Please ensure Javascript is enabled for purposes of website accessibility

Instant Analysis: What Microsoft Corporation's Partnership With GoPro Inc. Means

By Leo Sun – Feb 16, 2016 at 12:30PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Don’t get too excited about the action camera maker’s deal with Redmond.

On Feb. 5, Microsoft (MSFT -0.20%) announced a collaborative patent licensing agreement with GoPro (GPRO -0.80%) for "certain file storage and other system technologies." GoPro stock rallied after the news, but gave up those gains within a few days.

An "iPod without iTunes"
A major problem that has plagued GoPro is its lack of efficient backup and editing solutions for its massive videos. CEO Nick Woodman has repeatedly stated that a GoPro camera was still "like an iPod without iTunes." That statement raises concerns that smartphones, which are already equipped with automatic backup solutions like Alphabet's (GOOG -0.36%) (GOOGL -0.58%) Google Drive, will render GoPro's cameras obsolete.

Last June, Woodman told TechCrunch that the company was developing a cloud-based platform for its content. Woodman didn't disclose any more details during last quarter's conference call (as transcribed by Thomson Reuters), but stated that GoPro would ensure "that any new and existing hardware products do a better job of connecting to smartphones and the cloud." He also declared that the Hero 5 would be "the most connected and convenient GoPro" that the company has ever made.

GoPro meets OneDrive?
Partnering with Microsoft means that the action camera could potentially link its software to the tech giant's OneDrive cloud service. Through the partnership, Microsoft might offer GoPro cloud access at discounted prices. This move could also drive a wedge between GoPro and Google, its virtual reality partner for 360-degree videos on YouTube.

The partnership could also be focused on improving the efficiency of GoPro's SD card storage technologies. Microsoft offers the exFAT file system (for saving larger files on flash-based storage between 32GB and 256TB) for licensing, so a cross-licensing deal might improve the ability of GoPro's next-gen cameras to save larger files.

But it's all speculation for now...
GoPro investors should note that Microsoft has signed over 1,200 similar agreements with companies in the past. Most of those deals were for minor technologies that didn't significantly alter the companies' outlooks. So until GoPro actually reveals something solid built on Microsoft's technologies, the overall impact of this licensing agreement will be limited.

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Leo Sun has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), and GoPro. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Microsoft Corporation Stock Quote
Microsoft Corporation
$237.45 (-0.20%) $0.47
GoPro, Inc. Stock Quote
GoPro, Inc.
$4.99 (-0.80%) $0.04
Alphabet Inc. Stock Quote
Alphabet Inc.
$98.17 (-0.58%) $0.57
Alphabet Inc. Stock Quote
Alphabet Inc.
$98.81 (-0.36%) $0.36

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/27/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.