3 Reasons You Can Profit From an Underrated Tech Gianthttp://www.fool.com/investing/general/2013/01/08/3-reasons-you-can-profit-from-an-underrated-tech-g.aspx Jonathan Yates
January 8, 2013
If Microsoft (Nasdaq: MSFT ) were on a reality show, it would be the contestant who consistently outperforms its flashier rivals to the constant surprise of the viewers. Investors should never overlook three vital factors about the software giant that have resulted in its commanding so many business sectors.
This continues today with the gap between Xbox and Sony's (NYSE: SNY ) PlayStation broadening in the gaming system segment. The Windows 8 operating system for smartphones, now being offered through Nokia (NYSE: NOK ) and others, is projected by International Data Corporation to almost quadruple its market share by 2016.
The following products manifest the evolving innovation efforts of Microsoft:
While some still claim that Microsoft does not innovate, that is certainly not the opinion of Steve Wozniak, co-founder of Apple (Nasdaq: AAPL ) . In a recent interview, Wozniak expressed concerns that Microsoft is more innovative than the product developers for Apple. He laments: "I fear that Microsoft might have been sitting in their labs, trying to innovate, with a formula: 'How do we come up with new ideas? Let's not keep doing the same things as before, just the newer versions of them.' They might have been doing that for three years, while Apple was just used to cranking out the newest iPhone and falling a little behind. And that worries me greatly."
Microsoft did not start out at the top. It had to dispose of Novell to dominate in the server OS segment . It seized market share from Oracle in the database sector. There have been more than 70 million Xbox 360 consoles sold in direct competition with Sony (NYSE: SNY ) . For the first time, in 2011 Microsoft sales of the Xbox 360 for the year topped those of Sony's PlayStation 3.
For future growth, the cloud is another area that Microsoft has targeted with Azure, Windows 8, and its tablets Logically, Microsoft has cloud-based advantages through its dominant market share of both Windows for consumers and Windows Server in the data center. There is certainly a formidable challenge from Google, but the institutional presence of Microsoft will be tough to supplant.
For those companies looking to move up, there is the Microsoft Office 365, which is a cloud-based solution for business operations. Firms using Windows 7 that move to the cloud can now use mobile client systems for better performance and greater efficiency.
Microsoft's financials are great