Raymond James analysts Michael Turits and James Wesman explain how Microsoft Corporation (NASDAQ:MSFT) is rolling the dice with a new version of Windows, expanding Office, and going to the cloud, and what this means for the venerable tech company in their report, found below:
“A year-and-a-half after the grand, but until now still flawed, launch of Windows 8 in October 2012, new CEO Satya Nadella will have a chance today at Microsoft Corporation (NASDAQ:MSFT) BUILD in San Francisco to lay out his revised vision for Windows. We expect an ambitious, but at the same time dramatically modified, approach in which Windows enables Microsoft applications and services, but remains one of many operating systems and platforms on which those services are delivered. With the reprioritizing of applications like Office and services like Azure for non-Windows environments, and with speculation regarding OEM price reductions or even free OEM versions of Windows client, Microsoft Corporation (NASDAQ:MSFT) appears to be shifting away from a corporate strategy of first and foremost monetizing Windows versus monetizing those applications and services across platforms. As Nadella laid out last week at the Office for iPad launch, this “substitution” is being driven by the multi-platform “reality of our customers”. While the announcements regarding Windows are likely to be incremental and largely in line with industry expectations, we will be looking for Nadella to couch those announcements in his longer-term vision for Windows in a multi-platform mobile and cloud first environment. Below we list announcements that have been anticipated in the technical press and blogs. Microsoft Corporation (NASDAQ:MSFT) has not commented on the speculation.
Windows 8.1/Windows Phone 8.1
Windows 8.1 is expected to be released by next week, with feature sets expected to be announced today. 8.1 is anticipated to be a more keyboard and mouse-friendly version of W8. Windows Phone 8.1 is also expected to be revealed and could include a revised user interface with greater tile control, an updated “notification” center, and the Siri-like “Cortana” voice-activated assistant. In conjunction with Phone 8.1, new Nokia Lumia phone announcements are also expected. From a developers’ perspective the ability to “write once” for both Windows and Windows Phone is expected to be enhanced.
Windows 9
Some introduction of Windows 9, whose launch is expected in spring 2015, is also expected today. While there are essentially three Windows clients today (Windows 8, Windows RT, and Windows Phone), with Windows 9 the two ARM-based operating systems, RT and Phone, are expected to be merged into a single SKU that some say may not have a Windows “desktop”.
Touch First Office for Windows
With a touch-first version of Office designed from the ground up and launched for iPad last week, information is expected today regarding a Windows 8 touch-first version of Office.
Microsoft Cloud Services
Beyond press speculation, we expect focus on Microsoft Azure, which recently changed its name from Windows Azure and this week followed AWS and Google Inc (NASDAQ:GOOG) in a round of infrastructure as a service (IaaS) price cuts. We would also expect a focus on OneDrive online storage (recently renamed from SkyDrive). On the device side, there has been some press speculation we could see a Surface “mini” announced given that Microsoft Corporation (NASDAQ:MSFT) has spoken about Windows 8 being deployed on a variety of form factors.”
