Microsoft is holding its annual Build conference this week, and shares rose ahead of yesterday’s keynote speech and remain elevated today. The stock is up 0.15% a $55.12 per share after posting healthy gains on Tuesday and holding steady on Wednesday. Today is more focused on cloud and enterprise, while yesterday’s keynote speech was mostly about personal computing.
Microsoft becomes visionary again
In a report dated March 30, Bank of America Merrill Lynch analyst Kash Rangan, who has a Buy rating and $65 per share price objective on Microsoft stock, was very impressed with the first day of this year’s Build conference. He said he’s attended the conference for about the last decade and described day one of this year’s conference as “perhaps the best validation that MSFT is firmly becoming visionary.” Based on yesterday’s keynote, he thinks the Windows operating system is becoming “very cool” and that it could ultimately become very disruptive “in the new world of computing.”
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He notes that Microsoft has not only faced the challenge of proving that Windows is still relevant despite the PC market’s declining but also showing that it can still thrive and be a leader “as an important and omnipresent operating system.” He reports that the company has now infused a “bot” framework into Windows which enables developers to build apps for various purposes, like to act as a digital personal assistant, set up a Skype call or other meetings, or manage a calendar.
And then there’s HoloLens, which allows customer service representatives to guide customers through making repairs to a broken piece of equipment or carry out other tasks. Rangan believes all the new capabilities may vault Windows over Mac and iOS or Android and potentially make Microsoft’s operating system “a future force rather than a historical force in personal computing.”
Microsoft Windows transcends devices
The purpose of Windows 10 was to unite the experience across all Microsoft devices and enable developers to write apps that work across all of them, including the new HoloLens, using the more than 1,000 new APIs released by Microsoft. Rangan thinks it’s possible that the new pen and ink fature in Windows 10 might help prop up the declining PC industry because it blurs the line between tablets and PCs a bit, although he notes that still this might not happen. There are 270 million PCs running Windows 10 now, which is great progress because the new version of the OS is only about a year old.
The BAML analyst believes HoloLens and the Surface tablets could “add a growth leg” to the Microsoft story as he sees significant potential in both of them as the two $1,000 to $2,000 devices were developed from the ground up in only three or four years. He thinks the company could now have a strong start in the area of virtual and augmented reality rather than being a “fast follower” as it has been in past cycles like smartphones and tablets.
In fact, he thinks HoloLens could become a mainstream device more quickly and possibly in a bigger way than even the Xbox. Further, with a price point in excess of $1,000, he said the HoloLens could generate billions of dollars for Microsoft to make up for the declining Windows segment.