Browser Market About to Get More Competitive for Microsoft
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Our Internet browser is something many of us simply take for granted. A few years back, I would never have even thought to switch to a browser more suited to my preferences before discovering the wonders of Google (NASDAQ: GOOG) Chrome, and just stuck it out with my computer’s pre-installed Internet Explorer. Even Microsoft (NASDAQ: MSFT), the developer of Internet Explorer, has dubbed Internet Explorer the browser we ‘love to hate’ – but a very recent trend has seen Internet users going back to Internet Explorer, which is good news for the company. Microsoft is currently developing Internet Explorer 10, which will soon be the newest version to hit our computer screens. As positive previews of the browser flood in from critics, we are left wondering whether Microsoft could be making a comeback.
Internet Explorer 10 is set to be released in two versions: a desktop version, which will support traditional plug-ins, and a version compatible with the new Windows mobile phone, which will feature the new Metro interface by Microsoft and not support plugins. Microsoft aims to expand on key features of Internet Explorer 9, including HTML5 support and hardware acceleration. Most significantly, Internet Explorer 10 is being designed to be as safe as possible, making user privacy a priority.
Plugins will no longer have the access previously granted to user files, enhancing security, and anti-tracking tools will be built into the browser to prevent advertisers from gaining personal information. In emphasizing the importance of using a secure browser, I think Microsoft has made a very clever move. The one and only motivation many of those surfing the web have to change their Internet browser is to enhance their online security. Recently, there have been many circulating rumors that Google is storing too much personal data, and even when these claims are unfounded, they scare regular consumers away. A proportion of the market share, albeit most likely a small one, will be drawn to Microsoft’s Internet Explorer 10 because it offers more web privacy.
So, Microsoft could be set to make a comeback. Even as Internet Explorer claws back some of its market share, it can’t be denied there is much work to be done. Despite Internet Explorer being the most popular web browser a decade ago, the emergence of Google Chrome and Mozilla Firefox has seen it take a significant hit in the stakes, in both market share and reputation.
Google also has plans to upgrade its browsers in the coming month, while Apple's (NASDAQ: AAPL) web browser, Safari, is still lagging way behind. In May 2012, Internet Explorer held 28.8% of the browser market share, Google Chrome held 26.4%, and Apple's Safari held a meager 6.2%. Why did Safari not take off like Chrome? Experts believe this is due to the Microsoft OS remaining dominant over Mac. Consumers have complained that Apple's Safari is slow to startup, consumes more memory, and is not as visually pleasing as Google Chrome. Apple has instead been focusing its efforts on the mobile side, as Safari was used for 62.17% of mobile web browsing traffic in October 2011.
In the past, Microsoft has relied on web users choosing the default option (Internet Explorer on its popular hardware computer devices) when it comes to browsing online. It won’t be able to rely on this method for much longer, particularly as competition heats up on the hardware front, with the emergence of tablet devices and the popular Mac computers.
Other breaking news from Microsoft reveals that security threats could be present in its Xbox 360 game console devices, which paints a very different picture than that of the highly secure Internet Explorer 10. Researchers at Drexel and Dakota State Universities have discovered that the hard drive of the games console permanently stores credit card numbers used to make game purchases on Xbox Live personal accounts. They purchased a refurbished Xbox 360 model, and after running a software program through the machine, were able to retrieve files including those holding credit card information of the previous owner.
If it turns out that Xbox 360 games consoles do commonly contain this security flaw, Microsoft can expect to see their share price take a temporary hit. I don’t expect the effects to be too detrimental despite the potential seriousness of the issue. Although it puts the company’s games console design process under fire, it is more of a problem for those looking to sell their game consoles.
There would likely be a fall in the supply of preowned Xboxes (for a short period, until the flaw is rectified) which could lead to a boost in the sales of new Xboxes. Microsoft investors should keep their eyes open for further developments, and be ready for a slight share value drop – but my advice would be to cling onto your shares and wait for the storm to pass. With the price of the Xbox 360 set to fall to $99 in major US stores, any qualms consumers may have about security should be offset by the attractive, low-ball pricing of this console.
Although Microsoft’s Internet Explorer 10 is looking good, and problems with the Xbox 360 are unlikely to eclipse this, I think the company is far from leaving danger behind. Google is certainly a challenging rival in the browser market. For this reason, I wouldn’t suggest an investment in Microsoft until it embraces the ‘bigger and better’ tone of today’s computer technology industry.
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