Thursday, January 12, 2012

Microsoft Making A Move?

Microsoft's stock price performance over the past 3 and five years has about equalled that of the SP500, while it trails that index significantly over ten years.  Any way you look at it, the share price performance has been dismal, except as a trade here and there. 

My most recent posts took the position of not "piling on" as market negativism suggested some foolish strategies for the company to take.  Microsoft has  kept plugging away, to their credit.  I got a recent, contrarian data point on the company from a very small, well regarded tech service company in the Twin Cities.

This kind of company is usually way below the Microsoft radar screen, and of little interest to their partner development marketing efforts.  This time, as I was retching about the performance and vulnerabilities of Windows Explorer on my machine, the tech was extolling the virtues of the upcoming Windows 8.

I sharpened my verbal knives and talked about my experiences with Windows ME, Windows 97 and so on.  I don't think it was therapeutic to get my blood pressure up, and the tech kindly interrupted me to talk about how totally different in look-and-feel, functionality, design and performance Windows 8 was going to be.  He wasn't proselytizing yet, but he said that it was going to be "one of the best things the company had ever done."  This definitely got my radar up, because it was not coming from a Microsoft fan, to say the least.

Right around the same time, there was an item on Bloomberg News about Steve Ballmer's leadership of Microsoft, and about how the company had changed, along with Ballmer's leadership style.  It also made the point that Ballmer had totally turned over many levels of the company's leadership since founder Bill Gates had stepped back from day-to-day leadership at Microsoft.  Hmm.

It wasn't long ago that Windows Mobile was having scorn heaped on it.  However, most recently industry trade journals have reported estimates of Windows SmartPhone sales from Nokia and HTC projecting Microsoft mobile operating systems into the number three position behind Android, and Apple. Considering where Microsoft was, this is remarkable.  It also suggested that the product was developed under a completely new paradigm, with development groups sharing information and assets, rather than protecting their own empires.

So, it might be time to freshen up how one thinks about this company.  The one announcement that still gives me pause: Microsoft retail stores competing with Apple stores.  Apple's customer experience in their stores is without peer.  Best Buy's mobile stores are very mediocre, and they have a retailer's DNA.  Microsoft is a tech company that might finally be regaining its footing after years of stumbling around blindly.  I would be very wary about the leadership team for the store project, and how such a foray in retailing will be executed before getting excited about it.

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