Why Microsoft Will Rise Again
Vista, Bing will put Redmond's behemoth back on top.
If Susan Boyle were a stock, I'd call her a deep-value one with very low expectations (and thus a great margin of safety), selling at a discount to its fair value.
Then she opened her mouth. To everyone's shock, she had a beautiful voice. She became an overnight sensation, and the video of her performance was YouTubed more than President Obama's inauguration.
Then there's Microsoft. The company's name doesn't have the luster it once had. It's seen as middle-aged, overweight, and slow, and many believe that all its creativity retired with Bill Gates.
The sentiment is so horrible that there's almost universal expectation that it won't come up with another good product - ever. Kodak (EK) and Polaroid are now regarded as models for Microsoft's "bright" future; Apple (AAPL) and Google (GOOG) are ostensibly the ones who will send it there.
But the ugly duckling is about to sing, and it will be a Susan Boyle-like performance.
Vista's flop will lead to Windows' success
Microsoft is releasing Windows 7 sometime in late 2009 or early 2010. Vista -- its last operating system -- was a flop. Consumers didn't care for the product, and corporations didn't upgrade.
Of course, failure is a relative term when it comes to Microsoft. At the time of its release, Vista sales were double that of XP, the previous version. Vista still commands almost 24% of market share, second only to XP's 60% plus.
Windows 7 isn't just another new release. It's really Windows Vista 2.0 - or Vista-fixed, if you like. Microsoft took Vista's kernel -- the core of the operating system -- fixed it, made it faster, improved the interface, and added new features. Voila: a new multi-billion-dollar product.
As mentioned, many corporations stayed with XP. But the operating system is now 8 years old - a dinosaur in software years. Microsoft will eventually discontinue support and updates for XP. Unless all hackers pinky-swear that they won't try to figure out a way to hack into the 400 million computers that run XP worldwide, a running computer could be left exposed to new security attacks.
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