Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Apple Inc. (AAPL), And Big Risks For Microsoft Corporation (MSFT)

Page 1 of 2

There are two divergent strategies playing out in the mobile business right now. Apple Inc. (NASDAQ:AAPL)‘s closed ecosystem keeps consumers in a uniform operating system and creates a consistent platform for developers to work on, although it means choice for both parties is limited. Google Inc (NASDAQ:GOOG)‘s open-source operating system, Android, allows device makers to modify the operating system to suit their own devices. This has helped create a larger selection of products and taken market share from Apple Inc. (NASDAQ:AAPL), with the downside that users are on inconsistent operating systems, some of which don’t even work well with Google Inc (NASDAQ:GOOG)’s own systems.

Microsoft Corporation (NASDAQ:MSFT)

Microsoft Corporation (NASDAQ:MSFT) is trying bring in some of Apple Inc. (NASDAQ:AAPL)’s capabilities with its acquisition of Nokia Corporation (ADR) (NYSE:NOK)‘s handset business, building a consistent operating system and also having more device options.

Big risks for Microsoft
Apple Inc. (NASDAQ:AAPL)’s closed system has clearly been a success in smartphones and tablets, keeping consumers within the company’s ecosystem of apps, music, and movies. This helps the company draw consumers into new devices like Macs and Apple TV, which can access a user’s data and content. The closed system just makes sure all of these devices work together properly.

Microsoft Corporation (NASDAQ:MSFT) will try to create a fairly closed operating system as well, but instead of leveraging smartphones to expand into tablets and PCs, it will leverage a dominant share of the PC market to draw in smartphone and tablet users. In the end, if Microsoft Corporation (NASDAQ:MSFT) can create a more consistent platform than Google, it will be able to fit into the market between Apple Inc. (NASDAQ:AAPL) and Google’s offerings.

The strategy is working slowly in tablets. Windows 8 has grown as PC makers have expanded into convertibles and tablets and Microsoft Corporation (NASDAQ:MSFT)  has grown tablet market share from 1% a year ago to 4.5% last quarter. But Microsoft needs a critical mass in both tablets and smartphones to attract developers and users to its ecosystem. One brings the other and a reinforcing loop occurs.

That’s why the acquisition of Nokia Corporation (ADR) (NYSE:NOK) comes now. Nokia has been drowning in losses the past two years, leaving it financially incapable of competing with Apple Inc. (NASDAQ:AAPL) and Samsung‘s marketing. The Lumia line of phones running Windows has actually gotten decent reviews and taken some share, it’s just not enough to make either Microsoft Corporation (NASDAQ:MSFT)  or Nokia a big winner in mobile. Since Nokia accounts for 80% of the Windows smartphones, the easy option is to just buy Nokia and use Microsoft’s balance sheet to fuel both research and development, as well as marketing of Nokia devices, even if it alienates some other smartphone manufacturers.

Page 1 of 2

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!