Why Windows 8 Made Me Sell Microsoft (MSFT)

[zridling]

[Vitaly Katsenelson]:
...a few weeks ago we sold our shares of Microsoft. Because we believe the stock is undervalued, that decision was not easy. What changed? When I saw Windows 8 demonstrated in early 2011, it looked like a very innovative, un-Microsoft-like product. Windows 8 was very important for Microsoft’s response to Apple’s iPad — a tablet that was deservingly stealing market share from low-end laptops. Windows 8 was supposed to take Microsoft to the next level, leapfrogging Apple and Google.... A few months ago Microsoft released the public Windows 8 beta, and I tested it out. To my shock, I found it to be a very confusing product. The interface was slick and visually very appealing, but I simply could not figure out how to use it. All the experience I had accumulated using Windows over the past two decades was useless with Windows 8, and the fact that Microsoft took out the Start button did not help, either. I found myself staring at the screen helplessly, clicking the mouse on different corners, trying to discover how to do basic tasks that we normally take for granted, like starting a program or running two programs side by side. Even figuring out how to shut down the computer was an ordeal.... The touch gestures that work well and are intuitive on tablets and mobile phones fall flat when you try them on a PC with a mouse — swiping, a very natural touch gesture, is simply cumbersome with a mouse.

http://www.institutionalinvestor.com/Article/3061233/Why-Windows-8-Made-Me-Sell-MSFT.html
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I keep blaming it on this guy:
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[wraith808]

Either he's just writing to get views- or is quite stupid.  If you already believe it's undervalued, then something like this wouldn't make you sell.  Not that I disagree about Windows 8- I believe that Metro should be the default shell on touch devices and leave the desktop shell at its normal default.  But to sell based on this when it's not likely that MSFT is going to tank that badly, and very likely that they will recover.

[Carol Haynes]

Given your usual approach to all things Windows I am somewhat surprised that you even had stock in Microsoft.

Having said that I would guess you are right to dump stock - I am sure MS will spin Windows 8 as the most successful OS in the history of computing (usually before it is released) but I fear this might be the nail in the coffin.

Too many people still regard Vista as a total nightmare and are still using XP because they didn't want to move to 7 - I can't see many of them being convinced by Windows 8. With customers I have noticed a definite trend to at least ask 'is it worth moving to Apple?' just to get away from Windows. I think Metro on desktops and laptops will akin to a Leslie Nielsen movie "Microsoft - the final insult' from the response of people who actually use computers. Metro on tablets is likely to be too little, too late.

[wraith808]

Given your usual approach to all things Windows I am somewhat surprised that you even had stock in Microsoft.

I think the title was quoting the article... I don't think Zaine actually had stock in MSFT...

[40hz]

I predict it's going to have a brief splurge of popularity, followed by its tanking severely, only to be rescued once Microsoft relents on Metro and allows non-touch devices to default to a more familiar desktop again.

All this nonsense is being driven by Microsoft's desire to establish its own closed ecosystem and run a company store just like Apple does.

The reason why this isn't going to fly is because Microsoft is not Apple. PC users tend to be a more cynical and less starry-eyed crowd than Apple users.

And virtually all of the business/corporate IT crowd doesn't need, like, or want Metro on their desktops. Same goes for the people they have to report to.

And...IT managers still remember how Microsoft just about threatened them at CeBIT to get onboard with Microsoft's new "experience" - or get dragged along by their end-users if they didn't. (That did not sit too well with either them - or their bosses.)

Besides, both IT and PC users have far more thrifty spending habits when it comes to tech - as the increasingly difficult task of justifying MS Office upgrades has shown.

Now maybe this is all just a trial balloon to see how much Microsoft can get away with. It may also be a smokescreen to shift attention away from how Microsoft wants Secure Boot to work - to say nothing of the threat that represents to competing products down the road.

So yeah...Ballmer & Co. are going to play this new puppy up for all it's worth. Initial sales will probably be ok if they can keep the price of Surface just north of the iPad. Figure around $700-$800.

Then, about three or four months down the road, sales will drop off and some heavy spin-doctoring will go on for about another two or three months with Win8 sales figures being propped up by heavily discounted corporate/government purchases of customized managerial "tote along" appliances for use in airports, warehouses and similar environments.

Finally, about six months out from product launch, a service pack will be released that allows Win8 to have a persistent boot into either the 'standard' desktop or Metro environment. Possibly, even some species of start button will reappear.

And then it will get very interesting indeed. Especially since some of the Linux majors have broken ranks with the larger community by moving away from totally open software; and have since attempted to come to some sort of accommodation with UEFI and Microsoft. With some quick dev work, they could possibly give Microsoft a run for it's money in business circles. Especially considering how Linux will soon be more "Windows like" than Windows 8 once Metro is formally out and being pushed as the new standard.

Reason enough to sell off all your Microsoft holdings? I'd wait until shortly before the launch (if the price holds steady), dump it and take some sort term profit; wait for Win8 to tank; and then buy back about 50% of my former stock shares and wait for the desktop to be brought back as an easy and persistent boot option. Then I'd have to decide if I wanted to continue holding.

If Gates comes out of retirement (and removes/replaces Ballmer) I'll hold. (Hey! It worked for Apple, right? )

If not, I'd just do some market timing and take whatever profits I could.



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"Legal" note: 40hz's comments above are purely for hypothetical discussion purposes and are not intended, nor should they be taken, as investment advice.  

[superboyac]

^^Good sh--, 40.

[Carol Haynes]

Don't forget that corporate clients have licenses that allow them to update tot he latest version of Windows. I presume that MS includes them in the business sales stats - even though they don't actually upgrade

[TaoPhoenix]

I guess I'm lost from the business perspective. My knowledge of this area is kinda fuzzy but here goes:

If you have a stock that is *under-valued* then you keep/buy more because in the "perfect info world" you'll make money when the price catches up to the value.

Selling a stock is what you do when you think it is *over-valued* before the rest of the stock world figures out whatever perspective you're looking at.

What's funny is this is like the opposite of insider trading. With a little exaggeration, Window 8 Metro vs the iPad is the Meta-Game. Everyone else is doing Not-Windows-Not-iPad things. I haven't seen this much hype since the old Longhorn days. So if the Anti-Metro crowd is busy sending warning signs, this is feeling like a card game with some BIG cards not yet played. It feels like MS is trying to draw the pieces into a poker Straight, which would either win the hand or be a giant pile of Nothing.

[40hz]

It feels like MS is trying to draw the pieces into a poker Straight,

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[zridling]

Based on Microsoft's history, you'd expect the scenario 40hz described to play itself out once again. But why try to force Metro's square pegs into the PC's round holes? Sure, you can switch to a more traditional desktop, but that's not the default, and we all know how defaults get treated (as the norm). Frankly, to mimic Apple, Microsoft doesn't have the hardware chops to do so. And when they do, they're always late to the game. They announced their Surface tablets to decent press, but revealed little other details, viz., pricing. And those Surface tablets won't hit the market for a while, no matter how fast they are.

Meanwhile, if you're like me and a million others, you checked out that nifty little Nexus 7 tablet and found it to be far better, smoother, and faster than I ever thought. I have a great 10-inch tablet, but I want a Nexus 7 because I truly could comfortably take it anywhere -- the car, the family trip, the waiting rooms, sitting next to the TV, etc. Thus once Microsoft's Surface tabs do arrive, the market will be saturated with yet another tablet that many will be happy with, leaving them begging for attention. And I know they're not going to sell them for under $500, given the Ivy Bridge hardware inside.

Point is, it's been a wasted decade for Microsoft, and if I did have stock, I'd be dumping it. I'd need no other reason than the common joke throughout the decade has been Steve Ballmer. The man has no vision, and he seems proud of that.