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Analyst: Microsoft "misjudged" iPhone, Google

updated 03:10 pm EDT, Thu July 16, 2009

Analyst Says Sell MS Stock

In a rare move, Argus Research analyst Jackson Turner today reversed his recommendations and urged investors to sell Microsoft stock. He cautions that the market has "shrugged off" real threats to its operating system business and that neither investors nor Microsoft have fully realized that the iPhone, as well as Google platforms like Android and Chrome OS, are shrinking Microsoft's influence. Some effects may not be felt until later in 2010, when Chrome OS is released, but Microsoft now faces a slow "ebbing tide" over the next few years as it loses share.

"We believe Microsoft has misjudged -- or more judiciously, has been unable to react swiftly to -- the shift towards simpler operating systems on cheaper, more portable devices, including cell phones, smart phones and netbooks," Turner said.

The analyst softens his estimates by reassuring investors that Microsoft will still be healthy for the foreseeable future, even if trends are likely to run against the company in the long term.

A call to sell Microsoft stock is extremely rare for the industry. Outside of the economic crash, the company's stock has been largely unchanged for the past decade as its monopoly of operating systems has gone without a major challenge. However, the company is now poised to have its yearly smartphone share eclipsed by Apple and faces stiff competition from Android, which follows Microsoft's strategy of embracing many manufacturers but is less expensive or even free to license and is much adept at touch. Chrome OS threatens to undermine Microsoft's dominance of netbooks, where again the Google software should be less expensive.

By comparison, Windows Mobile remains on the same basic foundations of Windows Mobile 5 in 2005 and also shares some roots with Windows CE in 2002; a fully modern, touch-native version isn't expected until the launch of Windows Mobile 7 early next year. Microsoft's existing control of netbooks has also been helped by underpricing Windows XP and keeping it on sale both to give netbooks a sufficiently fast version of Windows and to fend off Linux, which will return with the release of Chrome OS.



By Electronista Staff
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Comments

  1. climacs

    Dedicated MacNNer

    Joined: Sep 2001

    +8

    bwahahahaha

    MS misjudged iPhone and Google?

    It's hard to believe this is the same company which also misjudged the internet itself back in the 90s.

    Oh wait, that's very easy to believe.

  1. dagamer34

    Fresh-Faced Recruit

    Joined: Apr 2007

    -3

    Sell?

    Sell a stock when they are going to have arguably the best OS release since Windows 95? Are these people high? O_o

    Not to mention the fact that Microsoft seems to have finally found a marketing campaign that Apple's legal team on the line telling Microsoft to "play fair". Things look to be on the up and up!

  1. climacs

    Dedicated MacNNer

    Joined: Sep 2001

    +2

    death of 1000 cuts

    MS isn't going to disappear overnight; it will be a slow, steady decline as the two main sources of MS revenue - Windows and Office - become less and less relevant.

    The only new success MS has had that I can think of in the last 10 years is X-Box and it's not exactly a cash cow.

    MSFT has been essentially flat for the entire decade. Yes, the entire decade, the company's stock has pretty much floated around the same price even during the post-9/11 fake prosperity of the Bush years. The Wall Street equivalent of putting your money under a mattress, only with even less security since the money hidden in your mattress isn't in danger of declining in value (other than inflation).

    If I owned MSFT, I wouldn't exactly dump it right now... but I'd be looking for temporary upswings to sell it off. And frankly, if I had ever owned MSFT, I would have dumped it long ago because it wasn't increasing in value.

  1. Salty

    Professional Poster

    Joined: Jul 2005

    +6

    hard to kill

    Honestly Microsoft will always be a hard giant to kill, sadly so many people assume that Microsoft products are the only way to do anything, and sadly for the way a lot of companies have set themselves up, they are.

    I remember back in the day IBM was moving toward a very Linux friendly strategy I don't know what ever happened with that, guess it wasn't as easy of a sell as they'd hoped.

    But ultimately the entire industry wants to dethrone Microsoft, because quite frankly Microsoft has stifled competition in too many markets as it is. As a company they're always bad for whatever industry they're in.

  1. nowwhatareyoulookingat

    Fresh-Faced Recruit

    Joined: Jul 2009

    +3

    i guess this guy

    just covered his short position in Apple and Google...

  1. JulesLt

    Fresh-Faced Recruit

    Joined: Jul 2005

    +1

    MS

    There’s a difference between misjudging something, and being able to do something about it.

    Given that MS stock price is based on a near monopoly of the desktop OS market, it can only really be maintained by them maintaining a monopoly position, which means that they need to kill competition, rather than compete with it - as we can see with netbooks and Linux, or the OLPC, when they have to compete, that reduces their income.

    And economic history tells us that all monopolies eventually fall. It’s just that it took 10 years for genuinely effective competition to emerge.

    That doesn’t mean MS will collapse – even selling Windows for $8 to business customers only, they’d be a hugely successful firm – high sales, low margins. But their share-holders will not be happy by that transition – high sales, high margins are far more attractive!

  1. dynsight

    Fresh-Faced Recruit

    Joined: May 2005

    0

    Get Real

    I am a big Apple fan, and I don't like Microsoft, but still...

    1) Chrome OS is not a threat. Linux has been around for years, and it is too hard for the average user and network tech to use. Sorry. I use Suse, Ubuntu, 2000, Vista, XP and OSX (listed in ease of use).

    Companies are not going to adapt Google's OS for many years.

    as a side note, Google may wish to watch out. It is MUCH easier to switch your search engine than OS....and Bing is not bad!

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