Phil Spencer to Lead Microsoft Xbox: Change in Strategy?

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Perhaps surprising no one, Phil Spencer was selected today to lead Microsoft’s Xbox division. In an email from new Microsoft CEO Satya Nadella to all employees, Spencer officially took the reins of all things Xbox. Although Spencer’s new title was not divulged, it could very well be CXO — Chief Xbox Officer.

We jest. Spencer isn’t likely to sniff a “Chief” title in the near future. But it sure has a nice ring.

Phil Spencer’s new role with Microsoft reflects a slight change in strategy for Microsoft. For several years now the Xbox division has fallen under the umbrella of the company’s Entertainment group. Several large shareholders have called for the new Microsoft CEO to spin-off the Xbox division and re-focus the company’s efforts on software.

Today’s announcement of Spencer taking the reins may in theory make that more feasible, thus reflecting a change in strategy for Microsoft. However, while that strategic change may be possible, Nadella’s note implies that it’s more of a slight shift than a seismic one.

In his email to Microsoft employees, Nadella said Spencer’s position is “a new role leading Xbox, combining the Xbox and Xbox Live development teams with the Microsoft Studios team. Phil will report to Terry Myerson, allowing us to keep gaming close to the group developing operating systems across devices.

“In this new job, Phil will lead the Xbox, Xbox Live, Xbox Music and Xbox Video teams, and Microsoft Studios. Combining all our software, gaming and content assets across the Xbox team under a single leader and aligning with the OSG team will help ensure we continue to do great work across the Xbox business, and bring more of the magic of Xbox to all form factors, including tablets, PCs and phones.”

In other words, Microsoft’s Xbox division could potentially be spun off as a more all-encompassing brand. However, Phil Spencer’s new role seems to be designed to further integrate and deepen the Xbox experience with all things Microsoft, not distance it from them.

Even Spencer’s own entry on the Xbox Wire shows Microsoft doubling-down on Xbox. “Xbox is an example of Microsoft identifying a new opportunity, going big after a consumer need and staying committed. From the early days of building the original Xbox, to core technology bets like incorporating the Internet in every box, Microsoft has enabled developers and creators of all sizes – from ID@Xbox to the biggest publishing and entertainment partners — with innovative technology and tools and, most importantly, a connection to the world’s best community of gamers.”

With all that said, building the Xbox brand across Music, Video and gaming could create a much more comprehensive brand that could more easily spin-off and survive in the future. Today’s announcement that Phil Spencer is taking the reins at Xbox doesn’t indicate Microsoft will jettison the Xbox brand any time soon. But in the distant future, with a more integrated overall Xbox brand integrated with the world’s most popular operating system, what’s to say a spinoff isn’t possible?

What do you think? Will Phil Spencer be a “lifer” at Microsoft, or will Xbox under his control eventually find a home outside Redmond, Washington, as an independent company? Let us know in the comments. It’s always fun to play analyst.

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