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Microsoft: I'm Goin' Back In


With Microsoft sitting as low as it is, I'm going to test the waters again and see how it does.


I've never been a huge fan of Microsoft (MSFT), but I've admired its ability to build a moat around its business and sustain leadership for so long. All the while, MSFT tried to transform itself from a technology giant to a media company. I would add with limited success.

About a month ago, I wrote about Sun Microsystems (SUNW) and why I like the stock. I also wrote how I sold Microsoft and why I didn't want to hold onto it. Since then it dropped about 15%. SUNW was at about $4.30 at the time and it's now hovering at around $5.15. I still expect it to break through with the shift of Jonathan Schwartz to the CEO role. I'm still waiting to see if the Star Office Google (GOOG) relationship really materializes.

Here's the battle field: Google owns search, Microsoft owns application and the OS. Both are aiming to challenge the other's business. As with any business, once you get so focused on one competitor over the other, a third can come in and blindside both – Sun? It's an exciting time in technology and media innovation, but for now, I'm focused on these behemoths.

I spent this past weekend playing around with Explorer 7.0 and MSN Messenger. Here are my thoughts:

1) When I downloaded the Explorer 7 beta it did a check of my system to see if I had a licensed version of Windows XP. I assume if I did not, I'd have to buy one. I view this as an extreme negative. It's a barrier to MSFTs browser dominance, especially when I can get Firefox without feeling like I'm being watched.

2) Once I downloaded and installed the application, the first thing I noticed was the easy tabbing feature and the search box built into the browser. BTW: if you go to Google as one of your first searches, it has built a nifty little piece of code to make the embedded search default to Google. Good strategy. But if Microsoft has its way, I think it could make up significant ground in the search field. The tabbed function works better than Firefox and is extremely easy to populate. In addition, it has a great view that allows you to tile the tabs so you can see smaller images of all the browser windows you have open at the same time. This is a very cool piece of code.

3) Coupled with MSN messenger, Microsoft has a suite of delivery mechanisms that can give some of the freeware a real run for the money. The MSN messenger worked easily. The video function is stronger than AOL's IM and the VoIP works smoothly.

These are products that are lurking in the background. If you follow Microsoft, you'll know it is about to hit the market in a much more substantial way. Currently Microsoft is taking a page from Google with their "Beta" launches. But shortly, the machinery will start cranking on the marketing front. Over the past few years Explorer's dominance has eroded. It is still the dominant player, but Mozilla Firefox took significant market share - until Explorer 7.

I believe if Microsoft can get the penetration of IE7 browser rolling and the marketing machine touting the virtues of the software, it has the potential to reinsert itself as an "innovative imitator." Microsoft has rarely invented anything, but it has done a great job of copying and improving and this is the foundation of its business. With Microsoft sitting as low as it is, I'm going to test the waters again and see how it does.

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Positions in MSFT, SUNW
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