3 Reasons Microsoft Will Survive the Post-PC World

With Apple (Nasdaq: AAPL  ) and Google (Nasdaq: GOOG  ) leading the shift toward mobile and cloud computing, some investors might conclude that Microsoft (Nasdaq: MSFT  ) will inevitably sink into irrelevancy. However, I can think of three reasons the company won't go the way of the dinosaurs, even if its longtime stronghold in PCs does.

1. Mango's ripe for picking
Windows Phone 7, codenamed "Mango," may have entered the smartphone market late and struggled to gain traction, but the operating system has generated a lot of buzz recently. Critics gushed over an early build of Mango back in July. Some of the bolder analysts have even predicted that Windows Phone will surpass iOS's market share by 2015.

Although I don't see Mango toppling the iPhone anytime soon, I do think it can bump Research In Motion (Nasdaq: RIMM  ) out of third place. A recent survey by NPD found that 11% of U.S. consumers planning to purchase a smartphone in the next six months are most interested in Windows Phone 7. Meanwhile, only 8% said they were interested in BlackBerrys. Additionally, 44% of those planning to purchase a smartphone in the next six months included Windows Phone 7 in their consideration, while 33% were considering BlackBerrys.

Over the next few months, we should see more interest in Mango, as the update hits existing handsets and new phones come on the market. AT&T just announced that it plans to add the HTC Titan, Samsung Focus S, and the budget priced Focus Flash to its lineup of Windows Phones this fall. Nokia (NYSE: NOK  ) will probably also invest heavily in marketing the platform when it releases its first Mango handsets in North America.

2. Someone built an ecosystem
It appears that Microsoft has taken a page from the Apple playbook, setting out to create a consistent user experience across all of its devices. Windows Phone 7, Windows 8's tablet-friendly "Metro" interface, and the next Xbox 360 dashboard update all have a similar design.

However, rather than copy the familiar grid of icons now found across the iEmpire, Microsoft has instead designed its interfaces around customizable live tiles, which users can set to launch an application, or display information and photos. It's an innovative design scheme that has the potential to do the impossible: make iOS look somewhat clunky.

The connection between Microsoft's platforms goes beyond just looks. They're becoming more tightly integrated as well. For example, Office365 -- the cloud-based version of the company's business and productivity tools -- will automatically sync documents edited on a Windows Phone with the user's computer, and allow users to collaborate in real time.

The company also plans to expand its Xbox Live platform to the PC and Windows Phone. I think this is an especially smart move. It reminds potential mobile gamers that Microsoft knows a thing or two about building a successful game library. I'm also hoping that placing Xbox Live on a PC will simplify the process of sharing media between my console and laptop. My current combination of the Zune Marketplace and Windows Media Extender works decently, but it could be cleaner.

3. Ooh, look at the clouds!
In addition to offering a cloud-based version of Office, Microsoft launched its own cloud hosting service, Azure. Since launching in February 2010, Azure service has signed up 31,000 subscribers and hosts 5,000 applications, but it has a lot of catching up to do. Salesforce.com (NYSE: CRM  ) and Google's App Engine both top 100,000 applications.

However, Microsoft has managed to snag a few big-name customers like Lockheed Martin, Xerox, and Travelocity. Also, tech news site The Register recently reported that Apple had selected Windows Azure and Amazon.com's (Nasdaq: AMZN  ) AWS to jointly host iCloud.

I also like Microsoft's strategy for bringing Azure to social gaming. The company has developed a toolkit for developing social games, which provides code and guidance for things like tracking achievements, keeping scores, and handling in-app purchases. Developers can download the kit for free ... as long as they host their finished games through Azure.

Foolish takeaway
Microsoft has put in place all the pieces it needs to survive the post-PC era. Now it needs to focus on execution. Azure should grow into a valuable asset, but if the company wants investors to see Mr. Softy as more than an old geezer again, Microsoft really needs Mango and Windows-powered tablets to succeed.

If you'd like to learn about another company that is prepared to profit as we move more of our computing to the cloud, you should check out this special report, "The Motley Fool's Top Stock for 2011." It's absolutely free, so click here to download it today!

The Motley Fool owns shares of Google, Apple, Research In Motion, Lockheed Martin, and Microsoft. Motley Fool newsletter services have variously recommended buying shares of salesforce.com, Apple, Microsoft, Google, AT&T, and Amazon.com; creating bull call spread positions in Microsoft and Apple; and shorting salesforce.com. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Patrick Martin does not own shares of any of the companies mentioned. You can follow him on twitter @TMFpcmart03. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (8) | Recommend This Article (4)

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On September 16, 2011, at 1:20 PM, hellomojo wrote:

    "Although I don't see Mango toppling the iPhone anytime soon, I do think it can bump Research In Motion out of third place. ".... haha.. A tin can on a string should be able to bump RIM out of 3rd place soon..

  • Report this Comment On September 16, 2011, at 2:49 PM, ConstableOdo wrote:

    WP7 smartphones aren't selling in quantity, so what makes you think that Windows 8 tablets will? I wish people would stop making bold predictions about products that haven't been introduced to consumers or practically anyone else for that matter.

    The same pundits that likely predicted the iPad to be a huge failure are now predicting that the Windows 8 tablet will be a huge success. Guess what? Only consumers will decide that and I honestly don't see a valid a reason for them to be throwing away their iPads to get the Windows 8 tablet a year from now after they've become happily and fully absorbed into the iOS ecosystem.

  • Report this Comment On September 16, 2011, at 3:01 PM, H3D wrote:

    By the time Mango is ready to bump RIM out of third place, third place may already be smaller than MIcroSoft's share now.

  • Report this Comment On September 16, 2011, at 3:03 PM, H3D wrote:

    An article that calls a prediction of Windows Phone passing iOS by 2015 "conservative" is called an advertisement.

  • Report this Comment On September 16, 2011, at 3:12 PM, H3D wrote:

    "However, rather than copy the familiar grid of icons now found across the iEmpire, Microsoft has instead designed its interfaces around customizable live tiles, which users can set to launch an application, or display information and photos."

    So, the "icon" for the calendar on my iPhone says its Friday the 16th, which it is, so I guess it's a live tile. So Microsoft's clever live tiles will be just like the iPhone then? If not, how not? I think you've been reading Microsoft's marketing, which is fine, and believing it, which is stupid.

  • Report this Comment On September 16, 2011, at 3:15 PM, H3D wrote:

    " The Register recently reported that Apple had selected Windows Azure and Amazon.com's (Nasdaq: AMZN  ) AWS to jointly host iCloud."

    I think you'll find that they speculated. Evidence? None.

  • Report this Comment On September 16, 2011, at 3:51 PM, IDCDark wrote:

    Stop drinking the apple kool-aid... I am sure you was one of the xbox will never gain anything also right.

  • Report this Comment On September 16, 2011, at 9:25 PM, techy46 wrote:

    The 1st Reason Microsoft will survive the Post-PC World is that it's really the Mobile-PC World that Microosft just announced with Windows 8 and they have the enterprise ecosystem to back up their bets and Apple doesn't. Apple's iOS and OS X are really nothing but Linux/Unix shareware wrapped in Apple skin. Android's the same genes. The reason Microsoft's mobile devices will finally start making inroads is that the same UE will run across all PC form factors including phones, tablets and Xbox. Apples got the iToys but Microsoft's got the eToys and servers that make you a living in enterprise development not as a graphics artist or talking head.

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