Microsoft’s consolidated profit is $17 billion, so if we can combine the added contribution from selling Office 365 across Apple’s ecosystem, we can guess that Microsoft’s net profit by 2017 should be greater than $31.72 billion. I have not factored in the growth rate of Microsoft’s other businesses, so this is a very conservative estimate of Microsoft’s potential success.
I also kept the current $24 billion made in revenues from the business segment constant because it’s unlikely Microsoft’s computer segment, or mobile segment, will garner any additional growth. And that’s because Microsoft 365 licenses will transfer from pre-existing Windows devices to Windows 8 phones. That means Microsoft 365 sales will not grow from the increasing adoption of Windows 8 mobile.
Therefore Windows 8 should not be factored into any assumed growth rate for Windows 365. The growth for Windows 365 should only include the added demand from Apple’s ecosystem and product substitution of the iPad in emerging market economies. It is likely the average iPad user will be more affluent than the Android user on a worldwide scale, thus by extension, will also be able to afford Office 365.
Google’s strength is waning
Like I mentioned earlier, Microsoft Corporation (NASDAQ:MSFT) isn’t in a rush to release Office 365 for Android. There is a lot of un-tapped market potential in Apple’s ecosystem, and I doubt Microsoft will want to support Google knowing Google Inc (NASDAQ:GOOG) is a direct competitor. Because of this, Microsoft would like to use the Office suite to bring consumers over to both the Windows 8 and Apple ecosystem. Ultimately, Microsoft has to partner up with Apple, as Apple consumers are extremely loyal.
Source: Piper Jaffray
Demand for Android devices could fall over the next 2 years as phone contracts end. Based on the above statistics, Android users should adopt an iPhone. But, Google can off set this decline with growth from international markets.
Still, I think the Android app market can grow at 23% through 2017 and that Google will maintain 40% of its global market share. This implies Google can grow alongside Microsoft Corporation (NASDAQ:MSFT) and Apple in the post-PC era.
Conclusion
Microsoft’s business segment could be its winning ticket to exponential growth. Apple devices will continue to take market share away from traditional handset manufacturers and growth may be supplemented by emerging markets. Google’s search, app store, and ad services will benefit from an ever-expanding worldwide internet user base, which could grow from 3 billion to 5 billion by 2020. So, if you want to get in on big tech, take a look at Microsoft first, Apple second, and Google third.
The article What is Microsoft’s Next Ten Billion Dollar Idea? originally appeared on Fool.com and is written by Alexander Cho.
Alexander Cho has no position in any stocks mentioned. The Motley Fool recommends Apple and Google. The Motley Fool owns shares of Apple, Google, and Microsoft. Alexander 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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