For decades, Microsoft Corporation (NASDAQ:MSFT) has been the leading software company, dominating the market for PCs with its Windows operating system. Microsoft Corporation (NASDAQ:MSFT) is known for creating major revolutionary moments, which is why the company is still one of the leading brands in the world.
Despite all of its success, Microsoft Corporation (NASDAQ:MSFT) has lost much of its spark lately, especially after Apple Inc. (NASDAQ:AAPL)’s sudden impact on smartphones, tablets and PCs.
After having a successful time in the software market, Microsoft Corporation (NASDAQ:MSFT) expanded its operations and also entered the gaming segment with its Xbox console. Sony Corporation (ADR) (NYSE:SNE) and Microsoft Corporation (NASDAQ:MSFT) have been going head to head in getting the major market share in the gaming segment; however, Microsoft Corporation (NASDAQ:MSFT)’s latest Xbox One has left many loyal customers, along with its investors, disappointed.
What went wrong with Microsoft?
For several years, things have not been looking that good for Microsoft. Microsoft used to rule the world, but today, it is just another company trying to survive with the fierce competition.
For years, Microsoft’s latest offerings have been disappointments including its Bing seach engine, which just couldn’t break Google’s strong search engine share. Then, Microsoft’s Zune player failed miserably against Apple Inc. (NASDAQ:AAPL)’s iPod.
On top of that, Microsoft’s strongest business division is also not having its best time, as the PC market is on a consistent decline. I still think a major part of this should be contributed to Apple’s iPhone in 2007. Since then, the entire industry has changed, and Microsoft was just not good enough to enter into new segments. A smartphone partnership with Nokia also hasn’t paid off, and Microsoft’s OS is still pretty far behind Android and Apple’s OS market share in smartphones.
Microsoft’s lack of innovation could also be considered as a major factor, as the company is just not what it used to be under Bill Gates. The smartness, getting the first mover advantage and bringing in revolutionary products has all gone away from Microsoft.
Valuation
Microsoft, with a market cap of over $285 billion, is currently trading at around $34-$35. Overall, Microsoft’s stock has performed relatively well in the market, going up from the $27 mark in April. Microsoft’s latest earnings report showed a profit of over $6 billion, which is not too bad with respect to the fact fact that Microsoft missed the smartphones and tablets market and witnessed a strong decline in the PC market.
Apple, perhaps Microsoft’s biggest rival, is trading around $417, with a market cap of around $391 billion. Microsoft isn’t the only company losing its spark in recent years as Apple’s stock has been on a constant decline since reaching the $700 mark last year. The company has witnessed a steady decline in market share for its iPhone smartphone, and I think its fair to say that Apple, under Steve Jobs, was a much better company.
