xboxonenokinectMicrosoft CEO Satya Nadella this morning responded to critics of the company’s Xbox business, defending its significance and making it clear that Microsoft won’t be spinning off its console anytime soon.

The statements came as part of a larger strategy memo from Nadella to Microsoft employees, released this morning at the outset of the company’s new fiscal year.

Here’s what he said on the topic of Xbox.

“The single biggest digital life category, measured in both time and money spent, in a mobile-first world is gaming. We are fortunate to have Xbox in our family to go after this opportunity with unique and bold innovation. Microsoft will continue to vigorously innovate and delight gamers with Xbox. Xbox is one of the most-revered consumer brands, with a growing online community and service, and a raving fan base. We also benefit from many technologies flowing from our gaming efforts into our productivity efforts – core graphics and NUI in Windows, speech recognition in Skype, camera technology in Kinect for Windows, Azure cloud enhancements for GPU simulation and many more. Bottom line, we will continue to innovate and grow our fan base with Xbox while also creating additive business value for Microsoft.”

Notably, however, Nadella made it clear that Xbox is not a part of Microsoft’s “core” business. That’s a new distinction that wouldn’t have been made by his predecessor, Steve Ballmer.

Nadella wrote, “As a large company, I think it’s critical to define the core, but it’s important to make smart choices on other businesses in which we can have fundamental impact and success.”

Xbox One has gone through a series of adjustments following a negative reaction from gamers, and several months trailing Sony’s PlayStation 4 in unit sales.

Most recently, the company started selling a $399 version of the Xbox One, no longer requiring gamers to buy a Kinect as part of the package.

Previously: Microsoft will streamline engineering, make faster decisions, vows CEO Satya Nadella in new memo

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  • guest

    Too bad Xbox isn’t a mobile platform.

    And stating that it’s not part of the “core” sure sounds like big changes are coming (which, as we insiders already know, has been happening for a while, but now it sounds more like it’s going to go more public). Trying to pivot while PS4 is out there eating Xbox’s lunch is going to be a super hard PR/Mktg challenge. I wish them luck, but I wouldn’t want Phil’s job. There’s never a good time to announce that XBL is going cross-platform, esp. not when the core HW platform is perceived as failing (which is not the case today, but after this holiday – which is going to be super rough for XboxOne – the knives will be out). And explaining the value prop to developers of the cross-platform XBL network – w/o proprietary hardware and the benefits of a closed platform – another super tough challenge.

    This is just going to drive morale in Xbox lower in the short term (and morale has not been great to begin with). Expect an email from Phil to the team shortly messaging what this mean for Xbox, other MSFT platforms, Games as a Service, etc.

    • reaper

      The lovely parting gift that you get when you’re not part of the “core business”: layoffs.

  • gyest

    Sell Xbox buy Sonos and Spotify.

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