Microsoft's quest for short-term $$$ is doing long-term damage to Windows, Surface, Xbox, and beyond

Microsoft CEO Satya Nadella has turned the company away from declining relevance to the most prestigious investment in the world. Still, the sacrifices required to achieve this goal are becoming increasingly problematic. I loved these comments. Comments like this inspired me to start writing about Microsoft in the first place. As a user of the Microsoft ecosystem, it felt like Satya Nadella understood where Microsoft had been failing and where they could begin to turn the corner. The forward-facing sci-fi tech of HoloLens, against a backdrop of Windows mobile devices and sexy, shiny new Surface devices, is rounded out by a top-rate Xbox gaming and entertainment ecosystem. Microsoft even had its own retail stores where customers could get support and explore products. It was a promise of an all-encompassing ecosystem where Microsoft services were presented first, and people would want to use them because they were good.

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Almost ten years later, that vision seems to have collapsed — Satya Nadella's Microsoft is burning long-term goals for short-term gains, moving from tech fad to tech fad-like locusts, often showing up to the party too late and burning mountains of cash. Microsoft had a real opportunity to become a different megacorp that invested in social responsibilities, employees, and customer satisfaction first. It could lead by example and show you can be nice and profitable. Perhaps it could even be profitable to be good. When I first started blogging almost ten years ago, in my youthful naivete, I believed that Microsoft would. I lament my naivete, but importantly, I lament for the customers, partners, and employees that Microsoft is treating like an afterthought. Microsoft is now a company with short-sighted aims, where it feels like every corner imaginable is being cut for profit.

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Xbox hardware sales have been down around 30% year over year, two years in a row. Part of that is a poor game line-up and inconsistent delivery from Xbox. Part of it is the general gaming downturn. Another part of it is Microsoft's catastrophic 2013 reveal of the Xbox One, which has cast a cloud of doubt over the brand ever since. Despite all this, Xbox has record revenue, even before Activision-Blizzard joined the fray. Indeed, Microsoft wants to stay in gaming, hence spending $72 billion on Activision-Blizzard last year, giving it control over Call of Duty, World of Warcraft, and other major PC, console, and mobile franchises. I still had this potentially naïve outlook that Activision under Xbox would benefit all involved. Still, it resulted immediately in hundreds of layoffs, game cancellations squeezed budgets, and studio closures and divestitures. From the outside, it's hard not to see what's going on at Xbox as totally chaotic, and as with the above, chaos and inconsistency have typified Microsoft's playbook in the years I've been covering the brand.

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Most of Xbox's life span over the past ten years has revolved around playing catch up, and the fact they're still in the game is a miracle. Innovations like Xbox Game Pass, advocation from Phil Spencer and his team, and building more affordable consoles like the Xbox Series S have helped Microsoft stay in the running. But now, Microsoft's corporatism is infecting the good will and momentum Xbox had been generating in recent years, threatening to derail the hard work to rebuild. Microsoft CEO Satya Nadella previously said that he "has no love" for the world of console-exclusive games. Fast-forward a few months, and Nadella is now celebrating with investors his strategy to move Xbox's exclusive games to PlayStation, a strategy that has been met with widespread alarm from Xbox users and confusion from pundits.

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There's some console war tribalism in certain corners, but there are plenty of legitimate reasons to be concerned about this if you're a current Xbox customer. It stands to reason that moving your exclusive games like Halo, Gears, or Forza to PlayStation eliminates a reason to buy an Xbox console. If you eliminate reasons to buy an Xbox console, you're once again handing the keys to your future to other platforms, a problem Microsoft has right now with Google and Apple. Furthermore, you're removing an endpoint to acquire users via Xbox Game Pass. Cloud is prohibitively expensive right now and is gatekept by Apple and Google, once again blocking in-app purchases or, in some cases, blocking it entirely. You're also decreasing your footprint for game developers, who will increasingly see Xbox versions as wasting time. You set yourself up for a tailspin nosedive of exclusion, to the point where Xbox becomes another game publisher without a say in the overall direction of the industry — but maybe that's the idea.

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The plan to move Xbox games to other platforms is codenamed "Latitude" internally, and I know there's debate and unease at Microsoft about whether or not this is a good idea. More upcoming Microsoft-owned games slated for PlayStation are already being developed. While it's true Microsoft is a prolific publisher on PlayStation already, it has typically revolved around specific franchises like Minecraft. From what I've heard, Microsoft is pushing for no "red line" for what games could come to PlayStation, and it all revolves around Satya Nadella and CFO Amy Hood's plans to increase every department's margins. And yes, obviously, putting Halo Infinite on PlayStation will increase profit margins. Sea of Thieves enjoyed the top spot on the PlayStation Store this past week. And in a perfect world, it's great that more people get to play these games. But we don't live in a perfect world where platform holders willingly collaborate for customers' betterment while competing on pure value. Like many of Microsoft's other recent strategies, pursuing this strategy is a short-term margin booster with long-term consequences. Yes, the industry is struggling, and Microsoft isn't the only hardware manufacturer that has seen declines. But destroying the foundational reason to buy an Xbox isn't the answer you give if you do care about the long-term.

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Microsoft's quest for short-term $$$ is doing long-term damage to Windows, Surface, Xbox, and beyond

Microsoft has made a range of baffling decisions and awful mis-steps recently. You can trace everything back to insatiable desire for money.

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