Microsoft Windows Will Gain Strength in 2014

Don't let it get away!

Keep track of the stocks that matter to you.

Help yourself with the Fool's FREE and easy new watchlist service today.

Sometime in early 2014, Microsoft (NASDAQ: MSFT  ) will appoint the third CEO in its history, and the first that was not part of the original founding team. Microsoft has been transitioning into a devices and services company, and the next CEO will have the tough job of maintaining Microsoft's dominance in its core businesses while adapting to the changing technological landscape. 2014 will be an important year for Microsoft, and here's why.

Windows everywhere
Windows 8 was released about 14 months ago, and in that time the operating system has been slow to be adopted. On the PC side, users of Windows 7 have little reason to upgrade, and likely won't until a new machine is purchased. On the tablet side, up until recently there simply weren't any decent, affordable Windows 8 tablets available to consumers. This changed at the end of 2013, with Intel releasing its energy efficient Bay Trail processors, and 2014 should see more budget-friendly Windows 8 tablets and convertibles hit the market.

On the consumer side, there's no doubt that Windows will continue to dominate desktops and most laptops. Low-end laptops are threatened both by tablets and Google's (NASDAQ: GOOGL  ) Chromebooks, which have reportedly been selling well recently, although not as well as some headlines would lead you to believe. Microsoft needs to have Windows 8 devices priced competitively with Android tablets and Chromebooks, and currently there are just a handful. There should be more in 2014, with the upcoming International CES tech conference likely to lead to some announcements by OEMs.

On the enterprise side, Microsoft has a big advantage. Since almost all enterprise computers run Windows already, integrating Windows 8 mobile devices makes more sense than using Android tablets or iPads. Microsoft's PC dominance should leak into the tablet market, helping the company fight off Google and Apple in the enterprise.

A recent survey done by Bernstein Research suggests that demand for Windows 8 tablets in the enterprise is getting stronger. 81% of CIOs surveyed are either issuing or planning to issue Windows tablets, up from just 56% six months ago. The release of the first major update to Windows 8, Windows 8.1, as well Bay Trail's efficiency leading to a long battery life for Windows 8 devices, are likely the root causes of this increase in demand. Only 15% of CIOs plan to issue Android tablets, down from 23% six months ago, a big blow to Google's enterprise ambitions.

Smartphones are the last piece of the puzzle for Microsoft, and significant progress was made in 2013. While adoption of Windows Phone in the United States has been slow, Europe and Latin America have been strong markets for Microsoft. In Europe's five biggest markets, Windows Phone has surpassed a 10% market share, significant growth compared to a year ago. With Apple only selling high-priced iPhones, it seems inevitable that Windows Phone will eventually become the number two smartphone OS in the world.

With the acquisition of Nokia's phone operations, Microsoft has put itself in the position to push the Windows Phone platform without having to rely on OEMs to make quality devices. At the same time, Microsoft is reportedly offering incentives to phone makers, with Sony considering launching a Windows Phone as early as this year.

While 2014 may not be the year that Windows Phone finally breaks through in the United States, worldwide growth of the platform should continue. Windows Phone now has over 200,000 apps, still far less than Android or iOS, but the "app gap" is quickly closing. This lack of apps has been one of the major complaints about the platform so far, and the progress in that area is encouraging.

The bottom line
With Intel finally offering chips which make low-cost Windows tablets and convertibles a reality, Windows 8 should begin to find itself on an increasing number of affordable mobile devices. Enterprise adoption is key, and demand going into 2014 looks strong. Consumer adoption may be slower, but as more devices roll out I expect Windows 8 to begin gaining share in the tablet market. For Microsoft, 2014 will be the year that both Windows 8 and Windows Phone finally break through.

More compelling ideas from the Motley Fool
Dividend stocks can make you rich. It's as simple as that. While they don't garner the notoriety of high-flying growth stocks, they're also less likely to crash and burn. And over the long term, the compounding effect of the quarterly payouts, as well as their growth, adds up faster than most investors imagine. With this in mind, our analysts sat down to identify the absolute best of the best when it comes to rock-solid dividend stocks, drawing up a list in this free report of nine that fit the bill. To discover the identities of these companies before the rest of the market catches on, you can download this valuable free report by simply clicking here now.

Read/Post Comments (2) | Recommend This Article (0)

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 January 04, 2014, at 9:43 PM, techy46 wrote:

    Oh, oh this article is mostly right on!

  • Report this Comment On January 06, 2014, at 9:22 AM, Avro wrote:

    Nope. Windows Tablets were and are dire and poor sales led to the resignation of the CEO. No chance of Enterprise adopting this instead of the iPad. Microsoft is riding high on the Nokia name in phones, but its only success has been with the Lumia 520 and one doubts whether Nokia made any money on this budget handset.

    Microsoft was asleep at the wheel when Apple and Google went over to Tablets and SmartPhones. Its time has passed and gone.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2781790, ~/Articles/ArticleHandler.aspx, 8/28/2015 9:28:33 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 12 hours ago Sponsored by:
DOW 16,654.77 369.26 0.00%
S&P 500 1,987.66 47.15 0.00%
NASD 4,812.71 0.00 0.00%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

8/27/2015 3:59 PM
GOOGL $667.96 Down +0.00 +0.00%
Google (A shares) CAPS Rating: ****
MSFT $43.90 Up +1.19 +0.00%
Microsoft CAPS Rating: ***