Watch Out for MSFT Stock
Microsoft Corporation (NASDAQ:MSFT) seems to have finally found its groove. The maker of “Windows” has a strategy that could make MSFT stock look more like a growth stock than a blue-chip company.
I see nearly unlimited potential in what Microsoft is doing. The groundwork the company has laid is spectacular for product integration and it’s finally starting to coalesce. However, there is still one more piece that needs to fall into place—an X factor.
This X factor could propel MSFT stock to untold heights once it clicks into place. Trying to trade on a moment like that is difficult, so I’ve set a litmus test or two. First let’s run through the strategy and then I’ll give you a way to test the strength of MSFT stock.
Microsoft thinks the dominance Windows enjoyed for more than three decades is under threat. It’s right. In order to see the waning influence of Windows, you have to look past the personal computer. Consider all devices, including smartphones, tablets, and gaming consoles.
Windows barely has one percent of all smartphones. The company’s acquisition of Nokia’s phone division was a giant fiasco that amounted to nothing. Apple’s “iOS” and Google’s “Android” operating system are the dominant platforms in smartphone technology. They also dominate tablets.
In other words, consumers were getting used to other operating systems. Microsoft executives saw this as a threat to the company’s survival and made a plan. They needed an operating system that functioned seamlessly across all platforms.
It had to be a delivery system for all kinds of services, a transformative medium that turned MSFT stock into a play on services, rather than software. Microsoft called it the “Universal Windows Platform.” And it seems to be working. Last year, Uber built an app specifically for “Windows 10,” which indicated some major traction. (Source: “Maybe Microsoft’s weird app strategy is working after all,” Business Insider, December 9, 2015.)
But the real litmus test is yet to come. Don’t forget that Microsoft is the maker of the “Xbox.” The company is now building an Xbox app that will run straight off a desktop. Very soon, gamers will be able to play all their regular console games through a PC. I think it’s brilliant. (Source: “Microsoft’s gaming boss explains its radical reinvention of the Xbox,” Business Insider, March 1, 2016.)
When that product is ready, I think Microsoft will have closed the loop on its universal platform strategy. Gamers are aggressively loyal to Windows as a platform and they command huge numbers. Watch for the app’s release date and the volume of downloads.
Gamers could bolster the Windows 10 app market in a way no one else can. Believe me, if the Xbox app meets their approval, the floodgates for MSFT stock will open.