Previously, Bidness Etc questioned whether CEO Satya Nadella could help Microsoft Corporation (NASDAQ:MSFT) recover from years of lost market share. One could say the company is currently on the tip of an iceberg and tilting to either side will bring a different result for the company. Though Mr. Nadella is leading the company in the right direction, there are still certain aspects to the company’s vision and strategy that might not let it grow in the coming years.
Barron’s Asia's Tiernan Ray sets up a case for why the once-ever-popular tech company should be more like Apple, Android. According to him, although Mr. Nadella's entry has taken the company stock to levels of up to $48.30, the company’s hardcore focus on its Windows operating system has kept it back from exploring other areas it could have a strong foothold in. Mr, Ray has previously stated that Microsoft should move away from the Windows OS and become a developer’s platform to explore computing in web and mobile.
In September this year, Microsoft plans to launch Windows 10, and it is predicted that the new OS is going to be a major hit among users and developers alike. The company boasts that the new operating system will have advancements never before seen in Windows and could very well be on par with Apple Inc.’s (NASDAQ:AAPL) Max OS X. However, investors who have been with Microsoft for a really long time see this as just normal news.
According to Barron’s, Microsoft analyst Rick Sherlund at Nomura Securities believes the new OS could likely contribute about 17% of Microsoft's annual revenue of $93.5 billion for the fiscal year ending in June, with around 30% of profit. Mr. Sherlund feels that this time around the new OS will not cause as much of a ripple in the industry compared to the past, when a new Windows OS release was excitedly welcomed by the industry.
While speaking to Barron’s, Mr. Sherlund stated: “It used to be they would ship a new version, and the market took it as an inducement to buy new PCs. But the PC market is just too mature at this point for consumers to have a lot of interest in a new operating system.”
According to Barron’s, Microsoft analyst Rick Sherlund at Nomura Securities believes the new OS could likely contribute about 17% of Microsoft's annual revenue of $93.5 billion for the fiscal year ending in June, with around 30% of profit. Mr. Sherlund feels that this time around the new OS will not cause as much of a ripple in the industry compared to the past, when a new Windows OS release was excitedly welcomed by the industry.
While speaking to Barron’s, Mr. Sherlund stated: “It used to be they would ship a new version, and the market took it as an inducement to buy new PCs. But the PC market is just too mature at this point for consumers to have a lot of interest in a new operating system.”
Microsoft's more constant and stable revenues are received via sales from third-party PC manufacturers who license Windows for their machines aka original equipment manufacturers (OEM) like Dell and ASUS. Microsoft’s business with OEMs has helped it rake in around $11.1 billion this year, but that figure is facing declines too. Mr. Sherlund estimates that this stream will fall 21% this quarter.
Barron’s believes that Microsoft should change the way it’s running and inform software developers that they need to move their developed programs from Google Inc’s (NASDAQ:GOOG) Android as well as Apple's iOS, and spend some time on Windows. The company has even unveiled a kit, which developers can use to easily move their programs from the dominant operating systems and bring them over to Windows. Developers on the other hand have no interest in working on a dying breed. Windows phones' market share stands at a mere 3% while Android and iOS dominate the field with a collective 95% market share.
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