I'm a Microsoft (NASDAQ: MSFT ) shareholder, and after dealing with a few years of nearly zero return rates from the stock, I've been thrilled with the its performance year-to-date. The stock is up 28.72% this year, while the Dow Jones Industrial Average (DJINDICES: ^DJI ) has risen just 15% during the same time frame. I've been waiting for the other shoe to drop and for the price fall back down into the mid-$20 range, but this week I read a few articles that will make me pay especially close attention to the stock. One article highlighted something the company is doing well, another mentioned something that was sort of bad, and a third compared Microsoft with an ugly mistake another company recently made.
So let's look at the good, the bad, and the ugly for Microsoft this past week.
My Fool colleague Evan Niu wrote about how Microsoft had overtaken BlackBerry (NASDAQ: BBRY ) this past quarter in smartphone market share. Microsoft's push into the world of mobile devices and its Windows 8 operating system, which was built for mobile devices, has really paid off for the company. Evan pointed out that over the course of a year, Microsoft grew its mobile operating system market share from 3.8% to 5.6% as it rose to the No. 3 spot on the worldwide stage. During that time frame, previous No. 3 BlackBerry fell from 5.3% market share all the way to its current 0.7%. The mobile market is a great place for Microsoft to continue to grow in the coming years, and it seems that is exactly what the company plans to do.
Microsoft is releasing a new gaming console in the coming months, but only in the U.S. in 2013 and not in the Asian markets until late 2014. Meanwhile, the Xbox One's biggest competitor, Sony's PlayStation 4, will hit the markets worldwide before the Christmas shopping season -- and for $100 cheaper than the Xbox One. Giving Sony a one-year head start already puts the Xbox One behind the 8-ball, and it just adds insult to injury to have it rolling out $100 more expensive than the competitor's device. Microsoft needs to reconsider its timeline for delivery in Asia and take a deeper look at the long-term value that each Xbox One sold will bring in. It might also want to adjust the sales price to bring in more of those high-value, long-term gamers.
The worst news I read about the company this week was the comparison my colleague Anders Bylund make between Windows 8 and Netflix's (NASDAQ: NFLX ) historic Qwikster disaster. Anders noted that while Netflix made a big mistake with the Qwikster idea, it heard the complaints from its customers and made changes to make them happy. But he didn't see Microsoft doing the same thing with Windows 8, which has sparked a number of complaints over significant changes to the operating system. A Windows 8 update is coming, but Anders doesn't think it goes far enough and believes it will leave customers disappointed. It's true that Windows 8 for PCs has been a disaster so far. Microsoft relies on Windows for a large portion of its annual revenue, and unless the newest version really wows customers, the company may have trouble in the coming quarters.
More Foolish insight
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 a new premium report on Microsoft, a Motley Fool analyst explains that while the opportunity is huge, so are the challenges. The report includes regular updates as key events occur, so make sure to claim a copy of this report now by clicking here.