They need to get with the times and focus their efforts on understanding what the CONSUMERS want - not just what they want to sell.

cassidymeghan
cassidymeghan

I honestly don't see Bing as being any kind of useful search engine and to say that they should keep it around just because their devices point there instead of anywhere else for searching is a horrible reason to throw money at it. It would take them one software update to fix that problem and then just some waiting until they phase it out completely.

Darren B - KC
Darren B - KC

When you say "ditch Xbox", are you saying that MS should get out of the console gaming market altogether, or just create a newer, better console?  I'm a hardcore PC gamer, and I personally think that consoles are muddy-ing the gaming pool for PC gamers with dumbed-down controls, limited graphics options, and buggy port-overs, but nevertheless, I think it would be a serious mistake for MS to ditch the Xbox.  The console gaming arena is still a multi-billion dollar business and I can't imagine a world where MS and the Xbox isn't a part of that.  It would be foolish for MS to turn thier backs on it.

Systems Guy
Systems Guy

The investors should just STFU.  All they are worried about is the company making profits and have short term goals in mind.  If you don't like the stock, sell it and go some place else.

dpbakeril
dpbakeril

Another "lint in the navel" article concerning Microsoft.  I own both an iPad and the Surface Pro for different reasons and uses.  Neither is really better than the other but each has it's place in allowing me to do what I need to accomplish depending on the specific requirement.  Like selecting which variety of apple to use to make a pie, it comes down to the taste.

I'm really indifferent to the Xbox since I don't own one and haven't seen the need, but that's just me. 

As for a search engine and the results produced, it comes down to the structure of entering the right parameters for what you are looking to discover on the internet, as in "trash in, trash out" searching, because no amount of coding can correct a bad search term.

Chaz Chance#
Chaz Chance#

Two!

When you read the article referred to, the  “number of Microsoft investors" is actually just two.

That is a very small number.

Wow!  Is that the best you got?

lacerz74
lacerz74

If spinning off the Xbox division has the same effect as ConocoPhillips spinning off it's downstream business, I'm all for it.  ConocoPhillips and Phillips 66 are both doing very well, and the shareholders have seen their stock levels increase by $30 per share in less than two years.

Joeharbor
Joeharbor

I just bought the surface pro 2 and a Xbox 300 I'd hate to see them drop these I'm sure a lot of people have spent a lot om money on these items . I think Microsoft better think of of all the people out there who believed in there products. Joe

jbrown9100
jbrown9100

As a shareholder, technology professional and consumer I couldn't agree more. It isn't entirely clear yet what the long term strategy is but I think it has a lot to do with integration. Integration of devices and services. Integration of work and life.

Whing
Whing

@davebrewer1951 Blank front page as an improvement? I love the Bing picture of the day, it is the best thing about it. I was very disappointed when the Windowsphone search page stopped the highlighted areas of the picture of the day. I find Bing good enough most of the time and tend to use it on my phone because it is so tightly tied to it. However every day or two I find myself going back to Google, mainly for local content that Bing is woeful at finding. Hint for Microsoft: most of the world's population live outside of the US. Honest injun! Check a good search engine.

chaletart
chaletart

@blarman  i do use the xbox as a home hub.... it connects to my macs, pc's, has good streamable content available as well as it's games! xbox one just takes it one step closer!


agree.... windows 8 is not that great but i do think it is was a good step to change things up from the standard windows platform. hoping that windows 9 brings it together.


i don't use bing...though i do agree with the writer of this article that it's video presentations are much better google's.

jmfcosta
jmfcosta

@jbrown9100 As owner of a Windows 8.1 Laptop, Win RT 8.1. Surface and Win Phone 8 smartphone, I can't understand where is integration missing Same environment, same routines, just a change of device according to where and what I want to do.

Editor's Picks