Microsoft is Done! Long Live Apple, Google and Red Hat

Ash is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

I used to be a big Microsoft (NASDAQ: MSFT) fanboy. I have always owned the Microsoft product when it came to technology, and I would always recommend those products to my friends. I even owned the stock for the longest time. After a while it became time to cash in and move that tech money elsewhere; to the companies that have even a slight glimmer of success on the horizon.

I don’t mean to bash on Microsoft too hard, I really don’t. It's just that in the last couple of years it has become increasingly hard to see them emerging from this gigantic rut that they are in. Sure, I feel the company will always be there in some form, but when it comes down to it I feel that Google (NASDAQ: GOOG) and Apple (NASDAQ: AAPL) will steal control of the consumer landscape while companies such as Red Hat (NYSE: RHT) will take market share from Microsoft’s server business.

I have to have some sort of reasoning behind all of this, right? If I don’t then you might mistake me for some common Apple fan trying to put down the work of Mister Softy. Well, I have lots of reasons.

To begin with we can look at Microsoft’s biggest division, Microsoft Office. I have a hard time seeing Office being knocked off its top spot any time soon, but that doesn’t mean the department isn’t in decline. There are competitors in this division from Google, and even Apple in some sense. All it will take to bite a big chunk out of Microsoft is for one of these other apps to gain traction. With the transition from desktop to cloud happening it will be easier for services like Google Apps to wave their hands and shout, “Over here, we’re cheaper.”

The next biggest division at Microsoft is another shrinking one: Windows. People continue to switch to both Mac and Linux, and I believe that trend will continue over time. Like the Office division and the Server division I think it will take time for Windows to break down due to all of the legacy systems that are out there.

So, I think that Office is going down, Windows is going down, and you might as well add the Windows Server division into the mix too as businesses and the government begin to realize it is cheaper to run Linux with the help of a company like Red Hat. Oh, and one more thing: the web division is likely to crash and burn too. It isn’t making any real money right now and I think it would take a sheer miracle for Bing to beat out Google.

Something at Microsoft must have a positive future though, right? I would say that the Xbox division is perhaps the brightest in terms of the future. I think that Microsoft will pull off the next generation switch to a tee, and I also happen to believe that if there is a future in this company at all it will hang with the Xbox / Kinect brand.

Microsoft's Xbox is a console that is so much more than a console. It could be the next set-top box in everyone’s living rooms, or it could allow third party apps and act as a PC on the TV. There are lots of things that Microsoft can do with this console, and in my opinion they had better get working on it right now.

Of course, all of this is just my opinion. There are, as far as I can tell, more people against me on this matter then there are for. The company pays a great dividend and they have somewhere north of $60 billion saved away for a rainy day. They’re also putting a lot of effort into their new tablet, the Surface, which will be releasing a Pro version in the New Year. And what about those Windows Phones? Will they sell well? I guess investors will just have to play the waiting game on Microsoft and hope for the best.


Ash1402 has no positions in the stocks mentioned above. The Motley Fool owns shares of Apple, Google, and Microsoft. Motley Fool newsletter services recommend Apple, Google, and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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