This week was quite eventful for the tech sector, with a lot of significant developments related to major companies like Microsoft (NASDAQ:MSFT) and Amazon (NASDAQ:AMZN). We analyze a few such developments which could impact their value in the coming years.
Microsoft was in the news this week, primarily because it was prominently featured in the list of those who struck a gold mine by investing in Facebook. Microsoft had picked up a 1.6% stake in Facebook at a $15 billion valuation back in 2007, and is reaping an excellent on that now.
- Microsoft Earnings: Revenue And EPS Miss Expectation
- Microsoft Earnings Preview: Cloud Adoption To Spur Revenues In Q3.
- What’s Microsoft’s Fundamental Value Based On 2015 Results?
- By What Percentage Can Microsoft’s Revenues And EBITDA Grow In The Next 3 Years?
- How Has Microsoft’s Revenue Composition Changed Over The Last 5 Years?
- By What Percentage Did Microsoft’s Revenue And EBITDA Increase In The Last Five Years?
On the other hand, Windows Phone continues to disappoint. Microsoft’s market share in the worldwide smartphone market tumbled from 2.6% a year ago to around 1.9% in the first quarter of 2012. At this rate, Microsoft may never be able to gain enough traction to become a major player and may simply be relegated to the sidelines while Google and Apple share the spoils in the very lucrative smartphone space.
It also revealed its upgrade pricing for customers who purchased Windows 7 recently, and it’s just $15, much lower than what it has traditionally been. The lower pricing is a great way to incentivize users to continue to buy Windows 7 licenses, without stalling their purchases until the Windows 8 launch, knowing that they will be able to upgrade for a nominal cost.
Amazon seems to be focused on its Kindle line of hardware. It is not only working on upgrades to the Kindle and the Kindle Fire, but is also planning to launch a new Kindle with front lighting, which will enable users to read books even in the dark. This move will enable Amazon to boost its Kindle sales by targeting yet another segment of the market.
It may also be looking to generate additional revenue off the Kindle Fire by ways other than just selling digital content. In the past, it experimented with screensaver ads for the Kindle. Apparently, it is planning to sell ads on the Kindle Fire’s welcome screen now, in a package which starts at $600,000. The ad campaign would run for two months and would include ad inventory from Amazon’s “Special Offers” product. For $1 million, advertisers can get even more inventory.
In other news, Google and Microsoft are apparently planning to go up against Amazon directly, by launching cloud infrastructure platforms which will compete more directly with Amazon’s Elastic Computing Cloud. Though Amazon currently dominates the market, its market share may decrease going forward if Microsoft and Google continue to gun for it and release competing services which are just as good and are priced the same as Amazon’s.