Microsoft co-founder Paul Allen likes idea of company breakup

Allen's chief investment officer floats the idea of Microsoft spinning off consumer businesses, like search advertising and Xbox.

Dara Kerr Former senior reporter
Dara Kerr was a senior reporter for CNET covering the on-demand economy and tech culture. She grew up in Colorado, went to school in New York City and can never remember how to pronounce gif.
Dara Kerr
2 min read
Microsoft co-founder Paul Allen. NBA

As Microsoft's board hunts for a new chief executive officer, one of the tech giant's co-founders is throwing in his two cents on what that successor should do with the company: break it up.

The chief investment officer for co-founder Paul Allen said Microsoft should consider spinning off some of its businesses, according to the Financial Times. Paul Ghaffari manages Allen's $15 billion fortune and was speaking on behalf of Allen during the Financial Times Investment Management Summit on Tuesday.

Ghaffari said that consumer businesses, like search advertising and Xbox, are a distraction to Microsoft's success. The majority of the company's earnings come from its software and business customer services, he said.

"The search business and even Xbox, which has been a very successful product, are detracting from that. We would want them to focus on their best competencies," Ghaffari said, according to the Financial Times. "My view is there are some parts of that operation they should probably spin out, get rid of, to focus on the enterprise and focus on the cloud."

Allen, who founded Microsoft with Bill Gates in 1975, still holds a $2 billion stake in the company.

Microsoft has already spun out some of its businesses in the past. In 2009, it broke off a business that licensed its software protection technologies to other companies. The new venture was dubbed InishTech and is based in Ireland. Microsoft retained a stake in the company as well as an observer seat on its board of directors.

Other past spin-offs include Inrix and Zumobi (formerly ZenZui), which have come from technologies developed within Microsoft's research labs. Microsoft also spun out a social-networking technology, known as Wallop, in 2006.

Microsoft CEO Steve Ballmer announced in August that he would be stepping down from his position within the next 12 months, but recent reports say the seat change could happen as soon as the end of this year. Possible successors include Ford CEO Alan Mulally, former Nokia CEO Stephen Elop, and Microsoft Executive VP Tony Bates.