In quoting the famous artist, Pablo Picasso, Apple’s late founder, Steve Jobs said “Good artists copy, great artists steal.” By and large, this has been the theme which has propelled growth in the entire tech industry over the past three decades.
During that span, some of the most significant products to come to market were not original ideas. Instead items such as Apple’s iPod and iPad, Sony’s PlayStation and even Microsoft’s Windows were for the most part competitive responses to the successful products of a rival company - except, it was done better.
Software giant Microsoft is now hoping that it can duplicate its “artistic quality” with Windows 8, a product that is presumed to be the response to Apple’s mobile dominance. However, early indicators suggest that “Mr. Softy” may have a much tougher time than it anticipated.
Although there are many Microsoft bulls who wish to proclaim Windows 8 to be the company’s best product since Windows 95, Microsoft will be the first to admit that a lot has changed since then. This time, the company finds itself in unfamiliar territory with its back against the wall facing a bully in Apple who has a great memory.
Nonetheless, Windows 8 offers Microsoft a chance to reinvent itself - something that is extremely rare for a company of its size. Microsoft knows what’s at stake here. But what it wants and how consumers embrace the product don’t always align. This is the reason why this time the company has followed Apple’s model by also coming out with the Surface tablet.
By opting to build its own hardware Microsoft has essentially sent a message to its OEM partners such as Hewlett-Packard and Dell stating that they can no longer be trusted to put out designs that meet the company’s standards. In other words, Microsoft wants its fate back in its own hands - except, it’s not making much of a difference, at least not so far.
This has caused investors to start questioning whether or not Windows 8 will be able to put a meaningful dent in Apple’s control of the market while hoping that device manufacturers such as Samsung and even Amazon might consider using the operating system on their hardware.
The good news is that although sales of Surface and Windows 8 have underperformed so far, Microsoft has at least answered some critics who questioned the functionality of tablets in general. Aside from web surfing and email, that Surface supports the company’s flagship MS Office suite might be enough to persuade users to give it a chance.
Bottom Line
Microsoft is trying to respond to what the market clearly says it wants. But the company is entering what is already a highly saturated space since Google’s Nexus 7 as well as Amazon’s Kindle Fire already competes well with Samsung’s Galaxy Tab and of course, Apple’s iPad. Will Windows 8 be enough of a response?
So far, Wall Street is taking a “wait-and-see” attitude. Although I think is it justified, it’s hard to not give the company the benefit of the doubt here. Likewise, I like the stock at current levels and think that there is at least 20% upside left in the shares over the next 6 months – this is even on the most conservative assumptions.
