Frequently vilified by Opus, the much beloved penguin from the Sunday comic-strips “Bloom County” & “Outland,” is Bill Gates now trying to qualify for sainthood? Microsoft Corporation (NASDAQ:MSFT)‘s repeated incidents of actually listening to customers could be considered minor miracles that will lead to future profits for investors.
Miracle one
Xbox has been the number one selling game machine for 30 straight months. When the company announced the release of Xbox One, it did not take into account the customer’s desires for having an open gaming system. Instead, Microsoft Corporation (NASDAQ:MSFT) chose to setup the system so users had to login online to use it and you would not be able to use games borrowed from your friends or from rental companies because they would not be registered to you and your machine. The outcry from the gaming community was instantaneous and highly negative. Maybe for the first time in its company history, Microsoft actually listened to its potential customers and changed the policy.
Now with a more open system, Xbox One’s first production run is already sold out. The big competition with PlayStation 4 from Sony Corporation (ADR) (NYSE:SNE) starts this holiday season. It looks to be a race to see who can produce the most units. The production winner will win the prize for top selling game system. However, Sony has little chance of holding the title for very long.
Miracle two
Windows 8 released to the sound of silence. There was no rush to upgrade from older versions of Windows. One of the main reasons for this was the elimination of the start menu that users were familiar with using. You would think that this problem would have been identified during the beta test phase.
Microsoft Corporation (NASDAQ:MSFT) forgot or maybe never learned during 30 years in the operating system business that most people hate change and don’t enjoy having to learn new technology when the old technology was working fine. The result of this continued corporate arrogance was that people did not want to give up their perfectly functioning legacy versions of XP and Vista.
Now the miracle of Windows 8.1 is coming with a version of the start menu included. It took a whole year but Microsoft Corporation (NASDAQ:MSFT) seems willing to give the customer what they want rather than forcing them to want what Bill decides to give them. Strange how actually listening to customers can lead to success.
Almost miracles
Microsoft Corporation (NASDAQ:MSFT) has been making some other good moves that aren’t quite miracles. The company is undergoing an internal reorganization to be more customer focused. This should at least keep them competitive in this age of services being more important than the individual product.
The new Windows Stores within Best Buy Co., Inc. (NYSE:BBY) stores will start opening this fall. This will give Microsoft Corporation (NASDAQ:MSFT) products a big boost but will be very beneficial to Best Buy. Best Buy has a new policy and of matching prices of Amazon.com and having the extra touch of trained staff to explain Microsoft’s technologies should help them take a few sales away from Amazon.
Windows Stores are a grand extension of Best Buy Co., Inc. (NYSE:BBY)’s store within a store concept. The stores within a store that exist now are just areas with special displays for a particular company’s products. The exception being the Samsung sections that have actual Samsung employees selling Samsung products.
Windows stores are a complete redesign accomplished by giving Microsoft Corporation (NASDAQ:MSFT) control of the entire PC section of 600 Best Buy Co., Inc. (NYSE:BBY) stores. The employees will be Microsoft trained, but on Best Buy’s payroll. The emphasis will be different than a Microsoft Store, which only sells Microsoft’s products. Best Buy Windows Stores will be helping to sell all manufacturers devices that use Windows.
Recently, the computer sections of Best Buy Co., Inc. (NYSE:BBY) stores have been rather disorganized and lacking in knowledgeable sales people. The combination of trained staff and the new low price guarantee program should provide a revitalization to the entire store. People attracted to the new Windows stores might not buy a computer on the spot, but many of them will leave having made some kind of purchase. Those people who do buy a new computer can immediately leave with their new toy and probably a bag of new accessories.
Challenges
Microsoft Corporation (NASDAQ:MSFT) will need to work hard to continue its operating system domination. Apple is a minor threat but its computers are too expensive for the broader market. The problem is that Google Inc (NASDAQ:GOOG) is working hard to develop better versions of its Chrome operating system.
Google Inc (NASDAQ:GOOG) does not need to make a profit on Chrome. Google just needs to get it into the hands of as many people as possible because it wants those people to use more Google services, so Google can show them more ads. Google dominates the online ad business and revenue is steadily rising. The company’s mission is to destroy as many other companies’ business models as possible in the name of selling more ads.
Profits from Windows are still very important to Microsoft Corporation (NASDAQ:MSFT). So, the company needs to be developing a strategy that will makes as much money as possible from the OS while preparing to clash with Google Inc (NASDAQ:GOOG).
The bottom line for Microsoft stock remains the same. It is an excellent technology stock to hold in a growth and income portfolio. Look for market dips caused by media created bad news and buy.
Eric Whiteside has no position in any stocks mentioned. The Motley Fool recommends Google. The Motley Fool owns shares of Google and Microsoft.
The article Sainthood for Bill Gates? originally appeared on Fool.com.
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