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.

Microsoft Corporation (MSFT): Why You Still Can’t Afford to Rest Easy

Page 1 of 2

Once again, Redmond-based Microsoft Corporation (NASDAQ:MSFT) has successfully demonstrated how to ruin a great product and an otherwise stable source of revenue by broader plans that are not in sync with the real world. And that gives a fresh start to Sony Corporation (ADR) (NYSE:SNE), a company that’s been down in the dumps for quite some time now and has actually been the target of an activist investor in recent weeks.

Microsoft Corporation (NASDAQ:MSFT)

At the recent E3 in Los Angeles, the hallowed destination of hard core gamers, who themselves are a fast-disappearing species by the way, Microsoft Corporation (NASDAQ:MSFT) and Sony made back-to-back rival game console offerings in the forms of the Xbox One and the Playstation 4, respectively. But while the latest avatar of Microsoft’s popular game console was clearly aimed at a more holistic family entertainment scenario, the Sony Corporation (ADR) (NYSE:SNE) Playstation 4 highlighted just the fact that such a device was meant for – gaming. And the latter strategy paid off handsomely, at least in the initial phase.

The puzzling decisions

That apart, Microsoft Corporation (NASDAQ:MSFT) also seemed to have committed marketing hara-kiri by announcing restrictions on playing used games on the device, not to mention pricing it a good $100 more than its rival console. And the fancy Kinect motion sensor accessory does little to justify the enhanced price tag, in the opinion of some gaming enthusiasts. The Sony Corporation (ADR) (NYSE:SNE) Playstation 4 also does not require periodic Internet connectivity, another fact that has helped it to go one up on Microsoft’s gaming device.

The broad scenario

The crux of the matter, however, still lies in Microsoft Corporation (NASDAQ:MSFT)’s ambitions of transforming what is otherwise a great purely gaming device into a jack-of-all-trades, with features such as Skype and live television representing different aspects of all-round home entertainment. That again is part of its larger policy to arrest the increasing trend of gamers shifting their loyalties to smartphones and tablets, as people prefer to multitask in an increasingly mobile world. But, what Microsoft has perhaps failed to realize is that this approach may in the process lead to the steady alienation of its loyal group of hardcore gamers, painstakingly built up over a span of 7 years with devices such as the hugely popular Xbox 360.

The way Microsoft Corporation (NASDAQ:MSFT) has projected the Xbox One makes it evident that they are probably banking a lot on the recent trend of Xbox Live subscribers to increasingly stream content through their devices. At the same time, it cannot be denied that the overwhelming presence of mobile devices such as smartphones and tablets in the lives of people today is likely to mar the potential popularity of a nearly $500 all-in-one device. On the other hand, Sony Corporation (ADR) (NYSE:SNE) is sure to carry on with its gaming-plus entertainment options such as Netflix, Amazon Instant Video and Hulu LLC in the relatively less expensive Playstation 4 as well. And last but not the least, with Microsoft delaying the launch of the Xbox One in emerging Asian markets until the end of next year, as opposed to Sony’s simultaneous Christmas release of the Playstation 4, the audience’s decision seems to be a foregone conclusion as of now.

The ‘dissatisfied others’

And it’s not only gamers we are talking about here. Microsoft Corporation (NASDAQ:MSFT)’s seemingly ‘excessive’ restrictions on the Xbox One usage are sure to alienate retailers such as GameStop Corp. (NYSE:GME) as well. This is because a large part of their sales volume can be attributed to the market for used video games, which Microsoft seems hell bent on shutting out of its ecosystem. With GameStop already facing headwinds due to the dwindling market for console video games, such moves will surely not go down well with them. At the same time, companies such as GameStop will now be grateful to console manufacturers like Sony Corporation (ADR) (NYSE:SNE) that have placed zero restrictions on used games.

Look who’s calling

Having said all that, all is not lost for potential believers in the stock. Microsoft Corporation (NASDAQ:MSFT)’s Windows 8-powered Lumia range of smartphones that are manufactured by Finnish handset maker Nokia Corporation (ADR) (NYSE:NOK), is witnessing a steady rise in market share in the crucial US region. Although the competition in the form of Google Inc (NASDAQ:GOOG)’s Android and Apple Inc. (NASDAQ:AAPL)’s iOS operating systems continue to be way ahead, a recent survey has found Microsoft’s Windows phone platform record a healthy 5.6% rise in sales as compared to an increase of 3.8% last year. What’s more, that places the Windows phone operating system at third place, bypassing nearest contender Research In Motion Ltd (NASDAQ:BBRY). And going ahead, sales are bound to rise given the wide range of prices of Windows-based smartphones.

A walk in the clouds

That brings us to the last part of the trilogy – namely Microsoft Corporation (NASDAQ:MSFT)’s famed Office software suite. Or should we say Office 365, to be more specific, referring to the cloud-based version of the software suite? With Microsoft Office continuing to be the corporate customer’s favorite set of office applications, Office 365 is making strong inroads into a market that comprises many companies that need to comply with regulatory obligations such as HIPAA, thereby placing it several notches ahead of its most serious contender in this area – Google Apps.

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!