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Microsoft May Be Transforming Itself Into The Next Apple

Tuesday, November 15, 2016 9:57
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(Before It's News)

From Jon Markman: Microsoft Corporation (NASDAQ:MSFT) suddenly is about more than spreadsheets and stale PowerPoint presentations. It’s about making innovative products that drive narratives about the future of computing.

The company late last month held its Windows 10 Update event. Making software presentations interesting is a chore. So Microsoft decided to go to a place far away from its utilitarian roots.

It showed off hardware so cool you could imagine seeing the gear in an episode of the tech-trendy, sci-fi TV series Black Mirror. We’re talking sleek, futuristic and aimed at the hip, creative people Apple  (AAPL) normally attracts.

Microsoft’s Surface Studio PC (shown below) is a gorgeous 28-inch all-in-one computer with a single hidden cord.

The most striking feature of the device is the massive high-resolution touch-screen monitor. Microsoft says the 4500 x 3000 screen will easily push its 13.5 million pixels thanks to a best-in-class Nvidia (NVDA) graphics unit, backed by Intel (INTC) core i5 or i7 chipsets and 32-gigs of RAM. But the real shocker is the slim 13-millimeter aluminum case and the adjustable arm that allows the unit to lie nearly flat for drawing.

The Microsoft Surface Studio PC boasts features that rival the top-of-the-line Macs and that have Apple fans drooling.

And because Microsoft is primarily a software company, it saved one new trick to leave tech observers slack-jawed: Surface Dial, a small, metal, puck-like device can be placed on the screen to manipulate the software in new ways. You can rotate the screen, select pen tips and colors for the stylus and much more. When the machine lies flat, it’s virtually like working on a drawing board.

This appeal to creative professionals might seem out of character for Microsoft. Its Microsoft Office productivity suite remains the first choice for corporations to create and manage documents. That strength has carried into the cloud. Despite a multiple-year head start for Google Docs, Office 365 has enjoyed rapid adoption. The suite added 900,000 subscribers in the most recent quarter reported October 20.

The Office lock-in is also helping Microsoft continue to build out its hybrid and public cloud businesses, which are led by Azure. And while Azure still runs a distant second to Amazon Web Services overall, sales and profit margins are soaring despite continued massive investment in infrastructure. In the first quarter, Azure had a profit margin of 49% on sales of $6.32 billion.

And it is worth noting that Azure is becoming a major player in fast-growing business concentrations like Blockchain and the Internet of Things.

In a research note, Morningstar analyst Rodney Nelson wrote: “We view Microsoft’s public cloud offering Azure as a multifaceted service that not only provides substantial growth opportunities, but also serves as a natural hedge against potential declines in other aspects of its business.”

Microsoft has a reputation for building utilitarian software products your boss makes you use to get work done. The Surface Studio is certainly not that. It’s something traditional Apple customers will want to buy. That’s a good narrative for a company best known for spreadsheets.

Microsoft shares were down as much as 10% for the year in mid-summer but are now up 9%. They are just emerging from a 16-year trough, so they are rested and ready for their next leg higher.

This article is brought to you courtesy of Money and Markets.

You are viewing an abbreviated republication of ETF Daily News content. You can find full ETF Daily News articles on (www.etfdailynews.com)

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