The Good, Bad, and Ugly for Microsoft This Past Week

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.

The good
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. 

The bad
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 ugly
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.


Read/Post Comments (9) | Recommend This Article (8)

Comments from our Foolish Readers

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 June 15, 2013, at 8:41 PM, CluckChicken wrote:

    "Sony's PlayStation 4, will hit the markets worldwide before the Christmas shopping season -- and for $100 cheaper than the Xbox One."

    The PS4 is a blu-ray player and comes with 2 controllers. The Xbox One is a blu-ray player and comes with 2 controllers AND a the new Kinect. The kind of justifies the $100 price difference.

    Really you are going to support a writing that compares a business relabeling change to a change in an OS as being similar? It was bad the first time around and this just makes it seem even worse because you say nothing new about it.

  • Report this Comment On June 16, 2013, at 1:20 AM, ThorOdinson79 wrote:

    The $100 difference is not justified, as most gamers will not use the Kinect and see no need for it.

  • Report this Comment On June 16, 2013, at 1:22 AM, eidsonb wrote:

    The whole MSFT over takes BB for 3rd has been debunked.....

  • Report this Comment On June 16, 2013, at 2:30 AM, TheGreatOne10 wrote:

    Chicken you idiot, 3/4 of the people wouldn't pay 100 cents for the Kinect, much less 100 dollars. I'm surprised they even let 5 year olds sign up for this site.

  • Report this Comment On June 16, 2013, at 3:13 AM, Rockthebest wrote:

    Blah blah blah. Why are the Fools so desperate?

    Who pays them, surely not these comments.

  • Report this Comment On June 16, 2013, at 4:42 AM, nadiya00013 wrote:

    I think the xbox one will fail and I don't think they will make another. The users will not forgive this. Price/spying on the users/24 hour check in….Its like the gamers are checking in with a parole officer. Microsoft is treating paying consumers like they are criminals. I’m done with Microsoft.

  • Report this Comment On June 16, 2013, at 8:15 AM, misledbyfools wrote:

    Are you Fools that naive? I guess so, because here is a reality check for your propaganda.

    If BBRY had only 0.7% world smartphone share, then they would sell only .007 X 920M smartphones this year worldwide.

    They sold that many last quarter, you idiots.

    And as far as US market share, they are at 5.2% and rising.

    YOU my friend are ridiculously foolish.

  • Report this Comment On June 16, 2013, at 1:30 PM, HelpIsHere wrote:

    Another laughable claim, BBRY is killing MSFT, you need to do some research please.

  • Report this Comment On June 16, 2013, at 2:33 PM, magnaman1969 wrote:

    You should not even be allowed to print this garbage.

    BlackBerry is 3rd globally...

    Such bs...

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