Microsoft Corporation (NASDAQ:MSFT) isn’t the same MSFT that launched its IPO in 1986. Microsoft stock is now far behind Apple Inc (NASDAQ:AAPL) and has, as far back as the early 2000s, come across as increasingly out of touch.
Microsoft stock, too, reached its zenith around the dot-com crash.
But that was the past. Microsoft stock is up more than 51% since early 2013 — despite a disastrous revenue miss in January. Now as both the MSFT brand and Microsoft stock reach critical mass again, the decades-old firm seems to know just what it has to do to regain market share.
MSFT Releasing Cortana in Apple and Google’s Backyard
Companies putting their products on competitor devices isn’t new; Google Inc (NASDAQ:GOOG, NASDAQ:GOOGL), for instance, has several apps on iOS. Microsoft, however, is using the “competitor’s backyard” approach to strengthen the value of its mobile apps and the Windows Phone brand — which as of Microsoft’s fourth fiscal quarter, remained a distant third, holding less than 3% market share.
Previously, MSFT released its Office suite of apps, free, on iOS and Android-powered phones to favorable reception. My reaction was no different. When I started writing this article, I was using Microsoft’s Word app for iPad. After a quick auto-save to Microsoft’s OneDrive, I switched over to PC and picked up where I left off. At the same time, MSFT OneNote sits open on my iPad beside me for jotting quick notes.
That wouldn’t have been possible a year ago, or at least it wouldn’t have been an option I’d have been keen on.
The latest MSFT news regards the firm’s digital voice assistant — Cortana — which Microsoft is releasing on iOS and Android, where it will compete for users right on turf owned by Siri and Google Now.
Google doesn’t seem bothered, but rather, the search giant is welcoming, as Aparna Chennapragada, Google Now’s director of product, told reporters at SXSW:
“I’m going to say something super cliché, but it’s what I believe in, which is, I think it’s great. I think it’s great. This is the ground floor of predictive technology. We’re just starting to figure out how these things in our pockets can help us see and act on information. We’re just trying to figure out what are the right experiences. I think having more folks focus on it and help users on it is great.”
MSFT and Samsung – Unlikely Allies
Samsung Electronics (OTCMKTS:SSNLF) and Apple ended last year neck-and-neck in market share, with both companies hovering around 19%. The impending launch of Samsung’s Galaxy S6 and Galaxy S6 Edge could tip the scales in Samsung’s favor, and everyone who owns one will have a default “Microsoft Apps” folder pinned to the S6 home screen.
All told, the Galaxy S6 features Skype, OneDrive, OneNote and (possibly) Office. Every purchase of either the Galaxy S6 or S6 Edge receives 115GB of storage for OneDrive.
The two companies are still fresh off a patent licensing dispute that saw MSFT receiving $1 billion from Samsung in 2013, but they find common ground in thwarting Google.
It wouldn’t be far-fetched to attribute the dearth of Google apps on Windows Phone to its pitiful market share. GOOG promotes a lifestyle around its products, helped by their standardization across multiple platforms: Google Chrome, Drive, YouTube, Gmail and Hangouts. None can be found on Microsoft’s Windows Phone.
If MSFT has its way, Microsoft apps will become the standard, inseparable from the daily lives of an expanding user base. Samsung, after all, isn’t the only company Microsoft is using to hedge against the Google threat — MSFT is also in the early stages of equipping apps for Cyanogen, developer of a custom Android OS.
MSFT and the Cloud
While difficult to pinpoint the leader in cloud services, with top cloud-providers such as Amazon.com, Inc (NASDAQ:AMZN) and Google lumping their cloud revenue in with the rest of their business, Microsoft is generally considered the leader, or at least on of the leaders in cloud technology.
To protect shareholder investment in Microsoft stock, however, MSFT has to stay a step ahead, and it’s doing just that with its cloud services.
Microsoft Delve, for instance, is a cloud tool for the entire office. You can think of it like Google Now for the productive.
“It’s kind of like a Facebook news feed for work,” Microsoft CEO Satya Nadella told CNN. “I can see all the work happening inside Microsoft, and it lights up based on what my topics of interest are. Think about how empowering it is to have that kind of transparency and access.”
Microsoft may sell its own cloud solutions, but it also wants to sell to cloud providers. To do this, MSFT and Cisco Systems, Inc (NASDAQ:CSCO) are joining forces to sell to corporate data centers, offering up Cisco networking devices and Microsoft Windows Azure.
While MSFT gets the world used to seeing its face again, we can’t overlook the nuke sticking out of Microsoft’s back pocket — Mojang. MSFT paid $2.5 billion for the development studio behind the popular Minecraft game, and expects MSFT to give the Windows Phone store the app it needs to attract more market share.
This is all part of Microsoft’s “mobile first, cloud first” approach to restore the value of the brand. Killing off Internet Explorer and rebooting with a new browser (code named “Project Spartan”) is another good sign.
From the looks of it, these strategic moves are making the Microsoft brand ubiquitous among consumers and business alike.
As of this writing, John Kilhefner did not hold a position in any of the aforementioned securities.
