A $12.5 billion-dollar payout makes for a big bomb, and the fallout from Google
s (NASDAQ: GOOG ) acquisition of Motorola (NYSE: MMI ) still is curling its way
through the beleaguered market. The acquisition has analysts discussing tactical
impact on Apple (NASDAQ: AAPL ) and its arsenal of iPhones and iPads, but
investors saw the move as enough of a blow against the Cupertino, Calif.-based
company that nearly all of its competitors saw share prices bump up. Nokia
(NYSE: NOK ), Research in Motion (NASDAQ: RIMM ), Dell (NASDAQ: DELL ) and
Hewlett-Packard (NYSE: HPQ ) all got boosts after Mondays announcement. Nokia
even jumped an impressive 17%, with shares slinking back above $6. Wall Street
suddenly wondered who has a chance to topple (and who else might partner up to
take on) Steve Jobs. Nokias new partner, Microsoft (NASDAQ: MSFT ), didnt see a
significant boost, however. It gained only about 50 cents between Monday and
Tuesday, well within the range it has been trading in throughout August.
Investor indifference toward the stock this week when all eyes are on major
players in the mobile and broader computing industries illustrates just how
peculiar and precarious Microsofts position is in those markets. The question:
In a world where Apple and Google are altering the face of consumer computing by
driving users away from PCs and toward mobile devices like tablets and
smartphones, where does that leave Microsoft? What is Windows place in this
landscape? Right now, Windows place still is at the top of the heap. Research
firm Gartner reported on Aug. 9 that Windows 7, the latest iteration of
Microsofts era-defining operating system, will own a majority share of its
market, running on 42% of all PCs worldwide, by the end of 2011. It will run on
94% of all new PCs sold. Apple and Google arent a threat in this arena. Even Mac
laptops, which have seen profound sales growth since 2008, will account for only
5% of PCs by 2015. Microsofts security in this arena assumes, however, that PCs
will remain the dominant machine for computing needs. Even if PC sales have
declined only by about 1% in 2011 so far, consumers especially are trending away
from buying new desktop and notebook PCs, putting money instead into compact
computing devices like smartphones and Apples wunderkind, the iPad. Even
businesses wont necessarily rely on Windows-based PCs since applications will be
available on multiple devices. Gartner expects 50% of business applications to
be built to run on any operating system by 2012. Windows 7 likely wont define
Microsofts place in the future. That job falls to Windows 8, the next iteration
due out next year that will work as both a traditional PC interface and a
touch-based mobile operating system presented in an easy-to-swallow app format.
Its a little bit Windows 7, a little bit Windows Phone and a spoonful of Apples
iOS thrown on top. This is the platform that will fuel not just future PCs but
Nokia-made Windows smartphones and tablets from a fleet of manufacturers like
Dell and others by the end of 2012. Microsoft will need that level of platform
ubiquity to survive in the modern age. It will need Windows 8 to be versatile
enough that it runs on anything, from the highest-end business PC to a
refrigerator. The company is showing humility in the leading up to its release
as well, addressing consumers burned by past Windows updates like the disastrous
Vista, a promising change from the Microsoft of old. With quality manufacturing
partners and solid functionality, Windows 8 might help Microsoft maintain its
decades-long rule of the computing roost. That is, if it isnt too late to edge
out Google Android and Apples big toys. As of this writing, Anthony John Agnello
did not own a position in any of the stocks named here. Follow him on Twitter
at
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