Microsoft Has A Plan To Beat Apple, But Will It Happen?

In November 2012, CEO Steve Ballmer declared that Microsoft (MSFT) is now a devices and services company that develops its own end-to-end experience for consumers – no longer just a software company that licenses its operating system to PC makers to use as they please. Ballmer said Microsoft wants to maintain firm control over how its products are used, and has developed a new plan that could possibly threaten the former stock heavy-weight champ, properly known as Apple (AAPL); but is the proclamation "we have a strategy to beat Apple," maybe just a little too ambitious?

The first glimpse of how this plan might come together was unveiled two weeks ago, and was termed the codename "Blue," – a plan promising to roll out more frequent and more incremental updates of Windows, Windows Phone, Office and Xbox software. More than that, those updates will be coordinated across Microsoft’s multiple platforms, to get all customers’ "devices, apps and services working together."

Sounds fancy, right?

Despite the rumors that Microsoft will merge the Windows and Windows Phone platforms, making "Blue" a potentially huge deal, there hasn’t been much validation behind these anecdotal conjectures. Dissolving the barrier between mobile and desktop would be nothing short of impressive, but one must ask: is this really an attainable goal for Microsoft?

In the past, the company was not structured to address a challenge like this. To even be in a position to attempt to break down the walls between mobile and PCs, Microsoft needed the ability to do a few important things. First, it had to exert tight control over the third-party apps that run on its devices. With the inception of Windows 8 in October 2012, Microsoft successfully checked that item off the list.

Second, Microsoft had to establish specific hardware guidelines for partners looking to build Windows and Windows Phone products. In 2011, Nokia (NOK) and Microsoft announced plans to form a broad strategic partnership that would use their complementary strengths and expertise to create a new global mobile ecosystem. The intention was to ultimately create a market-leading mobile product designed to offer consumers, operators and developers unrivaled choice and opportunity. The result in subsequent years has been more than a reciprocal advantage for both companies, as Nokia’s Lumia 920 was recently named the best-selling Windows phone to date. The company also announced in its Q4 2012 financial results that 4.4 million Lumia devices were sold in its recent quarter- up from the 2.9 million Lumia devices shipped in the 3rd quarter of 2012. Not only that, but Nokia revealed that its North American devices and services volumes were up 40% from the same quarter a year ago to 700,000 in total.

The Windows phone and the development of a partnership with Nokia has been an interesting venture to watch over the last couple of years. The Windows phone continues to exponentially gain international exposure and presence, and shows promising signs of further globalization in the future, but is that enough to eventually pass Apple?

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While Microsoft still has 90% of the PC market in its corner, and the ability to move towards mobile-PC convergence from its strong base of more than 1 billion loyal customers, it is still is going to need to think far outside the box to pass Apple anytime soon. It’s been no secret that Apple has taken one of the largest dives in market history – going from a high of $705/share in September of 2012, to a dismal current price of $435.69/share. The tech-giant has been the subject of much disparagement in recent months on worries that consumers aren’t taking to the last iPhone, and that the company needs the "next big thing" to show that it still has innovation left in the tank. While this stunning reversal has been spiteful for Apple investors, and has many worried that the company is just riding the aftershock of Steve Jobs’ successes, there are many things to look forward to.

Recently, rumors have spilled about the possibility of Apple partnering with Yahoo, in hope of developing a plan that would allow the two companies to collaborate on the iPhone and iPad devices. Yahoo chief executive Marissa Mayer recently met with Eddy Cue, Apple’s senior vice-president of internet services, to explore ways Yahoo can be more deeply integrated into the software that runs on the iPhone and iPad.

Yahoo already provides data for Apple’s weather and stocks applications, and the companies forged closer last year when Yahoo’s sports information was integrated with Apple’s Siri voice-recognition software. But clearly, the two believe there is still room to grow. Essentially, the new partnership would permit Yahoo to get its services and products onto mobile phones and tablets, while Apple gets a services provider that isn’t named Google (GOOG). Apple has been looking to partner with companies to help reduce its reliance on Google’s mobile services – a desire that is currently at the top of the priority list. In 2012, Apple ended partnerships with Google over maps and video, and has explored breaking up on search for many years. Its representatives recently met with companies that have search expertise, particularly Yahoo. No deal is imminent, said people with direct knowledge of the companies’ relationship, but the fact that negotiations are taking place should excite investors on both sides of the spectrum.

Conclusion

Ultimately, Microsoft will continue to develop its Windows phone presence both, internationally and domestically, and will eventually make a mobile phone and PC that are analogous in function , but the two aforementioned developments could not, and will not, allow Microsoft to pass Apple. Despite the precipitous decline over the last several months, Apple continues to lead the forefront of modernization and will continue to for many years to come. The tech-giant is merely too big for Microsoft to ever surpass them, and with strong growth initiatives in the making, I certainly wouldn’t count Apple out just yet.

Source: http://seekingalpha.com/article/1334081-microsoft-has-a-plan-to-beat-apple-but-will-it-happen?source=email_investing_ideas&ifp=0