Microsoft (NASDAQ:MSFT) is on track for one of its biggest product launches to date – Windows 8. It is expected to launch Windows 8 before the end of 2012, presumably in October. Windows 8 will compete with Apple‘s (NASDAQ:AAPL) and Linux based distros in the desktop OS space, and Apple’s iOS and Google‘s (NASDAQ:GOOG) Android in the tablet OS market. 
Windows 8: Make or Break for Microsoft?
- Microsoft Earnings: Cloud Growth Shines Through As PC sales Play Spoil Sports
- Microsoft Earnings Preview: Cloud Revenue To Increase, OS Revenue To Falter
- Will Microsoft’s Surface Phone Succeed Where Windows Phone Failed?
- Microsoft’s PowerApps Aim To Disrupt Enterprise Mobile App Development Market
- Microsoft Earnings: Cloud Fillips Revenue Even As OS Sales Decline
- Microsoft Earnings Preview: Cloud First Strategy To Boost Revenues, Mobile First To Erode Profitability
Windows 8 is going to be a crucial release for Microsoft (NASDAQ:MSFT) as it tries to maintain its dominant position in the shrinking PC market and enter the rapidly expanding tablet market currently dominated by Apple and Google. Microsoft will work with partners to release both Intel and ARM powered Windows 8 devices before October, making an entry into the tablet market before the holiday season. We expect Windows 8 to be a bigger hit than Windows 7, which has sold around 600 million licenses to date, as it will target a much larger market. We expect Microsoft’s market share in the OS market to jump to 77% in 2012, following the Windows 8 launch.
However, there is a chance that Microsoft may have been a bit too late to the tablet market, as Apple continues to rule the space and Android prepares to target the budget segment to gain market share. In comparison, Windows 8 tablets are expected to be priced at a premium compared to the iPad, which could make it hard for it to quickly gain market share.
Another risk is that with the new touch oriented Metro UI, Microsoft could alienate long-time PC users and could risk losing market share in the desktop market too.
Since Windows accounts for a significant portion of Microsoft’s revenue and around 26% of its total value, there could be a significant impact to Microsoft’s stock price estimate. 2012 is going to be a decisive year for Microsoft, and will indicate whether or not Microsoft can compete in a post-PC world. Windows 8 could turn out to be Microsoft’s greatest victory or its greatest mistake ever.
We currently have a $38 Trefis price estimate for Microsoft, which stands nearly 30% above its market price. Windows accounts for nearly 25% of its market price.Notes: