- Microsoft sells out launch stock for Surface book thereby inspiring investor confidence.
- A stock comparison of Microsoft vs Apple shows that Apple is in a much healthier position.
- Apple is likely to come out with astounding devices for their next keynote.
- Microsoft needs to be consistent from this point on in order to increase market share.
News of Microsoft (NASDAQ:MSFT) selling out the launch stock for Surface book was followed by a 0.71% increase in Microsoft's stock. That isn't to say that investors think the Surface Book could go toe-to-toe with Apple's Macbook range. However, it is a good indication of a consumer interest in convertible laptops running Windows 10.
After some uncertainty regarding the future of Microsoft, their stock started the year trading at $40.40. Due to Microsoft showing that they are willing to take the game to Apple, and produce premium devices, their stock currently stands at $47.01. Moreover, it has every chance of increasing. The Surface Pro 4 is going head on with Apple's iPad Air Pro. It runs a full Windows 10 operating system, and works with some fairly innovative accessories. On the other hand, the iPad Air Pro runs a mobile OS. If Microsoft is able to market the Surface Pro 4 as a computer built for productivity, it could outsell the iPad Air Pro.
Microsoft vs Apple
In order to fully understand the impact Microsoft's actions this year have made on closing the gap with Apple it is worth comparing the two tech giants.
Firstly, Microsoft beat its current last scale (CLS) by 147%, while Apple beat theirs by 31%. The huge difference between the two companies in this area is due to:
1) Manufacturers have really gotten behind Windows 10. Giants such as HP and Toshiba have created innovative devices which complement the new OS. Moreover, in a quest ot revive declining PC sales, Dell, HP, Intel, Lenovo, and Microsoft are coming together for a tv campaign. This is incredibly symbolic as it conveys an understanding that when it comes to Windows 10, pushing the platform and eating up market share from Apple is a big priority.
2) Satya Nadella took over from Steve Ballmer as CEO in February 2014, and his impact has been reminiscent of Steve Jobs' return from Pixar after being ousted. He has worked with their top manufacturers to promote the need to increase the build quality of devices running Windows 10, and with 110 million installations in just three months it has clearly made a difference. Additionally, he has placed a greater impact on mobile. Windows mobile devices are among the most affordable smartphones on the market, and arguably offer the best value for money.
3) With the announcement of Holo Lens, Surface devices, and a serious interest in creating more of their own products, investors can see that Microsoft is keen to change the image of the company and beat Apple in all avenues.
Secondly, Microsoft's dividend yield is 2.66 as compared to Apple's 1.89. When coupled with the 'resurgence' that Microsoft is going through, and the predictable growth of the stock price (compared to Apple), it is a key indicator that Microsoft is a better buy option than Apple.
What could the future hold?
Although Microsoft pulled off one of the most impactful keynotes in recent memory, the true test lies in whether they can generate that same level of buzz over the next three major keynotes.
Apple knows that the pressure is now on them to deliver something astonishing for the next iPhone, Macbook, and iPad releases. If they can do that, they will blow Microsoft out the water. And all signs point to them being able to do just that. Traditionally, the iPhone, Apple's biggest cash cow, improves greatly every 2 years. The iPhone 6s was a marginal boost from the iPhone 6. And with better perforation in the Chinese market, the stage is set for record-breaking iPhone sales next year.
Moreover, Apple's release of the iPad Air Pro should be viewed as them testing the waters to see how their consumers react and use a convertible tablet. I wouldn't be surprised for Apple to release a convertible Macbook in 2016 which runs like an iPad when in tablet mode.
In conclusion, Microsoft has made a great start to taking over more market share from Apple. They have their Surface line for the premium market, with HP, Lenovo, and Dell producing affordable devices for the everyday consumer. However, consistency is key from this point forward. Apple is likely to produce something astounding for their next keynote, and when that happens, Microsoft needs an equally great response, services and product wise.
2016 is going to be a very exciting year for tech investors.