I believe that Microsoft Corporation (NASDAQ:MSFT), with its update to Windows 8.1, will be able to win some more users who may be unfamiliar with the new Windows 8 design.
Windows 8.1 will be released later this year. This will give Microsoft Corporation (NASDAQ:MSFT)’s customers the ability to change the desktop background to something similar to Windows 7. The only difference with Windows 8.1 is that it won’t provide a start menu, but it will allow you to put programs on a horizontal toolbar that is reminiscent of the Windows 7 days.
Hoped for outcome
The hoped for the outcome is that the changes brought by Windows 8.1 will help to address the concerns of transitioning from legacy devices running on Windows Vista and Windows 7. Windows Vista users will experience the greatest gains from upgrading their computers, along with Windows XP.
I believe that Microsoft Corporation (NASDAQ:MSFT) is on the right track with this strategy. I believe the greatest advantage afforded through its Windows 8 platform is that it familiarizes the average Windows user with the mobile versions of Windows phone. This could help stimulate demand for Intel Corporation (NASDAQ:INTC) based processors.
Intel is banking heavily on the success of Silvermont, which will have better power efficiency and comes with a 22nm SOC technology process. It is also three times as powerful and power efficient from its current Saltwell generation of processors, which means that the Intel Corporation (NASDAQ:INTC) and Microsoft Corporation (NASDAQ:MSFT) duo could potentially be disruptive. The projected performance of Silvermont should not be laughed at.
That being the case, more must be done in order for Microsoft to win the hearts of its customers. As Microsoft Corporation (NASDAQ:MSFT)’s greatest advantage is through its OEMs, like Dell Inc. (NASDAQ:DELL), it will be able to provide a customize-able tablet that can have varying processors, ram, and memory configurations, which could help bring more customers.
Competition
One of the things that could be potential deterrents to Intel’s success and why Intel Corporation (NASDAQ:INTC)’s success is so dependent on Microsoft is the price wars it will have to run into with QUALCOMM, Inc. (NASDAQ:QCOM) in the mobile arena. According to AllthingsD, the Snapdragon is priced just at $20. This could be troublesome for Intel Corporation (NASDAQ:INTC) as Intel currently prices its Intel Atom Z670 at $75 (the processor does perform extremely well in terms of low power and performance).
Atom Z670 is found in the Acer W510 tablet, which is a Windows 8 tablet. Unfortunately, Atom, while being better than QUALCOMM, Inc. (NASDAQ:QCOM)’s processors across certain benchmarks, doesn’t change the fact that Qualcomm can price its products at a significant discount because it operates at extreme economies of scale.
QUALCOMM, Inc. (NASDAQ:QCOM) provided guidance that it would be shipping about 163 million to 173 million chips. When a company can ship more than 50 million chips per month, it can lower its prices and still recognize significant profit margins.
Other equipment manufacturers love QUALCOMM, Inc. (NASDAQ:QCOM) because of the $20 price tag. This is something that Intel will have to address (which may mean margin erosion), which is what gives Qualcomm enough time to come up with a better chip solution that can again be sold at a lower price than what Intel Corporation (NASDAQ:INTC) can price itself at.
Computer manufacturers can start to buzz again
Source: ComScore
What’s intriguing is that Microsoft Corporation (NASDAQ:MSFT) is starting to gain share in mobile. In partnership with Intel Corporation (NASDAQ:INTC), the tides could start to change. Again, other equipment manufacturers, like Dell, could experiment with creating their own mobile phones. Dell may be able to turn around its declining PC business, which reported a 9% decline in year-over-year sales for computer solutions for consumers. If only Dell was more aggressive with its Tablet strategy.
