Why Microsoft is the Most Interesting Name in Tech
Douglas is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Regardless of your personal preferences between Microsoft (NASDAQ: MSFT), Apple (NASDAQ: AAPL), Google (NASDAQ: GOOG) and Amazon (NASDAQ: AMZN) products, recent moves out of Redmond have made Microsoft the most interesting play in technology. This is not to say that the other three are not in arguably more enviable and stronger positions; rather, Microsoft seems to be at the cusp of a potential rebirth that is worth watching. It is making strong moves in tablets, smartphones, music and with the release of Windows 8. As the company attempts to become relevant again, its shares should be included in your technology portfolio.
While being a classic is not the typical goal of most technology companies, the release of Windows 8 offers us some evidence that Microsoft has returned some of its focus to what made it an industry leader in the first place. The new operating system has received very favorable reviews and has inspired the release of a new generation of devices that are sparking the interest of consumers. Based on a view that sentiment has been “too negative,” Stifel Nicolaus maintains its buy rating on the stock, stating that the firm believes Windows 8 business will grow in the year ahead. The new operating system offers a solid platform that combines some of the look and feel of touch screen operation with the comforting familiarity users have come to rely upon.
Smartphones and tablets have rapidly become two of the most important products through which technology companies compete. While Google’s Android is the most used platform, and Apple’s iPhones may be the most admired, Microsoft has made a significant push to compete on the app side of this fight. The company recently held a conference called ‘Build’ aimed at inspiring developers to help Microsoft close the gap in its ecosystem. Greg Lutz, product manager at development tools company ComponentOne said, “The Surface is really exciting. It's been interesting to see people that would normally be critics of Microsoft surprised to see how good it is.”
The Surface, Microsoft’s offering in the tablet space, may be the most exciting non-software product since the Xbox. The device, which runs a pared down version of Windows 8, and should have the ability to run most Microsoft Office applications, shows great promise. While the device has been criticized by some for its relatively high price – particularly when compared to the Google Nexus 7 and the Amazon Kindle Fire HD, both of which start at $199 – if the Surface is successful in bridging the gap between laptop and tablet, it will represent a very solid value.
The Microsoft Zune is remembered as one of the least successful product launches ever, and is regularly citied by critics as proof that for all its might, Microsoft will never really be an Apple alternative. Recognizing the importance of music, however, the company is taking another shot at providing auditory entertainment to users through its introduction of Xbox Music. The new service will provide access to music to anyone using the most current version of Windows 8 and will include elements of all of the most popular options currently available, including features similar to iTunes and to those on Pandora (NYSE: P). While the announcement of yet another competitor is not good news for Pandora, it highlights the importance of the segment to device makers and tech companies.
Microsoft’s release of Windows 8 and the Surface tablet should be seen as very bullish catalysts for the stock at current levels, but it is the across-the-board push by management to reinvigorate the company that makes it such an interesting story. After nearly a decade of stagnation, Microsoft has aggressively attacked on every front it can find. It may be too soon to predict the ultimate success of the move, but the effort makes the stock a buy for some allocation in your technology portfolio.
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Mr. Ehrman has no positions in the stocks mentioned above. The Motley Fool owns shares of Apple, Amazon.com, Google, and Microsoft. Motley Fool newsletter services recommend Apple, Amazon.com, 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.If you have questions about this post or the Fool’s blog network, click here for information.