A provocative posting by a Seattle area blogger suggests Microsoft is spinning off one of the crown jewels of its Xbox business, Bungie Studios.

Based on an e-mail from an alleged insider, the post says Microsoft will retain the rights to the Halo franchise that Bungie developed and Bungie will presumably continue to develop Xbox games.

The post, which appears on the community site of another Seattle paper and is being recognized mostly for its appearance on the 8BitJoystick gaming e-zine, posted the e-mailed tip:

"So heres my big secret. You should google Bungie + Microsoft + separation this week. You know that big ol BILLION dollar franchise Bungie has created for Microsoft, to show their appreciate Microsoft is letting Bungie leave. Of course Microsoft gets to keep all rights to the Halo franchise, but as today Bungie no longer part of Microsoft. Ask anyone who works there to search the global address book, they're no longer in there. Microsoft was supposed to release the press release today but if they wait till the 10/6 the impact wont effect the quarterly results. However today is the actual official date and the day the NDAs expire, however you still didn't hear this from me."

"Apparently MS just wants Bungie to make Halo for the rest of their natural days, and Bungie doesn't like how MS is constantly trying to 'handle' everything they do; the way they market their games, the way they interact with their fans (basically the fact that they do appreciate their fans), and how stingie they are with the profits (comparable to the rest of the industry). So as of today they are their own independent entity. They'll probably make Halo 4 for Microsoft, however hey are also free to create new intellectual properties for whatever system they want. (Even though they prefer the xbox platform)"

"What a way to say thank you."

It's a shocker if true, especially since Bungie management has recently been talking about the studio's autonomy and positive relations with the mother ship.

But Microsoft's also pushing hard to make the Xbox business profitable so it's probably looking at all sorts of ways to shave costs. Running a studio is expensive, and Microsoft would still benefit from its creativity since Bungie would continue to develop Xbox games.

Microsoft did the same thing just after it released Halo 2, in late 2004. That's when it cut its sports game studio, laying off nearly 80 people, then sold a Utah studio that had made snowboarding games to Take-Two Interactive.

Here's what Xbox boss Robbie Bach said that year, back when he was expecting the division to be profitable in fiscal 2007:

"When we got to that point, we started looking around and started realizing, wait, we've got tons of third-party support. We shouldn't be the bulk game provider."

Maybe this was all part of a plan that would unfold as the Xbox hit critical mass. Microsoft's a platform company, not a content company.

What I'm wondering, though, is whether Microsoft would divest Bungie to be run as a standalone or selling it to a big game publisher like Electronic Arts.

The blog post by Jacob Metcalf prompted tons of chatter, including comments about locks being changed at Bungie's offices in Kirkland.

You wouldn't lock people out unless there were going to be big layoffs or a sale. Could it be routine maintenance? Or is it really bad planning/HR messaging on Microsoft's part?

Besides, can't Microsoft's IT people change the door's access codes with a few keystrokes in a directory server?

As for the timing, I wonder if Microsoft would make an announcement under the cover of the pending launch of new Zunes. Consumers would be more interested in the new digital media players than the gyrations in the Xbox business, especially if there's no interruption in the flow of Halo.

But what about the message a divestiture would send to other hustling teams at Microsoft? Halo, Xbox and Xbox Live are one of the best and most Applesque end-to-end consumer experiences to come out of Redmond.

How would Xbox game developers interpret the news that Microsoft is getting rid of the platform's most successful studio because it's not profitable enough? On the other hand, they may be relieved to not be competing anymore with a deep-pocketed insider.

I guess Bach has to figure out a way to make money with the Xbox or he could be the one divested.

I asked him for a comment and haven't heard back. Apparently his PR people told the blogger "There's been no such announcement," which isn't much of a denial.

Update: Jake pointed out in comments that the locks were indeed being changed as a maintenance thing, to make them ADA compliant. Still strange that employees would be jumpy about something like that.

A limited number of people can take their Vista PCs to Microsoft for an update and an early copy of the upcoming Vista service pack.

The company will also give participants food, beverages and a gift for parcticipating in the day-long "install fair" on Oct. 27 at Microsoft Building 33.

It's intended to get feedback and generate enthusiasm about Vista SP1.

To register, send an e-mail to vsp1reg@microsoft.com. But first you may want to check and see if your system meets the criteria listed on the Vista team blog.

If you're interested I'd jump on this one; the blog invited Microsoft employees to register this morning and it's first-come, first-serve.

Here's the Times of London interview with Steve Ballmer that has Facebook fans in a tizzy today.

Ballmer was coy about Microsoft's rumored investment in the social networking company, which may be part of his strategy to "surprise" investors with a foray into advertising.

Facebook's networking effect has value but the site is faddish and its technology isn't revolutionary, Ballmer said:

"There can't be any more deep technology in Facebook than what dozens of people could write in a couple of years."

That was the money quote, but he said some interesting things later about Microsoft's new take on free software and services. I wish the article kept going; it ends just after it turns to this topic. A few excerpts:

Mr Ballmer suggests that there lies a new formidable force behind the drive into advertising. "My general rule of thumb today is that anything the consumer doesn't have to pay for, they won't," he says.

I'm surprised he didn't use the opportunity to plug the new Office Live services, but maybe the interview was done before Monday's launch. The story almost reads like a set-up for the new services:

The admission beckons towards a trend of free online software and services that has the potential to decimate Microsoft. Google and IBM, for example, recently launched free alternatives to Microsoft Office, Mr Ballmer's biggest earner by far. The stalwart suite of office tools, which includes Word and Excel, accounted for revenues of $4.6 billion -- a third of Microsoft's total sales -- in the company's most recently reported quarter.

Microsoft is in danger of losing licence fees that it has milked for decades as customers depart for free alternatives. The answer: Microsoft will also offer free services -- e-mail, photoshare, instant messaging and the like -- and reap revenues through advertising.

"There is no way to play in broad consumer services unless you're going to use advertising," Mr Ballmer says, "and you only have two choices for advertising: one, you do it yourself, or you outsource it to Google. In our case, that's probably not going to happen."

Mpire is launching a new venture today that could be bigger than the company's original shopping search service, according to Chief Executive Matt Hulett.

Called WidgetBucks, it's a contextual shopping/advertising service for bloggers and Web publishers. The inspiration came from work Mpire did for eBay on shopping features.

"What we found out with eBay is, my gosh, if you show contextual products on a page, people actually click on it and they buy stuff,'' Hulett said.

WidgetBucks places a widget displaying a list of products keyed to the content on a Web site. A camera site may have a widget featuring top-selling cameras, for instance. Viewers clicking on items are taken to merchant sites.

Mpire produces the widgets and refreshes the list daily. The lists draw on the data Mpire's comparison shopping service compiles, so they display top-selling items and deals from a mix of online stores including Amazon.com, eBay and others.

InfoSpace and Marchex are among the local companies that have been testing WidgetBucks for about six weeks. It took Mpire, an 11-person company on Westlake Avenue, about seven months to build.

Hulett said it should be particularly appealing to bigger Web publishers generating lots of pages dynamically, because WidgetBucks figures out the optimial product mix to display on each page.

Like a few other entrepreneurs, Hulett's also eyeing Facebook's growth. The widget is designed to work on Facebook pages, despite the site's restrictions on outside ad services, though kinks were still being worked out late last week.

The Flash-powered widgets are also advertorial content. They display reports pulled from Mpire, such as top-selling products in a particular category.

I'm curious to see if the widgets feel as useful as Mpire, a site that's a nifty way to compare prices across different shopping sites. Will a preselected list of shopping options feel as helpful? It probably doesn't matter -- they're ads, not search results, and their utility will lie in how much money they make Web publishers.

If it works as promised, WidgetBucks could make Mpire a more likely acquisition target.

Hulett said he's focused on making ads perform better for publishers, but he's also thinking about options.

"There's so much happening in advertising and everyone's looking to see what they need for an arms race; an ad network makes us more attractive,'' he said.