Microsoft's New Strategy: 'Out Apple' Apple

By Anthony Shields  SEP 26, 2012 8:30 AM

In the wake of the iPhone 5's successful announcement and the Windows Phone failure, Microsoft is down, but not out.


MINYANVILLE ORIGINAL  The day after Apple’s (NASDAQ:AAPL) press conference, things don’t look much better for Microsoft (NASDAQ:MSFT). After Nokia’s (NYSE: NOK) disappointing showing for the new Windows Phone models, and the increased speculation amidst Apple’s announcement of the iPhone 5, Microsoft seems to be muting its activities in the mobile phone market, at least until the Apple hype is over. What may be worse for Microsoft is that analysts don’t believe that its new Windows 8 operating system will provide it with the critical boost it needs at the moment.

Still, Microsoft is not throwing in the towel yet. The software company is doubling its efforts in other markets, all with the hopes of undercutting its rivals.
For starters, to boost the usage of its sagging search engine Bing, Microsoft issued a challenge to rival Google to publicly test which search engine was better. The “Bing It On” challenge sends users to a webpage where they can blindly judge the results of the two search engines.

So far, Microsoft claims to be inching ahead in the competition, but critics believe even if it does beat Google (NASDAQ:GOOG), that wouldn’t solve all its problems. Some of the more common complaints about Bing have to do with its cluttered interface, rather than the efficiency of the results. Another cause for concern should be Mark Zuckerberg’s very recent announcement that Facebook (NASDAQ:FB) may be revealing its own search engine in the future. According to experts, the social media company is strategically poised for this due to the massive database of information it has access to thanks to its many users.    
However, in other markets, Microsoft has taken a page out of Apple’s playbook by encouraging innovation, harnessing the contributions of product users to develop popular apps. Right now, the tablet market is dominated by Amazon’s (NASDAQ:AMZN) Kindle Fire and Apple’s iPad, leaving Microsoft without a prayer of becoming a major player. In response, the software company is urging its hardware partners to fundamentally change the game.

Computer manufacturer Hewlett-Packard (NYSE:HPQ) recently announced the HP Envy x2, a laptop with a detachable screen resembling a tablet which, on the surface, appears to combine the functionality of both devices. This innovation could be a major development in the industry as it will make all other tablet devices harder to justify: The HP Envy x2 will make it possible to work more efficiently on the go while still having the entertainment capabilities that a tablet provides.    


Naturally, the new HP Envy x2 will include touch on its screen, but in a landmark move that is surprising the tech industry, Microsoft’s partner Intel (NASDAQ:INTC) has stated that all of its products will eventually include touch starting next year. In an article by CNET, Rob Deline, director of product marketing for the Ultrabook, is reported to have said, “Every Screen in the future is going to have some level of touch. We’re looking for a pretty aggressive ramp.” In contrast, despite being the major modernizer of touchscreen usage, Apple has already indicated that touch isn’t suitable to a MacBook-like device yet, giving Microsoft an edge against the MacBook’s rising market share, and a greater range of ability for its Windows 8 OS.
Of course, for Microsoft to truly ensure the success of Windows 8, it has to hit Apple where it hurts: the apps. To do just that, yesterday Microsoft opened its Windows 8 app store to all developers with the hopes that it will be able to greatly increase their quality and quantity of apps. Microsoft is also planning on rewarding developers for their efforts with a one-year free subscription to its Microsoft Developers Network, which includes a slew of free development programs. In addition to professional developers, Microsoft is also trying to appeal to students by offering its Dreamspark program, also without a subscription fee.
Although the immediate future may look bleak for Microsoft, these announcements prove that good times may come again for the company, even if it has to wait until next year. Microsoft might not have as strong a brand as any of its competitors, but it seems resolved to stay on the cutting edge of technology, and has apparently learned from Apple about predicting consumer demand. Hopefully, none of these investments fail as massively as Nokia’s Windows Phone did, or else the software developer might end up falling from grace for good.
No positions in stocks mentioned.