Microsoft Corporation (MSFT): Is The Tech Giant Headed On The Correct Trajectory?

Page 1 of 2

Everytime Microsoft Corporation (NASDAQ:MSFT) unveils a new operating system, investors hesitate. The release of Windows Vista cost the company its stranglehold on the market. In 2004, the ratio of Microsoft Corporation (NASDAQ:MSFT) computers to Apple Inc. (NASDAQ:AAPL) computers peaked at 56 to 1. In 2012, 20 Microsoft computers were sold for every one Apple Inc. (NASDAQ:AAPL) computer, according to data from Asymco. That figure doesn’t include tablet and smartphone sales.

Lessons learned from Vista

Obviously, Microsoft would love to reach 2004 levels, which began to drop with the release of Vista. The company began to climb its way back up with Windows 7, so, as the company announced the release of Windows 8, it was understandable that investors met the news with trepidation.

After all, just before Windows 8′s release, Microsoft Corporation (NASDAQ:MSFT) shares dropped approximately 10% — a decline that happened in less than a month. Investors, hopeful that a new product would bring an increase in revenue, may have been eager to get in on the ground floor of an exciting new product.

But, those investors wouldn’t have done their research. History shows that Microsoft stocks actually drop following the release of a new operating system. Vista’s 9.6% drop was actually less of a drop than the 10.1% decline that happened after the release of Windows 98. But, even the release of Windows 95 and XP — both of which went on to become extremely popular Microsoft Corporation (NASDAQ:MSFT) operating systems — weren’t without share price declines just after the release.

Microsoft Windows 8 increase

For savvy investors, it came as no surprise when Microsoft Corporation (NASDAQ:MSFT)’s stock began to fall as release day neared. Earnings were down, as well, but this was likely related to consumers delaying purchase of new PCs that contained the soon-to-be-outdated Microsoft 7 operating system.

It’s not unusual for consumers to avoid purchasing technology in the days leading up to the release of a newer model. And with new PCs and laptops lasting longer than ever, anyone purchasing a PC today knows they’ll likely be stuck with that operating system for at least four or five years, maybe longer.

By December of last year, things weren’t looking very bright for Microsoft. Google Inc (NASDAQ:GOOG)‘s Android operating system seemed to be taking over phones and tablets across the world. Microsoft Corporation (NASDAQ:MSFT) countered with its Surface tablet, but Google is still leaving both Apple and Microsoft behind when it comes to tablet sales.

Tablets powered by the Google Inc (NASDAQ:GOOG) O/S are now outselling competitors thanks to inexpensive alternatives like Google’s Nexus and the Kindle Fire. This year, devices powered by Google are expected to claim nearly half of the market — last year, Apple Inc. (NASDAQ:AAPL) held 51% of the market, with Google still holding an impressive 46%.

Page 1 of 2
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

Richest Doctors in the World

The Best Movie Sountracks Ever

The Highest Grossing Musicals on Broadway

The Most Successful Reality TV Stars

Cheapest Cities to Visit in the US

Most Expensive Summer Camps

Most Expensive Animals in the World

Most Expensive Specialty Crops in the World

Movies That Took Ages to Make

The Longest Hollywood Films Ever Made

Most Expensive Concert Stages

The Richest Bands of all Time

10 Most Corrupt Countries 2013 List

10 Countries with the Highest Quality of Life Index

Most Expensive Mattresses in the World

5 Smallest Countries by Land Area

The Ultimate Heartbreak Songs

Richest Teenagers in the World

10 Most Haunted Places in America

10 Best Places to Retire in Florida East Coast

Top 10 Places to See Before You Die

Top 8 Countries in the World Where Justice Prevails

10 Richest States in America

15 Wealthiest Countries in the World

Richest Singers in the World

Most Expensive Tasting Menu in New York City

Most Expensive Baby Items in the World

Most Expensive Hotel Suites in Vegas

Most Expensive Brunch in New York City

Most Expensive Beef Cuts in the World

25 Best Colleges to Get a Job

Top 10 US Supermarkets

The 25 Most Dangerous Cities in the World to Visit

Most Expensive Xbox Games

Top 11 Cities Where Billionaires Live

Top 10 Most Charitable Companies in America

Most Expensive Seafood in the World

The 10 Wildest Conspiracy Theories

The 10 Best Job Markets in the US

Top 10 Accounting Scandals of All Time

The 25 Biggest Cities in the World

Top 10 Best Paying Virtual Jobs

Most Expensive Leather Shoes in the World

Top 6 Things to Buy in March

The 10 Most Stressful Jobs in America – 2014 List

Top 10 Jobs for Introverted People

Top 10 Honeymoon Destinations in the World

Top 10 Highest Paying Jobs in the World

Most Expensive Day-Care in New York City

The 10 Cheapest Places to Retire Abroad

Subscribe

Enter your email:

Delivered by FeedBurner

X

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 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!