What's Wrong With Microsoft Corporation Today?

The Dow Jones Industrial Average (^DJI -0.98%)has hit the skids in afternoon trading, dropping from a modest gain to 50 points in the red. Just two Dow stocks were down more than 1% as of 2 p.m. EDT, including Microsoft (MSFT -2.45%) with a 1.1% drop.

So what's wrong with Microsoft today?

There's nothing obvious behind Microsoft's drop today. In the words of fellow Fool Morgan Housel, "'Stocks are down and no one knows why' is the only honest headline in this category."

That said, a few news items may be rattling the nerves of Microsoft investors. None are particularly earth-shaking, but they do add up to a respectable lump of heartburn-causing volatility fuel.

First: Facebook challenges Microsoft's virtual reality plans
The biggest cloud on Microsoft's horizon comes from Facebook (META -10.56%), which is spending $2 billion on an acquisition right in Microsoft's wheelhouse.

Sony's virtual reality headset is virtually a reality already. Source: Sony.

Virtual reality specialist Oculus is joining the Facebook stable. The move arguably puts Facebook up against Redmond's Xbox Kinect team, which is reportedly working up an Oculus-like virtual reality headset of its own.

Letting Oculus slip into the hands of a major competitor makes Microsoft look weak. Oculus could have been a useful asset if paired with the Xbox platform, perhaps setting the console apart from the Sony (SONY -0.33%) PlayStation 4 in a tangible way. Sony is also working on virtual reality tools, so Microsoft can at least breathe a sigh of relief that the Japanese entertainment giant didn't outbid Facebook for Oculus.

Still, it's a missed opportunity and may signal the rise of a brand new head-to-head rivalry in the virtual reality space. It almost makes sense to see investor nerves rattled by this one.

Second: Is Microsoft's Xbox One strategy changing?
In other Xbox news, Microsoft has reduced the price of the popular Xbox One plus Titanfall bundle. First, a handful of third-party retailers slashed bundle prices by $50, and then Microsoft's own online store followed suit.

Microsoft claims that it's a time-limited special offer, not a permanent price reduction. But the Xbox One's Achilles' heel was always its high price compared to the PS4, and maybe this is the beginning of a long-lasting pricing adjustment.

To some, that would be a good sign as Microsoft pulls the most obvious lever to turn the sales tide. To others, it's a sign of failure that will lead to selling Xbox One consoles at a loss. Either way, it's another piece of unresolved tension that can send investors looking for a roll of antacid tablets.

Third: The XP migration is getting desperate
Finally, the death of Microsoft's venerable Windows XP operating system is just around the corner, but users aren't migrating to Windows 8 by the boatload. To nudge users in the right direction, the company now offers a $100 discount if you're abandoning an old XP system for a brand new Windows 8 rig.

You don't have to trade in the old system, but you do have to prove to store personnel that you own one in order to qualify for the rebate. Then you can pick up a Windows 8 system at a $100 discount.

Microsoft would clearly love to move everybody over to a newer Windows version before security updates and tech support for the aging XP platform fade away on April 8. This is just one of many nudges in that direction, and it remains to be seen how successful the entire campaign will be.

For now, Windows XP still holds a 30% market share in desktop operating systems, second only to Windows 7 at 47%, according to Web traffic analysts NetMarketshare. The preferred Windows 8 system lags way behind at just 10.7%.

Yes, ATM machines can crash into the Blue Screen of Death, too. Image source: Wikimedia Commons.

And that's just the share of computers accessing public Internet sites. Windows XP is also strong in some niche markets that don't touch regular websites. For example, 95% of the world's ATM machines run Windows XP, and many of these cannot be upgraded to Windows 7 or 8 without also refreshing the hardware. That's an expensive upgrade since each ATM can cost up to $60,000, and not likely to happen overnight.

That's just one example of a tricky upgrade path. The new $100 discount offer is just another sign that Microsoft isn't getting the conversion rates it would like to see. So the migration off of Windows XP is starting to look desperate, laying another weight on the shoulders of Microsoft investors.

None of these items would move Microsoft's needle on their own. But when it rains, it pours. And that's why Microsoft investors showed some jangly nerves today.