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Microsoft Corporation (NASDAQ:MSFT) Is a Moth to the Apple Inc. (NASDAQ:AAPL) Flame

Microsoft Corporation

Microsoft Corporation did something interesting on Wednesday at the Apple Inc. iPhone reveal. The appearance of Kirk Konigsbauer on stage may have been the most interesting part of what was, overall, a very ho-hum affair from Tim Cook and his team. Microsoft still has hardware on its mind, but the firm’s multi-platform push is more important.

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Mr. Konigsbauer appeared on stage to help sell the iPad Pro. That’s the new 12.9 inch tablet that Apple is going to try to use to get into enterprise. The software will be tailored to iOS 9, and use many of the features that are exclusive to devices running it. It will also have support for the Apple Pencil.

Microsoft spreads its Apple apps

Wednesday’s Office show off wasn’t the same as the other times at which Microsoft  unveiled an app for an iOS device. The iPad Pro is a new platform from Apple , and it’s set its sights on eating into the only hardware that Microsoft seems to be doing well at the moment.

The Surface Pro looks a lot better than the firm’s smart phone segment, and it might even be more healthy than the Xbox One. Microsoft is focused on putting software and services on all sorts of platforms right now, however, so the slim advantages that the firm’s own hardware has over that offered by other vendors is getting slimmer.

This flies in the face of the One Microsoft strategy outlined by Steve Ballmer ahead of the launch of Windows 8. Ballmer’s plans have been subsumed by the new Microsoft with Satya Nadella at the head, but he seems to be playing a dangerous game that could create tension inside the firm.

Pulling Microsoft apart

There’s no doubt about it. Parts of Microsoft are competing with other parts of the business. The push to get Office in full on the iPad Pro at launch is sure to hurt sales of the firm’s Surface Pro, if only marginally.

Some firms are well able to compete against themselves and succeed. Not every firm needs to be as single minded as Apple  or Google. There is still a certain amount of tension that results from internal competition, and the view that shareholders have of Microsot may interfere.

Steve Ballmer wanted, like Apple, to sell Microsoft hardware based on the software and services the firm offered. Satya Nadella wants to simply sell those services. He’s not willing to give up on hardware, but, at the same time, it’s not clear what the firm is doing with it.

Those with shares have, for some years, been dismayed at Microsoft’s progress in hardware. Each step the firm makes toward becoming an OEM is a step backward in the opinion of many. Hardware doesn’t make money for Microsoft, and it’s not big enough to help the firm sell anything else.

In a July 22 report RBC Capital Markets advised that “Unless Microsoft can get to hardware break-even within two years or demonstrate sufficient offsetting value elsewhere in the portfolio, we think the company should exit the hardware business.”

That’s the feeling of many that own shares in the firm. It’s bound to be a driving factor behind Mr. Nadella’s success in wooing shareholders. With Apple flying closer and closer to Apple’s flame, it’s not clear how it’s going to get to break even, or, even, what the firm’s goals are in hardware right now.

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Adam Green is an experienced writer and fintech enthusiast. He he worked with LearnBonds.com since 2019 and covers a range of areas including: personal finance, savings, bonds and taxes.

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