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Microsoft Corp. (Nasdaq: MSFT) CEO Satya Nadella has already made his company a force to be reckoned with, setting the once-stagnant tech giant back on a course toward innovation and big returns.
His efforts have helped push MSFT stock up 27% in just 20 months.
But when he took the stage at a New York City press event on Oct. 6, Nadella started to sound a bit like another, more famous tech executive.
That was the instant Nadella unveiled a series of new hardware products coming from a company that is renowned as one of the biggest software firms on the planet.
Of course, Nadella was taking a page out of Steve Jobs' winning playbook. Apple Inc. (Nasdaq: AAPL) has in fact become more than just a computing company – it's a true tech "ecosystem."
That's basically the vision Jobs laid out for Apple, one heartily endorsed by his successor, Tim Cook.
The ecosystem approach means you'll be able to rely on Microsoft for all your computing hardware needs – a fitness band/watch, a smartphone, a tablet, a laptop, even a virtual reality (VR) headset.
This is some of the most exciting and potentially profitable news we've ever had from Microsoft. Let me show you what's just around the corner – and how it will pack on billions in value for investors…
Ecosystem Essential No. 1: The New Must-Have Laptop
The new Surface Book laptop is getting rave reviews, even from hardcore Apple users.
Think of it as a MacBook Air but with a tablet included. The screen folds over to turn the device into a tablet. It also comes with a stylus that magnetically attaches to the left side of the screen.
The Surface Book enters the only PC category still growing – laptops. Tech research firm International Data Corporation (IDC) says laptop sales should come in around 164 million units in 2015. IDC projects average annual growth of about 1.2% for the next five years.
Priced at $1,500, Microsoft's laptop is clearly aimed at the top end of the market. But initial reviews are enthusiastic regarding quality, build, design, and style.
With the addition of the Surface Book, Microsoft now has a range of quality machines running the best version of Windows the company has made in several years.
Ecosystem Essential No. 2: The Truly Competitive Tablet
Microsoft also unveiled its newest Surface Pro 4 tablet, hardware that Microsoft has struggled with in the past.
You see, while Apple pioneered the tablet in 2010, Microsoft wasn't far behind, launching in 2012. The problem was, Microsoft tablets weren't very well thought out and were running Windows 8 – universally derided as a lousy operating system.
The blunder allowed Alphabet Inc.'s (Nasdaq: GOOG, GOOGL) (then known as Google) Android to capitalize on the non-Apple tablet market.
Now IDC says tablets running Android account for 67% of sales, with Apple in second place at 25%. But, critically, the research forecasts Microsoft will double its market share from the current 7% by 2019.
Because this time around, Microsoft has made a tablet that can compete with the iPad Pro in all areas, including price and performance.
For the fiscal 2015 fourth quarter ended June 30, tablet revenue came in at $888 million. That's an increase of a stunning 117%.
Ecosystem Essential No. 3: Microsoft's Own Smartphone
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.
Not a fan of the surface but I've heard good things about it.
Good article. Just want to clarify that the Surface 3 was/is a very popular device, generating nearly a billion dollars in revenue last quarter- and that was also released with Windows 8. The original Surface tablets on the other hand had very few sales due to its A.R.M. processor running Windows RT (not Windows 8), which had severe limitations with regards to its features and benefits. The Reason for the turnaround? All Surface devices now use the latest Intel processors that are able to run any application that we throw at it. It doesn't hurt that MSFT now has a highly capable CEO behind the scenes :)