Winners and Losers with Windows 8
Chris is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Microsoft’s (NASDAQ: MSFT) Windows 8 has been causing quite a stir. And when the operating system is finally released in late October this year, it will make a huge mark on the tech community. Windows 8 is Microsoft’s attempt to catch up to rivals like Apple and Google (NASDAQ: GOOG), but I’ll come back to competitors shortly.
In Q2 2012, 154 million smart phones were shipped to consumers – and a paltry 5.4 million of those were Microsoft’s Windows Phone 7. While that number did jump 115.3% year-over-year, Microsoft knows that it has been lagging the mobile phone markets terribly, and Windows 8 could be its chance to make things right.
Microsoft’s new operating system comes with a few key features, such as more efficient memory that allows systems like Ultrabooks, that cannot add more memory, to last longer and to better frame graphics. Also, the system uses less of the CPU’s resources, which is a big consideration for consumers operating tablets and portable devices. You can read more about Windows 8’s new features from PC World.
It’s obvious that Microsoft has much to gain from its new release. But do not overlook the pending impact on the market place. Microsoft’s new product will help companies Intel (NASDAQ: INTC), ARM Holdings (NASDAQ: ARMH), and Nokia (NYSE: NOK) and will hurt Google.
Revving Up Sales
Microsoft plans to get the chips for its new operating system from Intel and British semiconductor company ARM. Microsoft is making two devices, and the two chip makers each supply one with chips. Intel looks to be a big winner, as it will supply Ultrabooks with its third-generation core processor, which hit the market this past April. Analysts estimate that 30 – 40 million Ultrabooks will be sold in 2012.
ARM also stands to significantly increase its market share as a result of Microsoft’s innovation. Venture beat does a great job explaining ARM’s new technology, and it shares these figures about the company:
70 percent of digital TVs, 20 percent of Android smartphones, and 50 percent of Android tablets. About 160 manufacturer devices are shipping. About 12 partners shipped 48 million units in 2011, and 25 are expected to ship more than 100 million in 2012.
Add in new sales from Windows 8 products, coupled with growing demand worldwide for mobile phones, and ARM looks to be in a strong competitive position.
Lastly, do not forget struggling Nokia. Nokia has seen its fair share of struggles, but the future does look brighter.
For one, Nokia is launching a new tablet this year that will have the new Windows 8 operating system. Moreover, its new Lumia phone line has the Windows 8 operating system. This could be a huge boost for the company, but remember that it still lacks distribution channels. Of the big four carriers, only T-Mobile and AT&T offer to carry its service.
I believe that Nokia has some upside as a result of its partnership with Microsoft, but I expect a real boost to come if Nokia can convince Verizon to carry its new phones.
Who Gets Hurt
Apple targets the high-end market. And while its market share sank last quarter in comparison to Google, Google does target the mass market. So does Microsoft.
While many focus on the competition between Apple and Google for share of the smartphone market, remember that Microsoft is a more direct competitor than Apple. If Microsoft’s phone takes off, don’t expect Apple to suffer for it – Apple’s die-hard fans won’t jump ship for a few cool new Windows features. Instead, look for the more price-sensitive Android users to contemplate a change.
In conclusion, Microsoft’s Windows 8 will have a huge impact on the market – both on its upstream suppliers and on its competitors. Take that into account. If the Windows 8 system beats expectations, then a number of stocks could see jumps in price.
ChrisMarasco has no positions in the stocks mentioned above. The Motley Fool owns shares of Google, Intel, and Microsoft. Motley Fool newsletter services recommend Google, Intel, Microsoft, and Nokia. 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.If you have questions about this post or the Fool’s blog network, click here for information.
