Microsoft Corporation (NASDAQ:MSFT), just like its bitter rival, Apple Inc. (NASDAQ:AAPL), has its loyalists – fans of the brand who have always believeed the company was cutting-edge, innovative and revolutionary when it came to technology. That debate will likely rage on this fall, when Microsoft releases its new Windows 8 operating system, both for personal computers and smartphones – as well as its own proprietary tablet, the Surface – while Apple unveils several new devices, which include an expected new iPhone and a smaller version of the iPad.
Microsoft Corporation (NASDAQ:MSFT) is likely to need a huge launch of Windows 8 and the Surface tablet in order to match the hype – a lunch that would outstrip the loyal following and will have to reach those who are open-minded and discerning about the next device they purchase. And there is little question that Windows is in the hot seat to surpass expectations – especially in the smartphone and tablet markets, which are the big growth areas and which are currently dominated by Apple Inc. (NASDAQ:AAPL) and by devices running the Android OS from Google Inc. (NASDAQ:GOOG). Windows 8 will have to make a splash, but what does it say when Microsoft Corporation (NASDAQ:MSFT) is preparing to produce 3 million Surface tablets – which is likely designed to be the flagship device for the Windows 8 OS (though several other manufacturers will be making Windows 8 tablets as well)? Is it just that the company is underpromising, or does it expect some real competition from Apple and others that the number may not be larger (Apple sold 17 million iPads in the most recent quarter and Amazon sold 5 million Kindle Fires in the last quarter of 2011)? While there is a lot of talk that the Surface will sell for around $200 (with some strings attached) – which would make it the most affordable tablet on the market – Microsoft knows that technology has become a loyalty business and the Surface is late to the tablet party and thus might have a difficult time grabbing market share that may already pledged its allegiance to Apple or Google.
On the other side of the coin, Microsoft Corporation (NASDAQLMSFT) has also been a little late to the smartphone party, which has 85 percent of its market roled up in Apple Inc. (NASDAQ:AAPL) iOs or Google Inc. (NASDAQ:GOOG) Android systems. However, Windows did expand its market share by about 300 percent since the beginning of January, using an “outdated” updated version of Windows 7. If Windows 8 Phone can lead to growth anywhere close to the recent trend using Nokia Corporation (NYSE:NOK) Lumia handsets, might that be enough to make Microsoft a player in the smartphone market? (A 300-percent increase over current market share for Microsoft would be about 18 percent – Apple currently owns about 17 percent of the market). Well, one article from a long Apple stock investor certainly doesn’t consider Microsoft Windows very viable in the smartphone market, but then again, this writer does forget that Google Android has a 4-to-1 advantage over Apple in the market share, and Apple is currently about 3-to-1 up on Microsoft.
No mater how it’s sliced, though, Microsoft Corporation (NASDAQ:MSFT) has an opportunity to redefine the technology rules for innovation with Windows 8. For the sake of its future, it cannot disappoint. There are many investors paying attention – including hedge-fund manager Seth Klarman of Baupost Group.
