Bringing consumers back because they want to come back
This may be the biggest challenge Microsoft faces. The company spent more than two decades as essentially the only choice; and if there’s anything the mobile revolution has taught us, it’s that we don’t have to pick just one. And while surely some of Microsoft Corporation (NASDAQ:MSFT)’s failure to establish itself in mobile is a matter of poor execution, there’s a case to be made that consumers are simply tired of buying Windows based computers, and are happy to choose something that doesn’t say Microsoft, simply because it doesn’t say Microsoft Corporation (NASDAQ:MSFT).
If the company is to re-establish a relationship with consumers, it will be on consumer’s terms; that’s something it hasn’t had to do in a long, long time. Microsoft faces an uphill battle: Frankly it will have to be more innovative than its competition to win out- it will have to offer something more. And the Xbox One could be a part of that offering.
Foolish bottom line
It’s critical that as investors, we keep perspective. Microsoft Corporation (NASDAQ:MSFT)’s Entertainment and Devices division is easily the smallest of its three divisions, while the Business division is its largest. Both of these two business units are growing, and becoming increasingly more important. Actually, the growth of mobile is making both of these business units more relevant, whether it be the increasing demand for Microsoft’s server tools, as processing power is pushed to virtual computers and the Cloud. Add in the potential for growth with the Xbox One as a way to fully integrate our entertainment sources as consumers have learned that reliance on traditional media providers isn’t really as necessary as once thought. And while PC shipments are down, Windows 8 seems to be doing well as a standalone product; when one considers that it was designed to let users get more capability out of older computers, it should be no surprise that PC shipments are down, while the Windows division’s numbers are up.
But the key question investors need to ask is two-fold:
Will the growth of the other two divisions outrun any future declines in the Windows segment? Will products like the Xbox One make a dent in the living room, bring back consumers, and drive sales of Microsoft Corporation (NASDAQ:MSFT)’s mobile devices?
I think that the answer is “yes” to both of these. And despite Microsoft Corporation (NASDAQ:MSFT) looking to have made a faster move to the living room than Apple Inc. (NASDAQ:AAPL), these two companies, along with Google Inc (NASDAQ:GOOG), will remain relevant and central to the way we compute and entertain ourselves, for years to come.
The article Microsoft Just Beat Apple to the Living Room: Does it Mean Anything? originally appeared on Fool.com.
Jason is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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