More Bad News for Microsoft

Zynga (NASDAQ: ZNGA  ) surprised investors yesterday afternoon by announcing that Xbox boss Don Mattrick will be its new CEO.

The market's interpreting this as welcome news for the social gaming leader --  and rightfully so. Mattrick helped transform Microsoft's (NASDAQ: MSFT  ) Xbox gaming console into a vibrant community with tens of millions of gamers willing to pay up for interactivity.

However, what does this say about Microsoft's future in gaming? Why would Mattrick leap into a company where bookings and share prices aren't the only things on the way down?

Zynga's executives have been leaving since shortly after the company's 2011 IPO started to head south. Things got worse last month when Zynga started letting go of the people that actually wanted to stick around. Last month's announcement promised to lay off 18% of Zynga's workforce.

What does this ultimately say about Xbox One's prospects? We're just four months away from Microsoft rolling out its platform of the future. Why is its president bolting for a new team?

Microsoft didn't win too many fans during E3 last month, upsetting diehard gamers with restrictive features that rival Sony (NYSE: SNE  ) ridiculed. Microsoft's reversal wasn't enough. Gamers don't trust Microsoft, and now Sony's PS4 becomes the console to watch this holiday shopping season.

What does Mattrick know that finds him taking a job which by most accounts is a step down? CEO at Zynga isn't as glorious as it sounds, and since founder Mark Pincus is still sticking around as board chairman and chief products officer, it's not as if Mattrick will be getting all of the credit if the company is able to reverse its negative course.

It could be that Mattrick knows what gamers already know. With Sony and Microsoft moving to a new chip architecture, this holiday's battle between Xbox One and PS4 will be fought with a clean slate. Since older games on disc won't be playable on the new systems, gamers will face the rare choice of picking between sticking to their earlier platform or going for a full reset.

With Sony's decision to go cheaper and more gamer-friendly, there is a legitimate opportunity here to surpass Xbox as this country's platform of choice for the next generation of consoles. That's been the buzz in recent weeks, but now Mattrick's departure all but confirms that it's a concern at Microsoft.

Mattrick wouldn't be jumping into a frying pan unless he was leaping from a fire.

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Comments from our Foolish Readers

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  • Report this Comment On July 02, 2013, at 6:34 PM, TylerDurden94 wrote:

    Reading way too much into this. All the things that Microsoft rolled back are the things Don Mattrick championed for XB1. It sounds like ZNGA is going to be his chance to do things his way without fanboi backlash. And of course he would get full credit for any ZNGA turnaround.

  • Report this Comment On July 02, 2013, at 6:52 PM, VegasSmitty wrote:

    Everyday on the Motley Fool we see gloom and doom for Microsoft. Yet they make more money in a day they all the people at the Motley Fool will make in a lifetime. Poor, poor Microsoft.

  • Report this Comment On July 02, 2013, at 6:57 PM, locsphere wrote:

    Here is the deal Microsoft, If you update the ability when accepting the terms of service to opt out of any and all data collection, then make it so the Kinect cannot be accessed at all though the internet, Put its circuit on a closed loop of the machine that can't let Microsoft access it in any way shape or form.

    You are not allowed to have your machine in my home until my privacy and rights are gaurenteed. If this serves as a problem for you. That is not my problem... I would rather go with out technology then give up my privacy.

    There is absolutely no reason my privacy should be violated simply because I use technology. You have simply decided to make money off of something that ethically you never should have even been able to do.

    My data is off limits. Video and audio recording in my home is off limits.

  • Report this Comment On July 02, 2013, at 7:10 PM, donax666 wrote:

    I swear every other tech company could default and leave Microsoft alone and Motley Fool would say that Microsoft is in trouble because a startup company just figured out how to solder a resistor to a board...

  • Report this Comment On July 02, 2013, at 7:22 PM, Batotahell wrote:

    This is the same guy who annoyed fanboys a couple of weeks back with that comment about "if you don't like the requirements for the XBox One we have a system for you, the XBox 360." That one statement felt like a big finger in the face to the people who made the 360 such a huge hit. Now everything he stood up and told us we had to take is being taken back and we should think his leaving is bad for Microsoft? Sounds more like a win for them.

  • Report this Comment On July 02, 2013, at 7:26 PM, spinod wrote:

    Microsoft is just that, a software giant. They were better off making software with a company that makes good hardware. They could have utilized Sega or something to make a rather awesome console.

    However they went and did it themselves, and their lack of gaming knowledge is beginning to show through. Reveal a new console and don't talk about games at all? Really? Did you not learn from Sony's PS3 that no matter what you do to make it an "all in one" device, parents and consumers still look at it as a GAME MACHINE?

  • Report this Comment On July 02, 2013, at 11:06 PM, capnkrk77 wrote:

    I agree with Batotahell, you're reading way too much into this. Mattrick's ridiculous comments towards Xbox's core customers warranted his dismissal. As a long-time Xbox customer, their reversal of restrictions wasn't quite enough for me to stop considering buying a Playstation for the first time ever. I still had the sour taste of Mattrick's comments in my mouth and knew continued Xbox patronage would contribute to his success. His departure has sealed the deal for me getting an Xbox One come November. The Zynga gig and his pleasant sendoff was simply Microsoft doing a nice for his years of service.

  • Report this Comment On July 03, 2013, at 5:17 AM, kennethmacauley wrote:

    I like my computer, video card, 6 core processor and a 500 watt sound system.

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