Gates would back Xbox spin-off

But Microsoft co-founder sees Bing as 'fundamental' to company's strategy

Microsoft co-founder Bill Gates on Monday said he would back any move by current CEO Satya Nadella to spin off the Xbox video game console business.

In an interview on Fox Business alongside his friend and fellow billionaire Warren Buffett, the CEO of Berkshire Hathaway, Gates did not advocate pushing Xbox out on its own. But when asked whether he would support a hypothetical decision by Nadella to make Xbox its own company, Gates simply answered, "absolutely."

"I'm sure Satya and the team will look at that ... and it's up to them," Gates said of a possible spin-off.

Gates, who co-founded Microsoft with Paul Allen in 1975, stepped down from his role as chairman of the board three months ago. On Feb. 4, the same day Nadella was named as Steve Ballmer's replacement, Gates said he would retain his seat on the board, but would devote his time to advising Nadella on technology and product issues.

Wall Street has frequently pushed for Microsoft to unload its more unprofitable parts, most often naming Xbox and the Bing search unit as the likeliest spin-off or sales targets. Such talk, however, has quieted considerably this year, as Microsoft shares have climbed 8% since Nadella's appointment.

Gates argued, in fact, that Microsoft has an Xbox strategy, although his was not the broader one many industry analysts favor -- making the console the centerpiece of a more aggressive and comprehensive move into the living room.

"We're taking PC gaming -- Windows gaming and Xbox gaming -- and bringing those a lot closer together," Gates said. "The power of the PC graphics chips mean you can do great games there."

But while Gates would acquiesce to the departure of Xbox, he was very much against spinning off Bing.

"Certainly, the Bing technology has been the key to us learning how to do large-scale data centers," Gates said. "And Bing lets us see what's going on the Internet, so that as people are interested in various topics, we know what's new, we know when they're typing text what it might mean. So I see that as a pretty fundamental technology for the company, even for its Office business, which is a very, very core business.

"I can't see that making sense, to break it off," Gates added of Bing.

Gates' comments on Bing echoed those of former CEO Ballmer and current chief executive Nadella, both of whom have argued that Bing brings more to the table than just search.

"Bing continues to deliver platform capabilities across our products," Nadella said last month during his first quarterly earnings call with Wall Street. "One recent example of this is the recently announced Cortana virtual assistant for Windows Phone."

Ballmer had been even more adamant about retaining Bing. In his final speech before shareholders last November, Ballmer called Bing "fundamental to our strategy" of blending big data and machine learning, as well as an important service in its own right on Windows devices as well as those running rival operating systems.

Gates' portion of the Fox Business interview begins at the 20-minute, 30-second mark of the video.

Gregg Keizer covers Microsoft, security issues, Apple, Web browsers and general technology breaking news for Computerworld. Follow Gregg on Twitter at  @gkeizer, on Google+ or subscribe to Gregg's RSS feed . His email address is gkeizer@computerworld.com.

See more by Gregg Keizer on Computerworld.com.

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