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You lose if you do, you lose if you don't -- this pretty much sums up the state of Microsoft (NASDAQ: MSFT ) today. It seems no matter what the company does, Microsoft will never be able to overcome the aggravation it has caused the Street over the past decade. I get it -- the Street does not care for the company's management. For that matter, neither do I. But Microsoft should be given credit for (at least) making attempts to correct previous mistakes. The company deserves a break.
Desperate times or just good business?
Microsoft has an app store. No, seriously, it does. Granted, unless you're a die-hard fan of the company, you probably have never heard of it. This is yet another example of what drives the Street bananas with this company. Microsoft has heard the cries and it wants to address this. However, some analysts hate that too.
One of the ways Microsoft has attacked the lack of attention earned by its app store is by building up its app library. But it costs money. In an attempt to better compete with Apple and Google, Microsoft recently launched a promotion called "Keep the Cash," which rewards developers by giving them $100 for each app that they publish in the company's app store that supports Windows 8 and Windows Phone.
The program will award a $100 virtual Visa card to any developer for each app that they publish. To qualify, those apps must be submitted and published to the appropriate store by June 30. The payout, which is limited to $2,000 for 10 Windows Store apps and 10 Windows Phone store apps, can only be used for online purchases. Considering that Microsoft is capping the program at 10,000 apps, the company is willing to drop $1 million to build its library.
It sounds like a good business deal to me. But not everyone feels that way. Patrick Moorhead, principal analyst with Moor Insights & Strategy said,
It looks a little desperate. It sends the message that Microsoft is having a hard time building out its app categories. And it doesn't bode well for the Windows Store.
I don't quite understand the point of Moorhead's statement. It hasn't been a secret that Microsoft has been short of apps, nor has the company pretended it was an area of strength. In fact, Microsoft has made it clear that its app store has been weak and it's been an area the company wanted to build. So, it's unfair to criticize the company for looking at creative ways to address a problem that it was being criticized for in the first place. We can't have it both ways.
Give credit where credit is due
Granted, Microsoft can be aggravating. Its recent missteps, specifically its failure in the mobile, have caused this level of disdain. But now, the company is getting disrespected for doing things that other companies would be applauded for. Nevertheless, investors shouldn't discount that there is still a lot of good in this company.
I won't disagree that Microsoft's mobile efforts are lagging. I won't even contest that the company is still behind the likes of salesforce.com and Oracle in the cloud. However, that 80% of Microsoft's revenue still comes from businesses proves how strong its Windows and Office franchises still are. And there are no noticeable signs of weakness. Yet, this continues to be a popular bear argument that Microsoft is too reliant on Windows and Office, while no one complains that Oracle is too reliant on databases.
The concern is that Microsoft's Office dominance will eventually get eaten up by increased cloud adoption. However, Microsoft hasn't been asleep at the wheel in this area, either. With Azure, the company is taking the appropriate steps to shore up its cloud presence. Plus, with Office 365, I think (in time) Microsoft can become a true threat in the software-as-a-service, or SaaS, market, to rival Salesforce and Oracle.
Granted, Office 365 still has some room for improvement, but it shouldn't be discounted. What's more, just as with the "Keep the Cash" program for the app store, Microsoft has recently launched Azure community portal, which invites a wide range of developers to create. This is another way the company wants to increase broader adoption. In the process, Microsoft also refreshed Azure with a virtual-machine-centric platform similar to Amazon's Elastic Compute Cloud. And despite what bears may think, the platform is better than adequate.
Let's have some perspective
Microsoft is never going to be Apple or Google. But the company is not a dog, either. While it's true the company deserves criticism, we also have to be fair. The company is addressing its deficits as best as it can. But in the process, we can't beat up Mr. Softy just because it seems easy.
It's been a frustrating path for Microsoft investors, who've watched the company fail to capitalize on the incredible growth in mobile over the past decade. However, with the release of its own tablet, along with the widely anticipated Windows 8 operating system, the company is looking to make a splash in this booming market. In this brand-new premium report on Microsoft, our analyst explains that while the opportunity is huge, the challenges are many. He's also providing regular updates as key events occur, so make sure to claim a copy of this report now by clicking here.