Is Microsoft Corporation’s (MSFT) Mixed Reality Event Worth the Hype?

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The big consumer tech companies have been holding fall events, full of product reveals. There was Apple Inc.’s (NASDAQ:AAPL) iPhone event, yesterday Amazon.com, Inc. (NASDAQ:AMZN) dropped a half dozen new Echo smart speakers and accessories. Samsung Electronics unveiled the Galaxy Note 8 at the end of August and Alphabet Inc’s (NASDAQ:GOOG, NASDAQ:GOOGL) Google is holding a Pixel event on Oct. 4.

Is Microsoft Corporation's (MSFT) Mixed Reality Event Worth the Hype?

Source: Microsoft

With all the activity, you’d be forgiven for not realizing that Microsoft Corporation (NASDAQ:MSFT) is holding a Windows Mixed Reality event next week. It takes place on Oct. 3, and it has real implications for MSFT stock.

What Is Windows Mixed Reality?

There’s virtual reality — championed by Facebook Inc’s (NASDAQ:FB) Oculus — and there’s Augmented Reality, which is currently the subject of a big push by Apple. But what is Windows Mixed Reality?

Microsoft says its a hybrid of VR and AR. Realistically, it’s pretty much what we think of as virtual reality, but with Microsoft providing OS-level support in the Windows 10 Fall Creators Update, and setting standards for headsets and controllers. The emphasis is on integrating VR with Windows and making the headsets, PCs and accessories inexpensive to spur consumer adoption. Microsoft says headsets will start at $299 and Windows Mixed Reality-ready PCs will start at $499.

What to Expect on Oct. 3

Microsoft will be showing off the Windows 10 Fall Creators Update, the fourth major update to this version of its PC operating system. Windows Mixed Reality will be front and center, with demos of games and Windows apps that support the VR technology. OEM hardware partners are also expected to be featured, with Windows Mixes Reality headsets and game controllers from companies like Dell and Acer. Samsung is also rumored to be debuting a headset at the event.

What’s not expected is a new version of Microsoft’s own HoloLens. Rumors have it being pushed back to as late as 2019.

Is Windows Mixed Reality Important for MSFT Stock?

The Windows operating system used to be crucial to MSFT stock performance. A decade ago, Windows and Office were the primary drivers of Microsoft revenue, but today, Office and Azure Cloud services eclipse Windows. In its latest quarterly results, the More Personal Computing division accounted for 35% of the company’s revenue. That includes Windows OEM, Windows Commercial and Windows Cloud — but also all of Microsoft’s Surface hardware, search and Xbox gaming revenue.

And while revenue in other divisions was up — 21% growth for the Productivity and Business Processes division that includes Office and LinkedIn — More Personal Computing was down 2%.

MSFT stock would obviously benefit from a boost in Windows sales. Windows Mixed Reality and the Windows 10 Fall Creators Update is seen as one way to do just that. Windows 10 adoption rate stands at around 28%. That means there are nearly a billion PC owners worldwide that Microsoft could still potentially convince to pay to upgrade to Windows 10, or buy a new PC with OEM Windows 10. That’s a lot of revenue in play.

Windows Mixed Reality is the latest attempt to get those holdouts excited enough about new technology to go ahead and upgrade. Revenue that would have a big impact on MSFT stock.

Microsoft is also going on the offensive against the likes of Oculus and HTC (maker of the popular Vive VR headset). It’s possible that the future of computing could start to transition away from the PC screen, toward headsets. Windows Mixed Reality is Microsoft’s attempt to ensure VR is tightly integrated with its operating system — not an eventual replacement for Windows — while also keeping Oculus and others from dominating the VR headset hardware business.

The Windows 10 Fall Creators Update, Windows Mixed Reality and third party hardware will be on stage on Oct. 3. They all arrive starting Oct. 17. Look for a big push to convince consumers a Windows Mixed Reality headset would make a great Christmas gift.

As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.

Brad Moon has been writing for InvestorPlace.com since 2012. He also writes about stocks for Kiplinger and has been a senior contributor focusing on consumer technology for Forbes since 2015.


Article printed from InvestorPlace Media, https://investorplace.com/2017/09/microsoft-corporation-msft-windows-mixed-reality/.

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