According to technology research and advisory firm Gartner,
) may be on the brink of obsolescence as demand is rapidly
shifting away from traditional desktops to laptops and further to
tablets and smartphones.
Microsoft was the undisputed leader in computing operating
systems (OS), controlling almost 90% market share. It's OS has,
however, been losing ground to
) for quite some time as these companies continue to rule the
roost in mobile.
According to Gartner, worldwide shipments of smartphones and
tablets may reach 1.9 billion units and 197 million units,
respectively in 2013. Further, by 2017 smartphone units may touch
2.12 billion, with tablet units going up to 467
Further, Gartner predicts that traditional PC shipments will
continue to decline. Shipments may fall 7.6% in 2013 to 315
million units, down from 341 million in 2012. By 2017, it may go
down further to 271 million. The rise in popularity of
Android-based smart devices is expected to further aggravate the
decline. By 2017, Gartner expects tablets and smartphones may
outperform traditional PCs.
Gartner also believes that Android emerged as the leading OS
with 22.5% market share on the basis of the 497.1 million units
it shipped in 2012. Windows, iOS,
Research In Motion's
) Blackberry OS and others trailed behind. Android will continue
its dominance and may reach 1.5 billion device shipments,
followed by Windows and iOS, which may ship 570.9 million and
504.1 million units, respectively by 2017.
Microsoft has fallen behind as its revamped mobile OS has
entered a very competitive market, dominated by Android and iOS.
It is also battling the slump in the PC market caused by the
Microsoft's Surface tablet is still lagging its competitors'.
Its partnership with Finnish handset major, Nokia is yet to reap
benefits as the latter's Lumia range of smartphones lack the
popularity enjoyed by Apple and Samsung devices. Microsoft needs
to strategize in order to regain its lost position in PCs and
grow in the smartphone segment.
We are positive on Microsoft as it is one of the best
positioned software vendors, given its wide range of products,
emerging markets strength, continued technology deployment at
data centers and growth in cloud computing. Also, we believe that
Microsoft's current investments are supported by its strong
balance sheet and expect these to drive the next growth phase,
improving prospects of market share gains.
We believe that there is no need to panic and it is a matter
of time before Microsoft bounces back on the strength of its new
products and technologies.
Microsoft reported revenues, excluding deferrals, of $21.46
billion in the second quarter of fiscal 2013, up 34.0%
sequentially and 2.7% from last year, in line with our estimates.
All except the Entertainment & Devices segment grew both
sequentially and from the year-ago quarter.
Microsoft has a Zacks Rank #3 (Hold).
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