Investment firm Goldman Sachs has recommended that Microsoft separate its profitable Entertainment and Devices division - which includes Xbox - from the rest of the company.

According to an analyst report the profitability of Microsoft's consumer focused entertainment division is being adversely affected by being a part of the company as a whole.

"For example, the Xbox products could be an appealing stand-alone entity, given the historical success of the Xbox and the products' brand strength, and the business could show unlocked value with forced cost discipline compared to as a piece of Microsoft," read the report.


According to the report, Microsoft believes that combining the consumer and enterprise divisions has value, but analysts suggest this approach is splitting focus.

"To date the company's comments suggest that management still sees significant value in combining the consumer and enterprise efforts, but we view a foot in both camps as preventing a successful focus on one strategy, a la Oracle in the enterprise or Apple for consumers."

The report went on to highlight Microsoft's lack of dominance in the tablet PC and cloud-based computing market, and reduced its rating from "buy" to "neutral".

Microsoft has claimed that Kinect's launch may be be bigger than that of every console in history, and earlier today CEO Steve Ballmer labelled Kinect the 'next-gen' Xbox 360.

Retailers are warning customers that Kinect stock levels are 'limited', even suggesting there will be no Kinect units available to buy at launch next month.

http://www.computerandvideogames.com/ar ... ?id=268169