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More Bad News for Microsoft Corporation (MSFT)

Zynga Inc (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 Corporation (NASDAQ:MSFT)‘s Xbox gaming console into a vibrant community with tens of millions of gamers willing to pay up for interactivity.

Microsoft Corporation (MSFT)

However, what does this say about Microsoft Corporation (NASDAQ:MSFT)’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 Inc (NASDAQ:ZNGA)’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 Corporation (NASDAQ:MSFT) 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 Corporation (ADR) (NYSE:SNE) ridiculed. Microsoft Corporation (NASDAQ:MSFT)’s reversal wasn’t enough. Gamers don’t trust Microsoft, and now Sony Corporation (ADR) (NYSE:SNE)’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 Inc (NASDAQ:ZNGA) 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 Corporation (ADR) (NYSE:SNE) and Microsoft Corporation (NASDAQ:MSFT) 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 Corporation (NASDAQ:MSFT).

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

The article More Bad News for Microsoft originally appeared on and is written by Rick Munarriz.

Longtime Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool owns shares of Microsoft.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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