Consider Microsoft Corporation (NASDAQ:MSFT) to be like a Cisco Systems, Inc. (NASDAQ:CSCO) in terms of longevity. Cisco, compared to other technology giants, is widely considered a glacial-paced investment. On May 15, The Open Globe reported the company’s released net income on a generally accepted accounting principles (GAAP) term was $2.5 billion, or $0.46 per share. The non-GAAP equivalent is $2.7 billion, or $0.51 per share. CNNMoney further reported that the company now hoards $47.7 billion cash, $1 billion more than in the previous quarter. In a media statement, CEO John Chambers noted Cisco Systems, Inc. (NASDAQ:CSCO) “slow, but steady economic environment.”
Yet like Google Inc (NASDAQ:GOOG) and Apple Inc. (NASDAQ:AAPL), Cisco Systems, Inc. (NASDAQ:CSCO) is still widely invested in by many market watchers. This already attests to the confidence investors have in the company. Even as Apple Inc. (NASDAQ:AAPL) and Google Inc (NASDAQ:GOOG) grapple with the ‘problem’ of being the most overly-invested in stocks this side of AIG, this is a firm indication of the markets’ confidence in these entities.
Comparisons to New Coke
By the end of March, Windows 8 accounted for 3.6% of all Windows devices, versus Vistas 4.9% at the end of its fifth month. For a system that already loses to Apple Inc. (NASDAQ:AAPL) for being less intuitive, whatever change Microsoft Corporation (NASDAQ:MSFT) implements to Windows needs to be incremental. Radicalism is bad for business. The Financial Times’ Andrew Hill, and indeed many investors, have compared it to the Cola wars debacle of 1985. The Coca-Cola Company (NYSE:KO) eventually came to the realization that the people weren’t as much appalled by the actual taste of the New Coke, but rather the idea of changing it at all–in essence sending the message what they’d been having all through was sub-standard.
What will Microsoft do?
Microsoft Corporation (NASDAQ:MSFT) needs to bully their way into the tablet market. By the end of the first quarter 2013, Microsoft Corporation (NASDAQ:MSFT)’s share of the tablet market was 1.8%. Global tablet sales have grown by an estimated 142% in Q1 year-over-year, and this offers an abundance of possibilities for growth. Microsoft’s share is too small for a market that is growing astronomically. Unfortunately, this means that the growth potential is enormous for any company, including Microsoft’s competitors. Samsung currently holds 18% of the tablet market, while Apple leads with 40%.
IDC’s report for Q1 2013 states that Windows Phone toppled Research In Motion Ltd (NASDAQ:BBRY) for the third position in the market. This in itself shouldn’t mean much for the future as Research In Motion Ltd (NASDAQ:BBRY) rolls out new products and OS’ that should keep Windows in check. As per the report, Google Inc (NASDAQ:GOOG) and Apple combined control 92.3% of the market share, even as Apple finds making a mark in the Chinese market a hassle. China appears poised to become the largest smartphone market in the globe later this year, as it doubled the number of phones sold in 2011, CNNMoney writes. This isn’t good news for Apple unless it decides to take a firm market drive in China and fight Samsung and the other Asian brands that only allow it to control 7.5% of the market there. Apple may also want to address the huge disadvantage of not having a phone fully compatible with China Mobile’s network, especially as all other international smartphone brands competing in China offer products that comply.
Conclusion
Added with the revenues Microsoft Corporation (NASDAQ:MSFT) will rake in from the new Xbox One and other services like cloud computing, Skype, Office 365 and Azure, Microsoft will get over the Windows 8 debacle. Both Office 365 and Azure independently made $1 billion in annual revenue, while Skype services made annual revenue of $2 billion. Remember, the above services have the potential for double or triple growth over the next two years. That, coupled with Microsoft’s average 11% growth rate, makes it an ultra sound investment.
The article Stick With Microsoft, It Will Pay originally appeared on Fool.com and is written by Frank Midega.
Frank Midega has no position in any stocks mentioned. The Motley Fool recommends Apple, Cisco Systems, and Google. The Motley Fool owns shares of Apple, Google, and Microsoft. Frank 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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