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Microsoft Corporation and Uber: A Sign of Things to Come

This past summer, Microsoft (NASDAQ: MSFT) bears had their day: CEO Satya Nadella made the decision to write-off a whopping $8.4 billion related to its monster deal for Nokia 's hardware business. Naturally, many industry pundits and investors alike came to the same, "undeniable" conclusion: The "mobile-first" piece of Microsoft's two-pronged "mobile-first, cloud-first" strategic initiatives was a disaster.

Thing is, Nadella's mobile plans were never just about manufacturing a better smartphone: That's an uphill climb of the tallest order. The goal was more along the lines of Alphabet's goal for Chrome: Get Windows 10 into as many devices as possible -- mobile and desktop alike, and regardless of manufacturer.

Though not strictly for mobile users, Microsoft's recent deal to bring a Windows 10-friendly app to the fast-growing market for Uber riders is yet another step toward reaching Nadella's OS and mobile-first goals.

Simplicity at its finest

The iOS and Android-friendly release of Office 365 and a cross-platform Cortana digital assistant are good examples of what Nadella's mobile objectives are all about; now, it can add Uber to the growing list of reasons for consumers to give Windows 10 devices a shot.

After downloading the free Uber app from Microsoft's Windows Store to any device-desktop, smartphone, or tablet, users are able to set their pick-up location by simply inputting their address. The Uber app also tracks the expected arrival time of the driver, notifying users when they can expect their ride to show.

For the growing number of device users who prefer voice commands over "old-school" methods, Microsoft's Cortana comes to the rescue. Simply telling Cortana "I need an Uber ride" to the address of choice initiates the process, and the app takes care of the rest. The deal also includes the first-ever desktop version of the Uber app, though given the proliferation of mobile devices, that's more of a nicety than a necessity.

Need some incentive to utilize Microsoft's new Uber app? First-time users of Uber who reserve a ride via Microsoft's new Windows 10 app will get a "sweet deal on a free ride up to $20." Users can also track their Uber driver by simply pinning the app to the Windows 10 start menu, foregoing the need to open the app.

What's the big deal?

In and of itself, inking an arrangement with Uber isn't likely to boost sales of Microsoft devices such as its Lumia smartphones or Surface Pro pseudo-tablets, but that's not the point. Moving the needles on Bing's search market share and ad revenue, along with software apps like Microsoft's flagship Office 365, is what getting Windows 10 into the hands of users is all about, and expanding its capabilities will help make that happen.

Last quarter's annual run-rate of more than $8.2 billion in cloud sales got much of the headline attention, but Microsoft's efforts to get Windows 10 devices into the hands of the masses also impressed. As it relates to digital ad sales , Alphabet's $16.78 billion in revenue last quarter puts it in a ballpark all its own, thanks in large part to Android's dominant mobile market share. Despite it being free, all those smartphones and tablets around the world running Android are driving Alphabet's ad sales, and the same concept is working at Microsoft, albeit on a smaller scale.

Nadella didn't share specifics, but Microsoft's Bing search revenue climbed 29% last quarter after accounting for currency translation, and Windows 10 adoption was cited as a primary reason the long-suffering unit finally turned a profit.

Also, Bing now commands 20.8% share of the U.S. search market, putting it in a comfortable second place behind Alphabet's 63.9% piece of the search pie. Office 365 commercial sales also skyrocketed last quarter, climbing "nearly 70%, and the number of consumer subscribers jumped about 20%.

Does a deal with Uber suddenly make Microsoft a must-have stock? No, but what it does is demonstrate Nadella's strategic objective of making Windows 10 -- and by extension Microsoft's mobile ambitions -- legitimate alternatives. And with each OS download, whether it includes the new Uber app or not, Microsoft moves one step closer to once again ruling the tech industry roost.

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The article Microsoft Corporation and Uber: A Sign of Things to Come originally appeared on Fool.com.

Tim Brugger has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Alphabet (A shares) and Alphabet (C shares). Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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