In an attempt to get back on the saddle, Microsoft is doing a lot to create a redoubtable force in the space. This year, Microsoft plans to enhance its smartphone line up. It also intends to increase retail distribution and capacity. During the earnings call, it noted that its smartphone sales were 4 times higher than they were a year ago. I would argue that this ‘4 times’ scenario is brought about by the fact that sales volume was low last year.
Perhaps the biggest step that Microsoft Corporation (NASDAQ:MSFT) has taken so far with regard to mobile is its strategic partnership with Nokia. Microsoft has positioned itself the same way Google did with Samsung. Google has managed to ride on the back of Samsung. Going by global market share, Google’s android market share currently dominates. Microsoft hopes that it can achieve similar or even greater feats with Nokia.
Recent reports show that Nokia’s Windows-powered Lumia is gaining notably; this could pan out well for Microsoft. Indeed, some of the latest figures reveal that roughly four out of every 5 Windows 8 Phone devices are produced by Nokia. These statistics help to explain the growth in Windows 8 phones, which increased from 1.8 percent to 3 percent during the past quarter.
Windows 8 Integration knits it all
Tech fanatics may argue that the Windows 8 integration is just another demonstration of futuristic innovation. I have no argument against that. Notwithstanding, my view is that this integration knits most, if not all, of Microsoft’s initiatives together. It provides a platform that can help cut across all segments and in doing so; helps it protect its market share from belligerent competitors like Google. True to it, Windows is gaining remarkably. During the past quarter, Microsoft recorded $6.9 billion in Windows revenue, up 28 percent year-over-year.
As a bonus, the tech big wig has even gotten into the ‘patent segment’. Yes, patent wars have become a part of the business too- just ask Samsung and Apple. Recent news reports show that Microsoft supports Oracle in its Java case against Google. Oracle is appealing to a U.S district court to reverse an earlier ruling which had concluded that the copyright claims against Google, in relation to Java, held no ground. In May last year, Microsoft recorded a minor win after a German court concluded that Motorola, Google’s subsidiary, had infringed Microsoft’s patent in relation to text messaging technology.
Conclusion
Despite tech investors’ current inclination toward stocks with high growth prospects in mobile, Microsoft is not- just yet – placing all its efforts in mobile. The headwinds created by Samsung and Apple in the smartphone market are too strong and Microsoft Corporation (NASDAQ:MSFT) has been forced to diversify in an attempt to spread its risks and keep investors happy.
Nonetheless, Microsoft’s profit in the past quarter slipped 4 percent to come in at 78 cents, or $6.62 billion. In addition, most of its efforts are in the initial stages. I would therefore not recommend the stock to an investor looking to make a quick buck. However, its well-disposed prospects are indicative of a good long term play. A buy and hold approach is recommended.
The article Microsoft’s Diversification Is A Well Disguised Trial And Error originally appeared on Fool.com and is written by Lennox Yieke.
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