“The thing about Microsoft is: You can be a short-term bull and remain a long-term bear,” Gary Dvorchak writes for RealMoney. “The bear case for Microsoft is longer term, and it can be summed up in one word: Apple.”
“This isn’t to say competition from Apple is stunting Microsoft’s growth. That isn’t the case. Rather, the things Apple is doing right are the things Microsoft is not,” Dvorchak writes. “In other words: Apple’s successes have diminished Microsoft’s growth prospects.”
“The technology industry thrives on innovation. Microsoft is, and always has been, more of a ‘fast follower,’ than a product innovator,” Dvorchak writes. “In its cash-cow, historical product segments, notably the operating-system and Office software, there are few valuable new features that the company can offer to drive upgrades.”
Dvorchak writes, “In more recent growth categories, such as mobile, Microsoft generally isn’t a relevant player… Apple’s key competitive advantage — the reason it can create such great products — is the integration of hardware and software. Microsoft is somewhat stymied by the multitude of hardware platforms it must support, which inevitably creates a poor customer experience. I see a high probability of Microsoft buying a PC company — perhaps Dell — and a mobile-handheld company — maybe RIMM? — so that it can begin to offer a fully-integrated, more robust product to match Apple’s offerings.”
Dvorchak writes, “Absent such a strategic move, I believe Microsoft will continue to struggle to offer relevant products.”
Full article here.