Is Microsoft Back?

For the last five to ten years Microsoft has come under a lot of criticism, and quite rightly so, for constantly lagging behind in the consumer technology arena. It seems that under Steve Ballmer anything that threatened Microsoft's cash cows such as it's desktop OS (XP, Vista, 7 etc.) and Office products were immediately thrown out. This caused a long period of stagnation, as you can see in the chart below, and it wasn't until mid-2013 when Ballmer announced his retirement that the stock price began to rise again. Microsoft has seen some awful products over this time period with the most memorable being Windows Vista, Windows 8, the first Surface, and of course it continued to pump out useless versions of Internet Explorer.

It does seem now though that Microsoft is making some what of  resurgence - it's stock price is up, it has a new boss - Satya Nadella, and it's released details of some exciting new products. All is explained below.

Financials

Since around 2002 Microsoft's share price has been pretty flat at between $25 - $30 but since mid-2013 it's started to rise and now sits at about $40 after a peak of $50 in late 2014. This says to me that there's some confidence out there about the future of Microsoft and it's P/E ratio of 16 backs that up too.

Microsoft Historic Share Price

The company's financials are also looking up. In 2014 revenue was almost $87 Billion which is $13 Billion more than 2012. R&D spending is up and so is profit which now sits at just over £22 Billion.

These increases are set to continue through 2015 with the introduction of Windows 10, probably a new Surface tablet and the expected upgrades when Server 2003 goes out of service.

Office on all devices

Something Microsoft has always done well with is it's Office products. Everyone learns them in school and everyone uses them in their day to day lives - they're pretty good products. However, under Ballmer Microsoft seemed very wary of messing with this cash cow. Office was never really available (and if it was it was unusable) on mobile devices and has always worked best on PCs. Now though they have developed versions for Android and iOS, and they're really quite good. They've also opened up to a new business model which is offering subscription rather than a one type payment which really works in their favour.

This is a great step in the right direction for Microsoft and one of their biggest products.

Windows 10

Everyone hated Windows 8 - it only worked properly on touch screens and some it did away with some basic features that users were used to on previous versions e.g. the 'Start' button.

Windows 10 is currently in Technical Preview (Beta) stage which is expected to end April this year and so far has received positive reviews. The interface looks clean, simple and brings back the start button. They're also bringing universal apps so developers can develop once for Microsoft and their app will then work across all Microsoft devices including mobile.

There'll also be a new browser, codenamed Spartan, which promises to be much better than Internet Explorer. Cortana, Microsoft's (better) version of Siri will also be available on Windows 10.

With an expected release date later in 2015 it should be a positive step for the company.

HoloLens

A really innovative future product for Microsoft, Hololens hopes to bring holograms to our everyday lives - and it looks pretty cool. This has to be the most innovative product we've seen from Microsoft and although it won't be a consumer product for a good few years yet it gives a great glimpse in to the way the company is thinking and it looks like they're thinking about the future rather than just iterating their current cash cows.

I'm not going to attempt to describe HoloLens - it won't do it justice. Have a look at this link.

Mobile

This is an area where Microsoft have really struggled in the past and I they're still not there yet. Even with the acquisition of Nokia mobile sales are no where even near those of iOS or Android and although the Surface 3 is a great tablet it's again not even coming close to the iPad in terms of sales. I'm sure Windows 10 will go some way to enhancing their mobile offering but I'm not convinced it'll make much of a dent. I think they should be going after the business customers that left Blackberry but I guess we'll have to wait and see.

 

On the whole then I'd say things are looking up for Microsoft. They've got some great products in the pipeline that look they can easily compete with the likes of Apple and Google as well as keep their loyal users happy. It'll be an interesting year for Microsoft that I look forward to following.

 

My Predictions for Tech in 2015

2014 was a great year for technology. There were brilliant IPOs such as GoPro and Zendesk, the shareconomy rocketed thanks to the likes of Airbnb and Lyft (among others), Apple released the brilliant iPhone 6 and 6 Plus, Android got a whole lot better with Android L(ollipop), and there were acquisitions left, right and centre. There were also some lows for tech in 2014. Blackberry almost completely disappeared, Uber received massive opposition from local government (and dug itself some pretty big holes), once great companies such as IBM continued in a slow decline, and hackers (for good and bad reasons) were out in full force with the biggest hacks coming late in the year to Sony along with Xbox Live and the Playstation Network (PSN) over Christmas.

I think many of these trends will continue into 2015 and the negatives will lead to some positives for many. Here's some of my full predictions:

1. Wearables will flop

There was huge hype around wearables in 2014 with Google Glass being a big player and almost every tech company at least announcing their intentions for wearables while many actually released consumer versions - mostly watches. Guess what? They all failed. And I think they'll continue to fail through 2015. I don't think the technology or the consumer want is there quite yet. The devices are still too bulky for most and so far have just emulated smartphones on a smaller screen. I think this will change slightly with Apple's iWatch as they always do UIs well but it's not going to be the big hit that the iPod, iPhone or iPad were.

2. Cybersecurity will rule

Following the high profile hack of, and release of information from Sony 2015 will be a brilliant year for the cybersecurity industry. Companies of all shapes and sizes are going to be on the hunt for protection in an attempt to avoid being 'Sonyed'. The solution too will come in many shapes and sizes but I think Software/Hardware as a Service (S/HaaS) will be the big business model. Of course, there will continue to be high profile hacks as anything connected to the open web can never be 100% secured.

3. IPOs galore

As already mentioned there were some great Initial Public Offerings (IPOs) in 2014 and this will only increase in 2015. Some of the IPOs to expect include, in my opinion, Spotify, Box and possibly Uber and Airbnb. I'm still not sure about Evernote but that would great if it happened. We could also see some small unexpected IPOs from the likes of Pinterest or Snapchat but I'm not convinced these would be particularly successful/necessary.

4. Unbundling

I think 2015 will see some pretty big corporations splitting up their operations to compete with the smaller, more agile start-ups that are so threatening to their businesses. This will be out of necessity rather than something they really want to do - it's much more efficient and cost effective to have everything in one place and share overheads but I don't they'll have a choice going forward. I'd be keeping my eye on the likes of Microsoft, Sky, Cisco etc.

5.Disruption will get more opposition

Highly disruptive companies will get more and more opposition in 2015 as they spread their wings and go international. The companies I'm talking about are those such as Uber, Lyft, Airbnb, 23andMe, and Tesla. Much of this opposition will come from local government who have failed to keep-up and therefore have no, or the wrong, legislation in place for these companies. Unions and those in the disrupted industries who fail to innovate will have an ever stronger but short lived voice. Eventually the disruptor's will be successful.

6. Retail will suffer at the hands of mobile

Bricks and mortar businesses will continue their general decline as online and particularly mobile gains more and more traction. At points in 2014 Amazon saw 60% of it's sales coming from mobile. Only a couple of years ago it was still more convenient to go to a store to buy something but now with one-click purchasing on the go (on mobile), one day delivery and click and collect it's almost more convenient to buy online and with the upcoming launch of Apple Pay and increasing use of and innovation by PayPal this will only become more convenient. Any company that isn't mobile first in 2015 should be preparing for failure.

9. Healthcare will become personal

As more and more of our devices monitor our every move and heartbeat I think 2015 will just start to see a revolution in healthcare. I think individuals will become even more aware of their own health and tailored healthcare and fitness will become a big trend starting in 2015 and continuing for years after.

10. OS wars will end

Finally, I'm pretty confident that the Apple vs Android vs Microsoft wars will come to an end. As Benedict Evans has very well noted towards the end of 2014 Apple and Android have both won in their war. Android have won the mass, low price point consumer, which is what they wanted and Apple have won less market share but it's at the high end (price point) of the entire mobile market, which again is what they wanted. Meanwhile, Microsoft have retained the vast majority of their business customers and even gained some consumers with their Surface tablets. So 2015 will hopefully see an end to the OS wars we've seen over the last few years. Oh, and as for Blackberry, say Goodbye!!