Microsoft Can Compete With Tech Giants in 2014

Microsoft's (NASDAQ: MSFT  ) investors enjoyed gains of more than 30% in the past year. Despite this, some analysts doubt that the company can get to where it needs to be. However, Microsoft has made changes to drive growth in the New Year. For instance, Microsoft is adding new features to its Windows Phone. Also, the company will soon finalize the purchase of Nokia's devices and services division. Finally, the tech giant has also made some changes to its tablets.

The Nokia purchase
Microsoft is closing in on the purchase of Nokia's devices and services division for $7.2 billion. The deal has been approved by the Department of Justice, the Federal Trade Commission, European Commission, and Nokia shareholders. The deal gives Microsoft a greater business opportunity. Microsoft got less than $10 in revenue from each Nokia Windows phone sold. It stands to make $40 or so in profit margins with the deal. The purchase is also another step toward competing directly with Apple (NASDAQ: AAPL  ) and Google (NASDAQ: GOOGL  ) in the mobile hardware and software space.

The prospect of Windows Phone
Microsoft's Windows Phone still lags behind Apple's iOS and Google's Android. However, Microsoft is working on a Windows Phone 8.1 update. The company intends to add a notification center and set volume levels for different apps. The new features should make the devices more appealing to consumers. In December, devices running the Windows 8 and 8.1 crossed over 10% of the market share for the first time.

An area to watch
Microsoft has helped push its smartphone platform by boosting the number of apps in its Windows Phone store. The platform was seeing uploads of approximately 500 new apps per day and has had more than 3 billion downloads to date. Additionally, the store now boasts more than 200,000 apps. Though significantly fewer than the one million apps offered by both Apple and Google, Microsoft is making progress.

Microsoft's tablet exploits
Microsoft made some tweaks to the Surface 2 and Surface Pro 2 last September. Consequently, the company's tablet exploits are also a big area to watch in the New Year. Although the tablets did not break sales records, the tweaks should make them more attractive to consumers. A new survey conducted by Bernstein Research showed that 81% of CIOs plan to purchase Windows tablets, up dramatically from 56% six months ago.

Competitors
At the end of October, Apple occupied the No. 1 spot for U.S. smartphone subscriber market share for OEMs. While Microsoft is growing in the app sector, its number of apps pales in a comparison to Apple's 950,000 apps. However, it has been reported that iOS 7 will focus more on in-car integration in the future. Apple is improving in that section of iOS to deliver technology to more cars. Apple customers spent over $10 billion in the company's App Store in 2013, demonstrating the continued appeal of native mobile apps.

Google's Android has 52.5% share of the U.S. smartphone operating system market. Google will partner with luxury auto manufacturer Audi to unveil an Android-based vehicle entertainment and information platform. The partnership will allow drivers and their passengers to access services similar to those available on Android-powered smartphones. In 2014, sales of phones and tablets running Google's Android operating system are projected to reach 1 billion users for the first time.

Conclusion
Microsoft CEO, Steve Ballmer, announced in August that he will be stepping down. The decision will provide opportunities for new perspectives in 2014. Nokia's devices and services division will boost Microsoft's growth. New Windows Phone features will enable the product to compete with iOS and Android. The company's tablets will boost sales in the New Year. Microsoft deserves a closer look. Foolish investors should however do their own research before making any investment decisions.

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  • Report this Comment On January 10, 2014, at 1:49 AM, symbolset wrote:

    Microsoft can compete. That's good news?

    They didn't used to have to compete. They told you how it was and that was that. Microsoft didn't have competitors. They had supplicants. You did it their way or those price breaks and marketing funds went to your competitors and you went under.

    Here for your enjoyment is an actual guide to approaching emissaries of the Redmond giant from Redmond Channel Partner magazine, "Minding Your Microsoft Manners": http://rcpmag.com/articles/2007/07/01/minding-your-microsoft...

    How is a company with a long history of being the boss dog going to deal with having to fight for their share? That is anybody's guess.

  • Report this Comment On January 10, 2014, at 2:23 AM, johnestromjr wrote:

    And here I thought Microsoft WAS a tech giant. How the mighty have tumbled. Microsoft use to be THE tech giant of giants, making money hand over fist. But they were arrogant and sloppy and their OS was never really very good - but they owned 90% of the PC world. We were pretty much forced to buy it. Now there is a competing OS - Apple's iOS and most people love it. And then there is Googles Android for mobile devices [along with Apples] and Microsoft got left in the dust. And now Samsung is beginning to pull away from Google's Android and developing their own. So who cares about the "mighty" Microsoft anymore. Not very many....

  • Report this Comment On January 10, 2014, at 1:07 PM, CharlesThe3rd wrote:

    Microsoft has better brand recognition than anything other tech company. And none of them are giants. They are gadget players. Microsoft just started playing in the mobile arena, but will dominate all soon enough. Mark 2 years from the release of Window Phone 8.1 to say bye bye to Android. If not sooner based on lawsuits... They will naturally be dominated in this timeframe.

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