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Microsoft Is Doing Well

December 10, 2013 | About:
Muhammad Bazil

Muhammad Bazil

3 followers
Microsoft (MSFT)’s latest collaboration with Nokia (NOK) has been taken into consideration by the leading Microsoft investors who are looking for similarities between this move and Google’s 2011 partnership with Motorola Company (GOOG). With the failure of the Motorola deal not meeting the expected profits, investors believe the same might be the case with Nokia. The software giant went an extra mile by taking over Nokia’s handset division with a handsome amount of $7.2 billion.

This division was causing serious setbacks to the company’s overall productivity. There are a number of similarities between the Microsoft-Nokia and Google-Motorola associations. The most worthy of note is the point that both Google and Microsoft are software firms who have issued the license to their very own competitors in the hardware industry. However, Microsoft has played smart and the deal will most likely add value to the Microsoft corp.

PC Sales Continue to Decline

On the other hand, Microsoft may have to worry a little as the PC sales show a declining trend every passing year. According to the IDC reports, PC sales will see the worst decline this year. Even though PCs are still the most used in households, and every house in America tends to have a desktop computer. The chief cause for the decline in PC sales is that the desktop computer has a longer lifetime which makes their purchase a once or twice affair, while other devices like notebooks, smartphones and pads have a very diminutive lifespan. With the increase in usage of smartphones and androids, every consumer prefers to keep a pocket computer with them rather than sticking to the massive traditional computer. Even though the latest PCs are highly efficient and have improved productivity but they are no comparison to the portable devices being adopted by everyone now a days.

The IDC reports do not include 2-in-1 devices which are pushed by Microsoft and its OEM partners progressively. Windows is the most used operating system for personal computers. Microsoft still doesn’t seem to be much bothered about the declining sales of personal computers. While most of the people hold the view that Microsoft may lead in to downfall due to the lack of mobile presence and constant decrease in PC sales.

What Makes Microsoft Worry Free?

Microsoft being a huge software giant does not seem to be really bothered about the decline as it holds the view that no matter what portable devices and tablets are introduced, none can completely replace desktop computers. The market for personal computers may not be growing well, but it is at least stable enough. According to the survey, 300 million PCs will continue to sell annually regardless of the other devices market. It is quite understandable as for instance people cannot write 1,000 word articles and long research papers on the smartphones. A personal computer cannot be replaced however because of its suitability to the human use. People who are writers by profession or university students who need to write on a regular basis cannot rely on smart and touch phones. Likewise there are many others who cannot break free from the accustomed routine of PCs.

What Is the Difference Between Microsoft and Google’s Deals?

Google bought the Motorola mobile’s fundamental property rights at an incredible price of $12.5 billion. This means that the software company can now own and operate its very own devices which will be completely incorporated with the Google’s OS and a personal in-house content.

However Google is at potential risk for loss here because the patents for Motorola did not turn out to be as worthy as they were thought to be previously. The partnership may not turn out to be as successful as the Microsoft and Nokia. Motorola has been lately involved in a serious battle with Microsoft even before their latest association with Google. The Motorola mobility had sued Microsoft for using its patents with a total of $4 billion per year. The case was followed by the district court in Seattle and the judge was James Rabart. The judge finally ruled that Microsoft ought to pay $1.8 billion every year to Motorola mobility. This charge is 2.25 percent less than what Motorola had claimed.

The trend in the technological industry usually is that if a company loses its value or is being swept away by the giant competitors they either leave the market or turn their investments into some other niche that is relevant. There are hardly any companies who would want to stay in the market after having a clear defeat which is seen as a major setback to the company’s image and reputation. However, the Microsoft and Nokia collaboration have taken this bold initiative, they have not gone back on their decision and are seen to be competing again in the same market where they previously had a clear wash.

Bottom Line

While the officials at Microsoft seem optimistic about the future even with the declining PC sales and the Nokia deal not turning out as profitable as estimated, many are of the view that the software giant has a serious potential for loss with its competitors gaining strength in the software market.

About the author:

Muhammad Bazil
Muhammad Bazil is a financial journalist and editor for a variety of websites, public policy organizations, and book publishers. He has written hundreds of published articles and blog posts on topics including budgeting, credit management, real estate and investing. His articles have been featured on the homepage of Yahoo!, MSN and numerous local news websites.

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