Within the jungle of popular consumer technology companies, Microsoft Corporation (NASDAQ:MSFT) is too often lost in the shuffle. This is a point that InvestorPlace contributor Richard Saintvilus hits square on the head. When you have smart device overlord Apple Inc. (NASDAQ:AAPL) dominating the cultural lexicon, it’s hard to justify buying Microsoft stock.
On top of that pressure point, you have sector outperformers like Tesla Inc (NASDAQ:TSLA). Year-to-date, Tesla shares are up an astounding 44%.
Outside of their broader technology categorization, Microsoft and Tesla are largely two different species. But consider general market psychology and the emotions of the moment: Why go after Microsoft stock for its steady fundamentals when you can chase the sexy stock of the year?
Plenty of Fresh Opportunities for Microsoft stock
To address the challenges of its industry, the tech stalwart became acquisitive. Thanks to its shopping spree, Microsoft ended up with some marquee brands. But more than just an emotionally-driven purchase, investors can appreciate the intellect behind the acquisitions.
The $8.5 billion deal for Skype is a prime example. Over the past ten years, enormous changes occurred in consumer technologies. One of those changes is in long-distance communication. The days of international calling cards and paying for PIN codes, while not dead, are certainly waning. Skype, with more than 74 million users, has a lot to do with that.
Naturally, ownership of the Skype brand gives MSFT a boost in terms of marketing exposure. At the same time, management is heavily investing in its functionality. The latest Skype version has a redesigned group video calling format, which better facilitates multiple participants. Such features incentivize non-Skype users to jump onboard, and thereby, promotes revenue-making opportunities for Microsoft stock.
Considering that 40% of Skype calls are of the video-to-video variety, MSFT is doing its homework. And that played into their much-publicized (and much-criticized) takeover of LinkedIn. It’s not just for the fact that LinkedIn is the “world’s largest professional network,” but the idea that nobody job hunts in the old “pick up the phone and hustle” way. Just like Skype, LinkedIn is an opportunity for MSFT stock to leverage paradigm-shifting transitions with an industry.
Finally, as is mentioned by all of Wall Street, Microsoft stock is rapidly becoming a cloud computing investment. Azure, the company’s venture into the cloud, is behind only Amazon.com, Inc’s (NASDAQ:AMZN) Amazon Web Services. Furthermore, it’s gaining increasing adoption among the top U.S. businesses. One only needs to reference the gargantuan revenue growth to see how important Azure is to MSFT stock.
Don’t Overlook the Core
All of these are great bullish arguments. However, I still love Microsoft stock for its core, PC-based business.
On the surface, that seems like an oddball statement. Anyone that’s anyone knows that the PC market is essentially dead on arrival. To survive in consumer retail, a tech company has to introduce smart devices such as tablets. To some extent, I agree with the public sentiment, and so too does MSFT.
I just prefer its methods over its competitors.
For example, when Apple released its iPad, Sony Corp (ADR) (NYSE:SNE) was quick to follow up with a copycat product. In contrast, Microsoft went with a hybrid option for their Surface, which integrates the best of the tablet and PC worlds.
Although it may take some time for the consumer base to concede, the Surface is vastly superior to the iPad. Have you ever tried doing anything of significance other than web-browsing with an iPad? Particularly when it comes to spreadsheets, the tablet platform is inherently a disaster. What would take minutes on a tablet can be squared away in seconds with a keyboard and mouse via the Surface.
And when you’re talking about PCs, nobody comes close to Microsoft. The company has off-the-charts household penetration rates. Their Office programs are the gold standard for personal, educational and professional use.
True, knowledge of other applications is advantageous. However, not knowing Microsoft programs is an instant death sentence, which is why Microsoft stock has a bright future even without its extracurricular bonuses.
Nobody says that about Apple products, as brilliant as they are. They’re quirky, they’re fun, but they’re also limited. Honestly, MSFT stock is likely to be more relevant in a hundred years. And that’s why you can’t go wrong going long.
As of this writing, Josh Enomoto was long SNE stock.
