Microsoft (NASDAQ:MSFT) is coming off one rollercoaster of a year. The stock started out strong, easily beating the Dow Jones Industrial Average (DJINDICES:^DJI) for a few months as the Windows 8 refresh looked like a powerful catalyst. But the joy didn't last: Mr. Softy soon fell back in line with its Dow peers and is currently underperforming the index year to date:
Tailwinds stopped filling Microsoft's sails when Windows 8 started looking like a mobile system bolted onto traditional desktops. The benefits of upgrading to the new software aren't clear, but users have found plenty of reason to stay with the familiar Windows 7 experience. Is this another Windows Vista disaster, or will consumers and corporations just get used to the new interface and move on? It's too early to tell, but I wouldn't be surprised to see a service pack that removes the mobile-style user interface in favor of a more traditional desktop.
And then there's the mobile market. Microsoft hoped to make a huge splash in smartphones with best friend Nokia (NYSE:NOK) by its side. The tablet segment would have to be covered by Microsoft's very own Surface product. When that slate was announced, system partners from Hewlett-Packard (NYSE:HPQ) and Dell (UNKNOWN:UNKNOWN) to Acer and Lenovo delayed or canceled their planned Windows tablets en masse. Neither gambit has worked out so far.
The company is trying to shift more Surface tablets by expanding sales to Best Buy (NYSE:BBY), Staples (NASDAQ:SPLS), and other retail chains. Again, it's far too early to tell how it's going. This holiday shopping season will either make or break Microsoft's hardware ambitions.
Redmond is stuck in limbo until the Windows 8 fog clears up
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