On day one of its annual Build conference, Microsoft Corporation (NASDAQ:MSFT) unveiled its changes to Windows 8.1. Analysts at Bank of America Merrill Lynch and JPMorgan Chase & Co. (NYSE:JPM) issued notes to investors focusing on those changes and the impacts they are expecting.


Will Microsoft’s Tweaks Be Enough?

The biggest question BAML analysts Kash Rangan and Jaimin Soni have is whether the changes Microsoft made to Windows will be enough. They note that the majority of the changes are aimed at developers, although there are a few things that are geared toward Windows users.

Of course Microsoft Corporation (NASDAQ:MSFT) has been dealing with complaints from consumers since Windows 8 was released, and Windows 8.1 addresses the main two problems. It returns the start button to the screen and also provides easier access to desktop mode, which was one of the biggest problems on desktop PCs.

BAML analysts also said Microsoft did a better job of integrating Bing throughout the operating system and the browser, especially in terms of providing search results that are more appealing visually. However, they said it feels as if the changes were tweaks rather than major changes in Windows’ usability. Also they said that the developers they spoke with seemed to be less excited about the changes to the user interface.

Microsoft’s Under-The-Hood Updates

However, the same developers who weren’t excited about the user interface changes seemed more enthusiastic about the chances Microsoft Corporation (NASDAQ:MSFT) geared toward them. They said the updates the company made under the hood will make it possible for them to create richer apps.

Microsoft improved the application programming interface in Windows 8.1 and provided the next version of Visual Studio. Together, the updates make it easier for developers to create web apps which are rich with a variety of features like test to speech, payment processing and connectivity to the Xbox.

Microsoft’s Challenge

The analysts note that right now Microsoft Corporation (NASDAQ:MSFT) faces a challenge in attempting to gain consumer market share while also keeping its strong presence in the enterprise computing market. They said many of the features that the company showed off would appeal to younger consumers, although the majority of Build attendees are middle-aged developers who have probably spent time working with Microsoft on the enterprise side.

BAML analysts said there are signs of innovative features, but now there must be signs of adoption. One of the concerns analysts have focused on recently is the slow adoption rate of Windows 8 in the enterprise sector. They reiterated their neutral rating and $37 per share price objective because they said they don’t see enough evidence to feel better or worse about Microsoft’s direction.

Development Of The Windows Ecosystem

In their report, JPMorgan analysts focused more on the Windows ecosystem as a whole, which Microsoft itself said on Wednesday would be one of its main points. CEO Steve Ballmer said the company is focusing on rapid release cycles and also developments in the Windows Phone operating system. He said soon there will be 100,000 apps available on Windows Phone and that Windows Phones will soon be offered on the Sprint network.

JPMorgan analysts remain neutral with a $30 per share price target on Microsoft Corporation (NASDAQ:MSFT).