Microsoft Corporation: This Is a Big Threat to MSFT Stock
Can Microsoft Take on This Challenger?
Microsoft Corporation (NASDAQ:MSFT) has been working hard to evolve in the era defined by mobiles and tablets instead of personal computers (PCs).
MSFT stock has been gaining consistently on the back of these efforts, and has returned impressive 24% returns, as compared to the around eight percent returns posted by the broader S&P 500 over the last year.
However, Microsoft has to constantly address threats from competitors, and there is one big threat coming its way soon.
Sony Corp (ADR) (NYSE:SNE) is releasing its “PlayStation VR” headset on October 13. It is priced at $399.00, and requires a “PlayStation 4” (PS4) to get started, which will ensure easy adoption. Although Microsoft is investing in the virtual reality (VR) market, it has not confirmed the release of its own “Xbox One VR” headset or another VR device. As of now, Sony seems to be leading in this battle of VR devices and games.
Microsoft realizes the potential of VR and gaming, as do others like Facebook Inc (NASDAQ:FB) and Google, aka Alphabet Inc (NASDAQ:GOOG). Sony dominates the console gaming industry, with about a 40-million user base for PS4.
However, what would give the edge to the tech giant and buoy MSFT stock?
The answer lies in Microsoft’s strategy revolving around “Windows 10,” which would let users play games on “Xbox,” as well as on PCs or any other Windows 10 device. This is something Sony cannot do, as it does not have that platform yet. Microsoft has been gradually building key Xbox features into Windows 10 and making games like Gears of War 4 available on both PCs and consoles. (Source: “Sony is playing a dangerous game to continue its dominance of Microsoft,” Business Insider, October 11, 2016.)
Microsoft is also working on a new powerful console called “Project Scorpio,” likely to be launched next year. It is likely to be more powerful than Sony’s “PlayStation 4 Pro.”
Microsoft has been gaining ground with its focus on building products and services for the future. This is reflected in the way that Microsoft stock has been gaining in the last three years.
Chart courtesy of StockCharts.com
The Bottom Line on MSFT Stock
Microsoft’s strategy of offering the Windows 10 platform for Xbox has huge potential. But the key challenge here is to improve the overall gaming experience. The kind of games that can be played on these consoles is what would be a big challenge, as Sony clearly has a lead there. If Microsoft can work on this, it has a good chance of becoming the market leader.
As Microsoft gets ready to showcase its new hardware at the October 26 Windows 10 event, all eyes will be on what’s next for Windows 10. As investors get more clarity about the tech giant’s plans for VR, XBox, and the future, MSFT stock shall continue to gain.