Market Overview

Microsoft Launches Windows 8 and Surface Tablet: What does the Future Hold?


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Microsoft Launches Windows 8 and Surface Tablet: What does the Future Hold?
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Can Microsoft translate advertising dollars to success in the marketplace? Surface, Windows 8 needs drive adoption, reverse trends and reestablish consumer momentum.

Microsoft Corporation (NASDAQ: MSFT) [Full Research Report] is pursuing a new strategy geared toward emerging trends in mobile and a growing long-term outlook within cloud computing.

This new focus could quickly become a turning point for Microsoft. A familiar user-experience across a family of devices may prove to be a rather distinct advantage. Employees who use Windows at work prefer to have a Windows OS at home. A recent study also revealed that 77 percent of current Small and Medium-sized business Windows users will make the move to the new Windows 8 operating system.

Considering the population of just the Windows 7 user-base, with sales surpassing 600 million units this past June, this could be tremendously positive for Microsoft. Early adopters are very pleased with the new Windows platform and should this sentiment carry over to the marketplace as a whole, Windows 8 will have a strong base behind it.

Many users, particularly large enterprises, are hesitant to adopt new habits considering the extensive investments and costs required. If Microsoft can execute well in the consumer market, enterprise adoption could soon follow.

Concerns are being raised over shrinking PC sales, with traditional desktop licensees still representing a significant portion of Microsoft's revenue. The transition to mobile must now compete not only with competitors for market share, but also at least offset what could be weak PC sales ahead. PC shipments declined 8.6 percent globally last quarter, worse than market expectations and marking an important shift. It's official, mobile is the new PC.

Dynamics of the marketplace have already shifted well in favor of mobile and these changes will only continue to accelerate as consumers begin to truly realize the potential available. With a little help from Moore's law, computing power is no longer the limiting factor when dealing with mobile technology. As the release of the iPhone made everyone realize, the technology and capabilities are there, the only limit is our imagination. Creativity and innovation is now happening on the application level, with cloud computing now taking the spotlight.

Can Microsoft successfully bridge Mobile, Desktop and Surface across the cloud? As the answer to this question plays out, it will only become clearer as to whether Microsoft is able to capture the seamless user interface the market is trending toward. It's not a matter of "if" we will see seamless integration; it's a matter of who will deliver it into the hands of consumers first.

Rumors of $1.5 Billion dollar marketing campaign means Microsoft is betting big on the success of Surface, Windows 8 and its migration to the mobile era. A budget of this magnitude is a greater risk than usual and could be setting up for failure if consumers do not respond well to the adverts.

Pricing of the Surface brings pause, could Microsoft be asking too much at $499 per device? A premium price for an unproven device has given some analysts doubt, with some pointing out it may be too late to enter into the tablet game. Apple has already secured over 50% market share and Amazon's offerings are less than half the starting price for the Surface Tablet. This pricing gap is going to be a hurdle for Microsoft to overcome as it must quickly prove to consumers it can live up to its price tag.

Speculation of potential friction with OEM producers is abound, primarily due to Microsoft's entry into a market it historically left wide open to its partners. The entry of Microsoft into the mobile hardware business puts it in direct competition with current partners. Another caveat comes in the form of consumer confusion, due to the variety of mutually exclusive hardware that the software will run on. Will users opt for the simple iPad pricing scheme over the abundance of options with Windows?

Some developers have noted the App ecosystem on Windows 8, Surface may be lacking in comparison to Google Play and Apple App Store. Projecting to have 100,000 Apps ready for download in the next 90 days, Microsoft is still a far-cry from the 500,000 Apps available on Google Play and over 700,000 Apps in Apple's App Store.

So how does this all play together? What does the future hold for Microsoft Corporation? For full detailed breakdown, analyst ratings and price targets; download our Microsoft Corporation research report free of charge here: [].

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