This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Microsoft Still a Long Way From Home

"If you're an online gamer, you love it," Riley says. And "if there was no money to be had, then these manufacturers wouldn't integrate the technology into the system. There has to be demand for it."

Although Microsoft's online game offerings may be more advanced than Sony's, the Play Station 3, due out next year, may be viewed as a more cutting-edge entertainment hub than Xbox 360. That's because Sony, the world's second-largest electronics manufacturer, decided Play Station 3 will feature next-generation Blu-ray technology, which could replace DVD players with the transition to high-definition television.

"First and foremost, Sony is an entertainment company. That's part of our DNA," says Sony's Smith. "That runs deep throughout the whole organization."

Other critics think Microsoft is in dangerous territory by straying too far from its software roots. "They think this Xbox will get them in the living room," says Jane Snorek, a senior analyst who covers technology for U.S. Bancorp Asset Management. "I just don't see that."

"Why be in the hardware business? If you're going to be in the home entertainment business, why don't you just write software for a TV company or a cable company?" asks Snorek, whose firm is underweight Microsoft. She argues that a set-top box is likely to be a more powerful entree into the living room than a video-game console.

Of course, Microsoft invested billions of dollars in the cable arena well before it dived into the video-game business. But eight years after buying WebTV and investing $1 billion in Comcast (CMSCA), Microsoft is finally reporting a small following of cable operators testing and trying out its latest set-top software, called Internet Protocol Television.

Only a company like Microsoft, with a massive $40 billion in cash and short-term investments, could get away with hedging its bets by investing so much in two different Trojan horses simultaneously. But with stiff competition from Sony and slow adoption in the cable industry, even the software titan is likely to have to wait another five years or so before either gambit has a chance of capturing the digital home.

3 of 3

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs