Analyst Goldman Sachs has downgraded Microsoft share recommendations from 'buy' to 'neutral', and suggested that one way to resolve the firm's apparent difficulties is to split off its consumer entertainment division.

In a new report (as seen by TechFlash), Goldman Sachs claimed that "A break-up of the consumer businesses could potentially unlock hidden value, or more discipline on cost could turn the businesses into contributors to profitability and shareholder value.

"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.

Clarified Goldman's Sarah Friar, "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."

Goldman blamed an "elongated PC refresh cycle" and the rise of tablet devices for its 4 per cent lowering of Microsoft's earnings estimates.

To address this, the analyst claimed, Microsoft would need to increase dividends in order to lure more investors, to pursue market leadership in cloud technologies and, damningly, "a coherent consumer strategy that could involve paring back investments and/or divesting more peripheral assets such as gaming."

In Goldman's valuation of Microsoft's various divisions, Entertainment & Devices (which includes Xbox) came out the lowest, at $3.6 billion.

By contrast, Windows/Windows Live was pitched as $107 billion, the business division at $99 billion and servers and tools at $43 billion.

Of the Xbox division, the analyst claimed that "Kinect expands the addressable market and could be key to higher profitability" and "Xbox Live [is] one of the largest paid Cloud communities in existence, offering Microsoft a door into the highly sought after consumer living room."

However, "The division is yet to turn profitable, once corporate overhead is allocated."

While Microsoft has yet to respond to Goldman Sach's recommendations, industry figures have been vocal in their disagreement. " Pulling this off would be like Microsoft learning Geller-ian magic tricks, the equivalent of being able to bend spoons with its brain," said investor Paul Kedrosky.

Added analyst Matt Rosoff to ComputerWorld, "I think it's silly to spin off a profitable business. Xbox would lose more than it would gain by going it alone." Rosoff felt that the company would be better off carving its search business, due to the complexities of competing with Google.

Microsoft share price fell by 2 per cent following Goldman Sach's report.

http://www.gamesindustry.biz/article...-xbox-division ...

Ubisoft's North American boss Laurent Detoc has claimed that Kinect is comparable in consumer appeal to the iPad.

As such, the French Publisher is aggressively pursuing projects for the Xbox motion controller.

"It's our intent to be the biggest third-party publisher on that machine," Detoc told Gamasutra at a Kinect event in San Francisco.

"I think we are in a good position because we have solid tech; we have a lot of R&D that has generated a lot of prototypes. We're only making like half a dozen games. We could have made like 12. There's a right balance to have."

Confident that Kinect would succeed, he argued that "It's cool. It's a piece of technology. Why do people buy iPads? I have an iPad. My wife has an iPad. Why? You've gotta have it."

In addition, he drew attention to Microsoft's significant spend on researching and promoting Kinect.

He was also unconcerned about Kinect's high RRP. "It's not such a big investment compared to how good it is, and how many units they want to sell at the beginning. Ask me a year for now how I feel about the pricing for Christmas 2011, based on the install base they have."

Detoc also predicted that Kinect (and its successors) would spread onto other hardware devices. "We're going to put 3D cameras in everything... I would be surprised if the TV I buy five years from now doesn't have a 3D camera in it."

http://www.gamesindustry.biz/article...nect-publisher ...

A study by Interpret has revealed that consumer awareness may be a barrier to widespread adoption of 3D in the home.

63 per cent of console owners (from a pool of 1500, surveyed online) claimed to believe that a firmware update was the only step necessary to enable 3D gaming, Interpret's Michael Cai revealed at GDC Online (as attended by Gamasutra) yesterday.

This suggested awareness of the necessity (at present, at least) for a 3D TV and stereoscopic glasses was not as high as it could be.

Similarly, 83 per cent of all surveyed consumers believed all 3D technology required glasses, suggesting understanding of the Nintendo 3DS was not universal.

Some 13 per cent of those consumers thinking of buying a new TV within the next year would 'definitely' buy a 3D set, while 10 per cent definitely wouldn't. This left 77 per cent unsure to some degree.

Of those that wouldn't, 46 per cent (again, from a starting pool of 1500, reduced to however many were considering a new TV in the next year, and then down to 10 per cent of those) named the hassle of 3D glasses as the major obstacle. 69 per cent, meanwhile, blamed the price of 3D TVs.

http://www.gamesindustry.biz/article...es-make-tvs-3d ...

The number of UK shops offering pre-owned game sales and trade-in programmes has increased by a third over the last year.

Around 3000 stores nationwide boast some sort of second-hand service, findings by MCV reveal - up 1000 on last year.

Non-traditional game stockists are experimenting too, with Tesco, Argos and most recently Asda all introducing trade-in programmes this year.

Asda this week revealed plans to offer its service in 234 of its stores – approximately two-thirds of the Walmart-owned chain's UK branches.

GAME CEO Ian Shepherd hinted that his chain remained the king of trade-in, however. "Our pre-owned business goes from strength-to-strength – it's a strong and growing part of our mix," he said.

"No one can be bold enough to claim such a thing as 100 per cent share. Is there room for others in the market? Yes, there probably is."

He also claimed that measures by the likes of EA (with Project $10/Online Pass) to attach publisher profit to trade-in games had not dented the growth of second-hand sales.

"No, we've not seen the changes in the commercial nature of how some games have launched make any impact on the trade-in category. It's still a strong part of our business."

HMV boss Simon Fox is also optimistic about the pre-owned market, tellingGamesIndustry.biz this week that he believes it drive new release sales too.

http://www.gamesindustry.biz/article...wned-stockists ...

Sony Computer Entertainment Europe has sent notice to developers that it will no longer be selling development kits for the PlayStation Portable.

A notice sent to pspgweber states that Sony "will no longer be selling the PSP development tool (dtp-t2000a) or testing tool (dtp-h2500a) past November, 15th," and that the company will "advise you when a new model becomes available."

Contacted by VG247, Sony Europe said the move was due to current kits expiring, and that it still intends to support the format.

"Due to the certification on the current development and test tools expiring, we will be stopping selling them on November 15. However, we will continue to provide loan stock for registered and new developers, until a new certified model is available," said Sony.

The move will fuel gossip of the PSP2, which is expected to be released before the end of next year.

Sony is believed to have presented the new hardware to publishing partners and discussed business models for the system.

http://www.gamesindustry.biz/article...g-psp-dev-kits ...

Note the plural use of "phone" in that headline quote. It comes from HP's Senior VP Eric Cador who said, "you will see us coming early next year with new phones," when speaking at an industry conference today in Barcelona. Of course, he's referring to smartphones running webOS and not some WinMo followup to the iPAQ Glisten for crissake. Sure, it's not much, but when you're as desperate as we are for the next Palm device then every scrap of information counts.

http://www.engadget.com/2010/10/06/h...rly-next-year/ ...

Eschewing the femtocells that most of its competitors have embraced, T-Mobile USA has long touted WiFi calling as the answer for augmenting its cellular network -- problem is, they've generally done a poor job of rolling it out to a wide variety of handsets. Notably absent from the compatibility list so far, Android is finally being welcomed to the club today -- as rumored -- with the recently-announced myTouch and Motorola Defy among the first models to nab the feature. Though availability on currently-sold phones hasn't been announced, T-Mobile does say that WiFi calling is "anticipated to be available on a growing selection of T-Mobile's Android-powered smartphones in the coming months," so we'll go on record hoping we see a few upgrades in the works (G2, we're looking straight at you).

http://www.engadget.com/2010/10/06/t...-calling-game/ ...

Say it with us now: "Here we go again." Just months after a particular eFuse predicament left legions of Droid X owners fuming, it seems that an all-too-familiar scenario is presenting itself to the earliest of T-Mobile G2 buyers. As the story goes, there's a problematic microchip embedded into the handset which "prevents device owners from making permanent changes that allow custom modifications to the the Android operating system." That's according to a lengthy New America report on the issue, which outright proclaims that a hardware rootkit "restricts modifications to a device owned by the user." In other words, if you install some fishy (or not fishy, for that matter) third party ROM, the phone is capable of overriding your software changes and reinstalling the original firmware -- makes perfect sense considering how earlier roots were "vanishing" post-reboot. Needless to say, this isn't exactly going over well with the tinkering community, and a 40+ page thread has already exploded over at xda developers. The silver lining isn't tough to spot, though -- chances are someone with ample time and sufficient coding skills will be able to circumvent this nonsense by the time the G2 actually finds its way back into stock.

http://www.engadget.com/2010/10/06/t...stricts-modif/ ...

With Nintendo's Wii has arrived a new kind of videogame injury caused by the carefree swing of a motion-sensing Wiimote: "bystander injuries". And those particularly at risk are children, a new study has found.

An American Academy of Paediatrics study presented at a San Francisco conference detailed how, over a five year period between 2004 and 2009, interactive games - mostly Wii games (reports the BBC) - were responsible for 92 injuries. As well as cuts and bruises, patients were more likely to have hurt shoulders, ankles and feet. There are even records of broken ankles from Wii balance board-related tumbles and head injuries from overzealous playing partners.

Smashed televisions were a well publicised problem when Wii launched in December 2006, and forced Nintendo to introduce a gel Wiimote cover and "re-evaluate" the flimsy Wiimote wrist strap.

Lead author of the study, Patrick O'Toole, told MedPage Today that, "Younger children under the age of 10 should be supervised while videogames are being played to prevent bystander injuries which are more common with interactive games."

A Nintendo spokesperson, talking to the BBC, countered: "As with any new activity, people playing the Wii system should pace themselves and not overdo it." She added that instructions should be followed, breaks taken and "excessive and forceful" actions avoided.

Yet despite the fabulously dramatic nature of Wii-related injuries, Nintendo's motion-sensing console is a far lesser evil than traditional console gaming. During that same five year period, 604 injuries were accounted to "prolonged constant viewing of the screen and sitting tensely". The injuries were more severe, too, and included 65 seizures, eight cases of visual disturbance or eye pain and around 23 neck injuries.

"Many people play [traditional] games for much longer periods of time than exergames," chimed-in boffin Greg Norman from the University of California to the MedPage Today.

"Many of the exergames that I have experienced have short bouts of play with breaks in between levels and games. This may actually help players of exergames avoid the injuries of traditional video games."

"I have seen some close calls in my own home with my children," he added. "It shows that these games do need supervision when played by children."

Nevertheless, the chances of you injuring yourself while playing are slim: one in millions. But if you do come a cropper, please let us know - and maybe take a picture for the website too.

http://www.eurogamer.net/articles/20...injuries-study ...