Microsoft Takes on Corporate IT
Pity the poor IT professional. BlackBerry phones, with their lovely, secure email systems, have all but died. iPhones run rampant, taking pictures of god-knows-what, and syncing confidential documents into Gmail accounts. Even the computer in the office is overrun with copies of Spotify and iTunes. There are so many systems bumping into each other, so many different versions of the iOS to deal with, so many holes in security. It's almost enough to make you wish for a Microsoft (NAS: MSFT) world, and Windows 8 looks happy to provide it.
A holistic approach to printing money
Microsoft has recently unveiled its upgrade plans for the move to Windows 8. In summary, the company responded to Apple's (NAS: AAPL) recent $20 OS upgrade by offering a $40 upgrade to Windows 8. While twice the costs might seem like a lot, it seems like much less in light of the Windows 7 upgrade price, which was $200.
Along with the $40 version, customers who recently purchased machines with Windows 7 preloaded will be able to upgrade for $15. The low entry point for those systems ensures that people won't hold off on purchasing a new machine just to save on upgrade costs. The low-cost upgrade should result in all sorts of upgrades from us little folk. But the bigger fish are the corporate accounts that live on Microsoft.
The sun never sets on Microsoft
According to a senior director from Microsoft, the company "[sells] a copy of Office 2010 every second." Most of those sales are going to businesses, which are looking for the next thing to upgrade to. Windows XP support ends in just about two years, and companies are going to have to upgrade to continue receiving help from Microsoft.
Because Windows 7 and 8 both need more powerful systems to run, it stands to reason that companies will skip over 7 and move straight to the cheaper, more powerful Windows 8. IT departments, in particular, stand to score a big win with Windows 8. If the Surface tablets catch on, then there's a better chance that the Windows Phone will succeed, as well. That means that security could be back in the hands of IT departments.
If the Windows Phone is the end game, the Surface tablet is the key to the strategy's success. That's no doubt the reason why bullet point number one on the Surface website highlights Microsoft Office. The iPad has some wonderful programs, and you can use other productivity packages but, as of today, there is no Office. Talk all you want about spreadsheets -- if you're an actuary or banker, and you're not using Excel, you're doing it wrong.
Bringing real productivity to tablets is the Microsoft offering. I'm sure consumers will pick the Surface up for home use, but the real audience has to be the business world.
All this planning doesn't mean that the game has been won, though. More and more companies are switching to Google (NAS: GOOG) Apps, though the offering tends to be focused on smaller businesses. Google has been fighting to expand this base by getting Google Apps FISMA certification, which is required if the service is going to be used on federal computers. This move has definitely made Google a more dangerous competitor, but Microsoft claims that it's not yet feeling the heat.
Microsoft also needs to form a better alliance with a phone provider if a strong offering is going to be ready for the end of the year. Nokia (NYS: NOK) is still on tap for making a Windows Phone 8 and, as my colleague Sean Williams points out in his article, the phone manufacturer is starting to look cheap enough to buy.
The bottom line
The future of business IT is going to be decided over the next year. The old guard has been pushed aside, and there's space at the top for a new king of IT. BlackBerry maker Research In Motion (NAS: RIMM) just announced that it's laying-off 5,000 more employees. This comes on the heels of a terrible first quarter. The company posted a $518 million loss, and is watching its once strong brand fade into obscurity. The iPhone and the Droid have removed any sense of control that IT departments once clung to and, as IT security becomes more important, something's going to have to change.
Microsoft can be the future of mobile IT, and can regain its position as the overlord of business systems. For investors, the biggest flags to watch will be Surface sales, then upgrades to Windows 8, and then the popularity of the next gen Windows Phone. If Microsoft plays its cards right, it could be dominating corporate infrastructures for another dozen years with this one move.
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At the time this article was published Fool contributorAndrew Marderdoes not own any of the stocks mentioned in this article. The Motley Fool owns shares of Microsoft. The Fool owns shares of Apple. The Fool owns shares of Google.Motley Fool newsletter serviceshave recommended buying shares of Microsoft, Apple, and Google.Motley Fool newsletter serviceshave recommended creating a bull call spread position in Apple.Motley Fool newsletter serviceshave recommended creating a bull call spread position in Microsoft. The Motley Fool has adisclosure policy. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.