Then it introduced Kinect.
Today, the tech giant is using Kinect to win big on a breakthrough that will literally touch millions of lives.
It is one of the reasons why Microsoft's stock has gained more than 20% this year.
What is Kinect?
You may recognize it as the best-selling add-on to the Xbox 360 video game. But it's much more than that.
It represents a revolution in how we will communicate with our computers, our TVs, and our smartphones.
For Microsoft, Kinect is literally a game changer. They lead the world in the technology behind it and it promises to be big.
But not just for Microsoft…not by a long shot.
The Promise Behind Microsoft Kinect
The magic behind Kinect is that it responds to body gestures.
And while Kinect did debut to rave reviews, Microsoft executives really didn't understand how Kinect could change the world — and rack up new sales.
But since its introduction in 2010, hackers have found dozens of very cool uses for Kinect– none of which did much for Microsoft's bottom line.
This got the software giant to thinking that maybe they were sitting on a potential gold mine.
That's why Microsoft is now tapping the genius of young entrepreneurs to better monetize the technology behind Kinect.
You know, the type of guys who live and breathe cutting-edge high tech.
In fact, Microsoft recently picked 11 startups to work at its Kinect development offices in suburban Seattle. It's a savvy move.
After all, these guys get out of bed every day looking to create the Next Big Thing.
Already, the program shows great promise. Here are some of the slick high-tech ideas these young turks are already tackling:
- Styku only hopes to reinvent how people shop online. The startup's idea is to provide you with a personal avatar that lets you "try on" clothes virtually before you buy them.
- Jintronix uses Kinect and 3D gaming to improve rehabilitative therapies for patients suffering from a motor disability. Virtual reality could be a godsend for stroke victims who want to rehabilitate from their homes.
- GestSure Technologies targets surgeons and hospitals. It wants to bring touchless interfaces into the operating room. Doctors could access computer data during surgery without compromising cleanliness.
- Ikkos uses algorithms to teach movements. Parents will love this one. It's designed to help people develop the body mechanics of an Olympian.
It's too soon to tell if any of these startups will ever go public and give savvy investors the kind of big gains that have been pushing the Nasdaq to new heights lately.
But don't worry. Kinect is bound to provide its share of breakouts.
First of all, Microsoft recently released a version of Kinect for Windows and is now pushing a version with developer software.
In fact, I predict we will see hundreds of applications using Kinect by the end of this decade. And many of them will be practical for every day use.
"Kinected" Carts Follow Shoppers
How cool is this? The Kinect cart can automatically follow a shopper through the store. Not only that, it can import a shopping list.
But it gets better — the system can direct a customer to items on store shelves. It can even scan goods as they are placed in the cart.
My gut tells me they will come up with an app that accepts wireless payments as you roll past a digital register.
And that's just the start. Turns out Microsoft is working with roughly 300 companies to develop more Kinect uses with Windows.
The list includes big-cap leaders like American Express (NYSE: AXP), Boeing (NYSE: BA) , Mattel (Nasdaq: MAT) , Toyota (Nasdaq: TM) and UnitedHealth Group (NYSE:UNH), to develop Kinect for Windows applications.
In the near term, Kinect likely will have its biggest impact on businesses that can make good use of large screens.
But it won't be long before Kinect becomes a mainstay of PCs, smartphones and tablet computers.
Let me close by saying it's impossible to predict just how much Microsoft can earn from stand-alone sales of Kinect.
That's going to depend on how many applications emerge and how popular they become with the public.
But this much is clear.
Less than a decade ago, operating a computer with the wave of your hand was the stuff of science fiction – remember the movie Minority Report? Now it's becoming reality.
That's what makes Kinect part of the Era of Radical Change, and it won't be long before we find a way for investors to profit from it.
That's exactly why I've created the Era of Radical Change.
It is a unique advisory service that will show you how to profit from the most important trends reshaping the world around us.
I'm referring to trends like:
- The sheet of flexible plastic that allows you to fold your e-reader screen like a newspaper.
- The small robot that can jump over walls to conduct surveillance for U.S. troops.
- The nanosatellite that can fly to the moon on a single drop of fuel.
- And much, much more…
So, if you want to find a way to profit from the next generation of tech breakthroughs, please join me at the Era of Radical Change by clicking here.
It's free and it debuts next Tuesday.
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About the Author
Michael A. Robinson is one of the top financial analysts working today. His book "Overdrawn: The Bailout of American Savings" was a prescient look at the anatomy of the nation's S&L crisis, long before the word "bailout" became part of our daily lexicon. He's a Pulitzer Prize-nominated writer and reporter, lauded by the Columbia Journalism Review for his aggressive style. His 30-year track record as a leading tech analyst has garnered him rave reviews, too. Today he is the editor of the monthly tech investing newsletter Nova-X Report as well as Radical Technology Profits, where he covers truly radical technologies – ones that have the power to sweep across the globe and change the very fabric of our lives – and profit opportunities they give rise to. He also explores "what's next" in the tech investing world at Strategic Tech Investor.