Microsoft Rides Windows 8 Launch to $32 Fair Value

December 12th, 2011 by Trefis Team
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Microsoft (NASDAQ:MSFT) Windows currently dominates the operating system (OS) market and competes with Apple‘s (NASDAQ:AAPL) Mac OS X, Linux based distributions like Ubuntu and Linux Mint, and to some extent, Google‘s (NASDAQ:GOOG) Chrome OS. Windows 7 had a successful launch two years ago, having sold more than 500 million licenses worldwide to date. Windows 8 is expected to be launched in 2012, but may be delayed to early 2013, according to some reports.

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Windows is one of Microsoft’s most valuable businesses and accounts for nearly 25% of Microsoft’s $32 Trefis price estimate, which stands nearly 25% above the current market price.

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Windows 8 Beta launch in February 2012

Reports are suggesting that Microsoft will unveil the Windows 8 public beta in February 2012, following a demo at the Consumer Electronics Show 2012. [1] Backed in September, Microsoft had showcased the developer preview of Windows 8.

Windows 8 is expected to be Microsoft’s biggest launch ever. It will target not only desktops and notebooks, but also tablets, where it will compete against Apple’s iOS and Google’s Android OS. We expect Windows 8 to outsell Windows 7, as it targets a much larger market. Microsoft has already garnered support from major notebook manufacturers such as HP, Dell, and Samsung, as they prepare to deliver Windows 8 powered ultrabooks and tablets soon after the official launch. Nokia has announced plans to launch a Windows 8 tablet as well.

Microsoft currently has around a 77% share of the operating system market. We expect it to decline marginally to around 76% by the end of the forecast period as competition intensifies. By dragging the trend-line in the chart below, you will see how a change in Windows market share impacts Trefis price estimate for MSFT stock.

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Notes:
  1. The public Windows 8 beta will be released in late February, TheNextWeb [↩]