Microsoft’s stock has been under a bit of pressure lately. Ever since it released its latest quarterly earnings, Microsoft’s stock has been hammered hard. The Redmond, Washington software giant missed estimates because of softening global demand for its products. The culprit: the strong dollar. For multinationals, a strong dollar is a two-edged sword. On one hand, it can lower costs. Lower expenditures can boost profit margin. On the other hand, it can evaporate chunks of sales growth. This is precisely what happened with Microsoft’s license sales for its operating system. Looking past the short-term drama caused by a slowing global economy and a strengthening dollar, things are actually looking bright for Microsoft-from a structural and strategic perspective. As much hype as there may be for mobile devices like smartphones and tablets, the vast majority of people who connect to the internet using PCs still use Windows. This is a tremendous competitive advantage for Microsoft’s cloud strategy. Google’s big game plan is to turn all computing devices into dumb terminals. You just turn on your hardware, and it connects directly to the
For multinationals, a strong dollar is a two-edged sword. On one hand, it can lower costs. Lower expenditures can boost profit margin. On the other hand, it can evaporate chunks of sales growth. This is precisely what happened with Microsoft’s license sales for its operating system. Looking past the short-term drama caused by a slowing global economy and a strengthening dollar, things are actually looking bright for Microsoft-from a structural and strategic perspective. As much hype as there may be for mobile devices like smartphones and tablets, the vast majority of people who connect to the internet using PCs still use Windows. This is a tremendous competitive advantage for Microsoft’s cloud strategy. Google’s big game plan is to turn all computing devices into dumb terminals. You just turn on your hardware, and it connects directly to the
Looking past the short-term drama caused by a slowing global economy and a strengthening dollar, things are actually looking bright for Microsoft-from a structural and strategic perspective. As much hype as there may be for mobile devices like smartphones and tablets, the vast majority of people who connect to the internet using PCs still use Windows. This is a tremendous competitive advantage for Microsoft’s cloud strategy. Google’s big game plan is to turn all computing devices into dumb terminals. You just turn on your hardware, and it connects directly to the
Google’s (NASDAQ:GOOG) big game plan is to turn all computing devices into dumb terminals. You just turn on your hardware, and it connects directly to the internet where Google predominates. That is Google’s grand vision for the future. Microsoft’s old vision was all about the operating system. It didn’t matter what hardware you used. As long as you used Microsoft’s operating system, it will connect you to the internet. Obviously, the failure of Windows 8 killed that vision. Microsoft’s old vision doesn’t work. It is a relic of the past.
The good news: Microsoft can latch on to Google’s vision and actually execute it. The big competitive advantage Microsoft has is that it already has that installed global user base. It only needs to rework Google’s grand vision to turn that base into a Microsoft revenue-generating base. This will take a lot of time, but it is definitely worth doing. The sad reality is that Microsoft really has no other options. Its huge Windows-installed base is its ace in the hole.
